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FORMAT

eUCP article e4: An eUCP credit must indicate the format of each electronic record. If the format of an electronic record is not indicated, it may be presented in any format.

Format is used to describe the system language or protocol in which the electronic record is encoded.  Data processing systems are not able to access every format into which data is organised. Therefore, it is vital that the data be formatted in a manner that is readable by the data processing system to be used. The failure to do so will mean that the data cannot be accessed or read in an intelligible manner.

The eUCP do not indicate how the format should be specified; the onus is on the issuer to indicate with sufficient preciseness the required format in which it desires data in the electronic record to be arranged. It is within the documentary credit that any format issues should be addressed - such an approach is good practice. This is not a rules issue.  The ultimate aim should be to achieve a standardised electronic record format, as is, for instance, the case with SWIFT messages. 

When considering the format of an Electronic Record, the below points must be taken into account:

• Format(s) of the electronic records to be agreed up-front by all parties to the transaction. 
• Must be comprehensible to the presenter.
• Capable of being accepted and processed by the specific data processing systems in use for the transaction(s). 
• Identify, with sufficient specificity, the format (protocol) by which the data in an electronic record is to be arranged. 
• Formats are commonly issued in versions-unless a specific version is stated, any version of that format is acceptable. 
• The indication of a version of a format would be assumed to include any prior version of that format but not any subsequent version. 
• If a prior version of a format is not acceptable, the transaction should so state. 
• It is possible that the transaction may specify different formats for various documents - in such circumstances, the electronic record must be presented in the format specified for it. 

AUTHENTICATION

eUCP sub-article e3 (b) (iii): "electronic record" means data created, generated, sent, communicated, received or stored by electronic means, including, where appropriate, all information logically associated with or otherwise linked together so as to become part of the record, whether generated contemporaneously or not, that is: capable of being authenticated as to the apparent identity of a sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered, and capable of being examined for compliance with the terms and conditions of the eUCP credit.

eUCP sub-article e3 (b) (iv): "electronic signature" means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.

eUCP sub-article e6 (f): An electronic record that cannot be authenticated is deemed not to have been presented.

The eUCP do not define 'authenticate', or how to authenticate an electronic record. The method of authentication used in the eUCP is intended to be technology-neutral and not to endorse any specific technique. 

Furthermore, the eUCP do not require an electronic record to have been authenticated for it to become an electronic record, merely that it be capable of being authenticated. Whether it is actually authenticated is the responsibility of the bank. As long as the data is authenticable, it is an electronic record for purposes of the eUCP. The eUCP require that, in order to qualify as an electronic record for purposes of the eUCP, data must be able to be authenticated with respect to the apparent identity of the sender, must be able to be authenticated with respect to the apparent source of the data, and must be able to be authenticated with respect to its complete and unaltered character. 

As such, the parties to a documentary credit must decide on the level and amount of security used to authenticate the message. The UNCITRAL Model Law on Electronic Commerce, amongst others, provides a guide to this process. Various national laws may also impose specific requirements for an electronic record to be authenticated. As such, this cannot be an issue for the rules. 

Below are the key considerations for authentication:

• Parties to the transaction must agree the level and amount of security used to authenticate a message. 
• Capable of being authenticated as to the apparent identity of a sender of an electronic record. 
• Capable of being authenticated as to the apparent source of the data contained in an electronic record. 
• Capable of being authenticated with respect to the complete and unaltered character of an electronic record. 
• Take note of any applicable national laws, which may impose specific requirements for an electronic record to be authenticated. 
• The eUCP are technology neutral and do not mandate any specific technology: any applicable technology is to be agreed by the parties involved in a specific transaction. 

ELECTRONIC ADDRESS

eUCP sub-article e3 (a) (iii): "place for presentation" of an electronic record means an electronic address of a data processing system.

Although the eUCP does not define or explain the meaning of 'electronic address', the term signifies the precise electronic location or a proprietary system to which an electronic record can be sent. It could include, inter alia, a URL, an email address, or an address on a dedicated system.

There is no need to provide a definition in the rules, as any relevant requirements will be within the terms of the documentary credit. This is an issue of practice, and not for the rules. 

Below are the key considerations for an electronic address:

• Identifies the precise electronic location or a proprietary system to which an electronic record can be presented.
• This can include, but is not restricted to, a URL, an email address, or an address on a dedicated system.
• To be stated with the terms of the eUCP credit.
• A bank may be open for business but is unable to receive an electronic presentation. To lessen the impact of such electronic closure, banks should have back-up systems in place and may wish to indicate alternative electronic addresses for specific transactions.

ELECTRONIC SIGNATURE

eUCP sub-article e3 (b) (iv): 'electronic signature' means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.

An electronic signature in an electronic record can take place by indication of the name of the signer, a code, key or acceptable digital signatures and public key cryptography given in a manner that appears to be intended to authenticate. The definition given for "electronic signature" is intended to be technology neutral and not to endorse any specific technology.

While the method of authenticating the document differs when it is electronic, "signing" an electronic message serves the same functions as does signing a paper document. Current technology provides for a number of commercially reasonable methods for digital signatures. 

The UNCITRAL Model Law on Electronic Commerce provides a guide to this process. Many of the laws dealing with eCommerce contain a definition of the term. In addition, expanded possibilities of verification of the identity of the signer have emerged, based on systems of identification and assurance.

