eUCP - Answers to FAQ - Part 2

6. It has been stated that a clause must be included in a letter of credit to make it subject to eUCP, that it is not mandatory. What happens if the subject clause is not included in a letter of credit that requires electronic documents?

If a letter of credit requires electronic presentation of documents but does not invoke the eUCP, it is up to the Issuing Bank to explain how documents are to be presented. The purpose of the eUCP is to provide a standard so that banks don’t have to include such explanations in their letters of credit and Beneficiaries will know how to comply.

7. Under what conditions should I make sure my letters of credit are subject to the eUCP?

The eUCP provides rules for presentation of electronic documents. Any letter of credit that calls for electronic documents should be made subject to the eUCP to take advantage of the standardization in practice that these rules give.

8. Is there any reason not to ask for all of my letters of credit to be made subject to the eUCP?

Even a letter of credit that calls entirely for paper documents may be made subject to the eUCP. The only change will be that the L/C must specify acceptable formats for each document. There is no harm making L/Cs that call only for paper documents subject to the eUCP as long as this additional information is included. If the format specified for all documents is paper, none of the rest of the eUCP applies—the L/C is effectively the same as any L/C issued subject to simply the UCP.

9. When I’m ready to start using electronic documents, do I just say so? What are the key issues and potential constraints that must be understood and considered first?

Unfortunately, it’s not simple to start using electronic documents, at least yet. Before a letter of credit is issued calling for electronic documents, some homework should be done on the capabilities of all the parties who will be involved and some agreements need to be reached on an array of issues that includes the following:

a) the ability of the parties involved to create, send, receive, and process electronic documents (systems capabilities, means of presentation, means of authentication, etc.)

b) the data format for each e-document

c) the types of documents that even can be issued electronically (e.g., bills of lading cannot be issued electronically, in negotiable form, except via Bolero)

d) the ability of 3rd party issuers, like carriers and insurance providers, to issue electronic documents

e) the willingness of governmental authorities (e.g., customs & port authorities, the Ministry
of Finance, exchange control boards) to accept electronic documents or even printed copies of electronic documents

f) the legal framework in countries with respect to the legal status of electronic documents and electronic signatures—for example, in some countries electronic signatures are not inherently recognized as valid and binding; in other countries, like Singapore and the United States, electronic signatures are generally acceptable and valid, but not on bills of exchange.

10. As a Beneficiary, how do I know where to present electronic documents?

Just as letters of credit specify mailing addresses, L/Cs calling for electronic presentation will specify electronic addresses.

eUCP - Anwers to FAQ - Part 1

eUCP - Anwers to FAQ - Part 2

eUCP - Anwers to FAQ - Part 3

eUCP - Anwers to FAQ - Part 4

eUCP - Anwers to FAQ - Part 5 (Final Part)