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With a review of ISBP 821 possibly under consideration, we return to the perennial question: is it time to revise UCP 600?

UCP 600 was adopted by the ICC ExCo in November 2006 and first published in December 2006 - so it has been in existence for virtually 17 years. 

In the past, we have always stated that a revision of ISBP is the key to improving education and guidance in working practices. With the possibility that this may now happen, it makes perfect sense to consider a future revision of UCP 600 once the ISBP exercise is completed.

Obviously, much will depend on the results of the ISBP review, but certain issues can already be identified. For example:

• ISBP 821 paragraph A3, concerning the signing of certificates, certifications, declaration or statements is more equivalent to a rule rather than a practice. There is no existing article in UCP 600 addressing this issue. ISBP 745 paragraphs P1 and L1 also stipulate the requirement for a signature on various certificates.
• ISBP 821 paragraphs A21 (b), (d), (e) regarding language are also much closer to a rule than a practice. UCP 600 does not currently regulate the language of documents even though this is a very important issue. These paragraphs, rephrased, could become part of a revised UCP. Paragraph A21 (e) would require amendment if it was to be considered as a rule.
• We could see great benefit in rephrasing ISBP 821 paragraph A31 (original and copy documents) and subsequently incorporating it as an element of a revised UCP (Original Documents and Copies, currently UCP 600 article 17).
• ISBP 821 paragraph A35 (d), regarding authentication via URL, is definitely more akin to a rule and could certainly be recommended for incorporation within a revision of UCP. It would naturally fit within the signature requirement stated in UCP 600 article 3, thereby amending/enhancing the interpretation of ‘electronic method of authentication'. Although very few documents are issued in this way, this may well change in the future.
• It is arguable that ISBP 821 paragraph C13, which addresses over-shipment and goods not called for in a credit, is also a rule. It could well become part of a revised UCP not only with regard to an invoice, but all documents required under a credit because if, for example, a bill of lading or weight list shows over-shipment or goods not called for in the credit, it would also not be acceptable.
• ISBP 821 paragraph K9, expiry date for insurance claims, is also a worthy item for consideration to convert to a rule. If so, it could amend the current UCP 600 article 28.
• Consideration could be given to inclusion of a definition for ‘all documents'. Whilst this has been the subject of a number of Opinions, we could certainly see benefit for incorporation within the UCP itself.
• UCP 600 sub-article 37 (c) does not include a definition of a period of time for claiming and reimbursing charges.
• Without delay is a recognised term within UCP 600, but is deliberately not defined due to the fact that, as stated in various ICC Opinions, the precise interpretation of this term would depend upon the circumstances of each case. The incorporation of a specific timeline would require an indication of the consequence (i.e., penalty) for failure to comply, in order for it to have any effect. It is clear that whilst the term without delay does not signify an immediate action, or that an action is to be completed ‘at once', it does imply a degree of urgency and attention that the concerned bank should apply. Could this perhaps be used as a definition?

There are also a number of generic issues that could be considered for discussion, some of which we have deliberated upon in former blogs, e.g.:

• Strict compliance - the paper concluded that no merit could be seen in attempting a definition of this multifaceted subject, and that developments in the past had proved that, as time goes by, it is customs and practice that provide the required clarity. And once such customs and practice have become commonplace, they form part of a future revision of ISBP. 
• Simple Documentary Credit Format - should this be considered as an appendix to the existing or a revised UCP 600? 
• Drafts - is it time to suppress usage of drafts under documentary credits? 
• Sanction Clauses - the use of clauses in relation to trade, economic or financial sanctions or embargos in trade finance instruments (documentary and standby letters of credit, demand guarantees and counter-guarantees) that are subject to the rules drafted by the ICC Banking Commission. Should this be part of UCP 600? 
• Whilst fraud is, quite rightly, out of scope for UCP 600, could some reference be made?
• Consideration of all Technical Advisory Briefing Papers for potential update/inclusion within UCP 600. 

Further issues which come to mind:

• Amalgamate UCP 600 & ISBP 745 - this is far from easy as one relates to rules and the other to practices. When rules are contravened, there is always a verifiable impact - the same cannot be stated about practices. However, could it be done?
• Remove Standby Credits from UCP 600. Based on the introduction of ISP98, this was suggested during the revision of UCP 500. However, as many standby credits were still issued under UCP, it was considered apt that they remain within the UCP - it is perhaps time to look again.  
• Add an appendix to UCP 600 and/or ISBP 745 that includes a guidance checklist on how individual documents should be prepared. This would aid the commercial parties and lead to a decrease in discrepancies. 
• Add an appendix to UCP 600 and/or ISBP 745 providing templates for each individual document. 
• A far swifter revision process - we have numerous thoughts on this, and believe that, with the correct focus, a revision could be achieved within a fifteen-to-eighteen-month time period. 
• Why have discrepancy rates on first presentation not decreased under UCP 600? This is absolutely critical to understanding how to take the ICC rules forward. 
• Are aspects of eUCP version 2.1 useful for incorporation into a revised UCP 600?
• Do the transport articles still reflect customs and practice in the transport industry?
• Is the default 21 calendar day period still appropriate for presentation of documents?
• Should ‘negotiation' be re-addressed? Should it even be included within UCP 600 just because it is ‘historically' used in some regions? Is this sufficient justification to persist with a process that is consistently misunderstood?
• Should UCP 600 (and, in fact, other ICC rules) include a Force Majeure article? There is no choice of law (or jurisdiction) article in UCP and the rules generally avoid legal issues. Should this, therefore, be left to the contract between the buyer and the seller?
• If retained, should the Force Majeure article be aligned with URDTT article 16 and include "cyberattacks"?
• The Uniform Rules for Digital Trade Transactions (URDTT) do not include an assignment article. This is predicated on the basis that the use of the term "transfer" is to replace the English law word commonly used of "assignment" and is an equivalent right to that of an assignment and covers the transfer of rights and benefits". Could this also apply to UCP?

So, does the above justify a revision? 

We await the finalisation of the ISBP review before making our final decision.

Be sure we will let you have our definite thoughts in due course.

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