Below are the key considerations for an electronic signature:

• Capable of identifying the sender of an electronic record and indicating that person's authentication of the electronic record.
• Capable of associating the sender of an electronic record with the content of the electronic record. 
• The definition for "electronic signature" in the eRules is intended to be technology neutral and not to endorse any specific technology: the technology is to be separately agreed by the parties involved in a specific transaction.
• Take into account the function of signature requirements in a given statutory and regulatory environment. 
• Determine the sophistication of the data processing system used by each of the parties.
• Ensure compliance with trade customs and practice. 
• Ensure compliance with any relevant authentication procedures set forth by intermediaries.
• The degree of acceptance or non-acceptance of the method of identification in the relevant industry or field both at the time the method was agreed upon and at the time when the data message was communicated.

DATA PROCESSING SYSTEM

eUCP sub-article e3 (b) (ii):  "data processing system" means a computerised or an electronic or any other automated means used to process and manipulate data, initiate an action or respond to data messages or performances in whole or in part.

Any bank engaging in the type of transaction associated with the eUCP is responsible for maintaining a data processing system. This responsibility is a fundamental pre-condition for using the eUCP. A bank cannot excuse itself from responsibility for the failure to authenticate electronic records due to errors or inadequacies in its systems where those systems are not acceptable. This formulation also imposes on banks that engage in processing transactions under the eUCP, the task of upgrading their systems to keep them current. 

The aim was to align definitions in the eRules with those used in local law. However, many legal definitions differ among themselves in formulation if not meaning. As a result, the eRule definitions are modelled on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce, which is the most widely imitated in eCommerce legislation. In working with the eUCP, it is necessary to consider each applicable legal system with respect to the eUCP definitions. 

Below are the key considerations for a data processing system:

• Any bank that engages in an eUCP transaction is responsible for maintaining a data processing system. This responsibility is a fundamental precondition for using the eRules in order to ensure relevance.
• Represents a computerised or an electronic or any other automated means that is used to process and manipulate data, initiate an action or respond to data messages or performances in whole or in part.
• Capable of processing electronic records in the format agreed by all parties to a transaction.
• Capable of receiving, identifying, authenticating, and responding to electronic records. 
• Capable of performing minimal functions of authentication that are considered commercially acceptable.

AMENDMENTS

• With respect to the treatment of documentary credit amendments in the digital world, evolving practice will decide the most valid approach. 
• At this stage, the handling of amendments is defaulted to UCP 600. The position in UCP 600 is that amendments must be accepted or rejected. 

SWIFT

MT700

Sub-article 1 (b) of eUCP version 2.0 requires that, for the rules to be applicable, the text of a documentary credit should expressly indicate that it is subject to the eUCP. 

Whilst all MT700 fields must be considered for applicability when handling a transaction subject to the eUCP, the following should have an additional emphasis: 

• Field 40E (Applicable Rules - mandatory field) - Indicates the rule(s) that will apply to the documentary credit. For an eUCP credit, it must indicate "EUCP LATEST VERSION", or "EUCPURR LATEST VERSION". 
• Field 46A (Documents Required - optional field) - Unless it is unavoidable, all documentary requirements should be accommodated in this field. If a specific document has been agreed in the form of an electronic record, the appropriate information must be stated. As such, this field should mention, for a necessary electronic record, any specific requirements for the format and authentication of such record. 

The documentary credit application form of most banks will incorporate a selection of the main types of documents that are presented under a documentary credit. For example, invoices, various forms of transport documents, insurance documents, packing lists, weight lists, etc. Where feasible, electronic alternatives should be considered. 

Neither UCP 600 nor eUCP version 2.0 indicate which documents must be presented under a documentary credit or which documents are to be presented in certain circumstances. This is left to the applicant and beneficiary to determine. However, an issuing bank may insist on certain documents being presented from a local regulatory perspective or due to its own internal policy. 

Field 46A - Main UCP/eUCP considerations

UCP 600 article 3 indicates that terms such as "first class", "well known", qualified", "independent", "official", "competent" or "local" should not be used to describe the issuer of a document. If a documentary requirement is so phrased, it will mean any issuer except the beneficiary is acceptable.

UCP 600 provides specific rules in respect of the content and signing requirements for commercial invoices (article 18), transport documents (articles 19-25) and insurance documents (article 28).

UCP 600 sub-article 14 (f) states that if a documentary credit does not indicate the issuer or data content of a document other than an invoice, transport or insurance document, the document will be accepted as presented provided that it fulfils its function and otherwise complies with sub-article 14 (d), i.e., there is no conflict of data between documents. It is in the interests of an applicant that each documentary requirement provides, at the very least, the data that should appear thereon. 

When documents such as inspection or analysis certificates are to be presented, specific wording should be given as to the quality or standard to which the inspection or analysis is to be completed and determined. Terms such as "detailed" preceding the name of a document should be avoided, and the documentary credit should indicate the detail that is expected to be shown.

UCP 600 sub-article 28 (f) (ii) requires, unless the documentary credit states otherwise, that the amount of insurance coverage is to be at least 110% of the CIF or CIP value of the goods. It is good practice for the documentary credit to indicate the amount of insurance coverage that is required and not rely on the text in this sub-article.

SWIFT Solution for Digital Exchange of Trade Documents 

SWIFT platforms (namely FileAct and MT 759) assist Banks and SWIFT connected Corporates in exchanging Trade documentation electronically, quickly, safely, and reliably.^[1]

• FileAct allows Banks and Corporates to exchange documents in any format 
• MT759 helps the community to both notify of, and link, the documents associated with the Documentary Credit

It is recommended by participating banks that banks looking to adopt FileAct as a digital channel to promote the digitisation of documents under documentary credits, take notice of the eUCP and the associated ICC article by article analysis.^[2]

www.tradefinance.training

[1] https://www.swift.com/news-events/webinars/helping-keep-trade-moving-during-exceptional-times

[2] https://iccwbo.org/media-wall/news-speeches/icc-banking-commission-releases-new-erules-use-electronic-documents/