When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank determines that a presentation does not comply, it may refuse to honour or negotiate. This is a positive step towards making the ucp a more. Article 23 now article 20 under ucp 600 concerning bills of lading has also been redrafted to make it clearer and easier to follow. This article examines the major changes introduced by the ucp 600 and comments on their likely. Some 1115% of international trade utilizes letters of credit, totaling over a trillion dollars us each year. As per ucp 600 subarticle 28 j, an insurance document may indicate that cover is subject to a franchise or excess deductible. Under article 14 j the addresses noted in the document need not be the same as those stated in the credit or other stipulated document provided they are in the same. The obligation of the issuing bank depends solely on the documents presented. Articlebyarticle analysis by the ucp 600 drafting group, icc publication no. Lc monitor trade services updatenewsletter, issue 2february 2008, p. Ucp 600 rules changing letter of credit business for international traders.
Article 14b reduces the time that a bank has to check the documents for compliance from. Sep 11, 2014 ucp 600 are the latest revision of the uniform customs and practice that govern the operation of letters of credit. Aug 04, 2008 ucp 600 the latest revision of ucp is the sixth revision of the rules since they were first promulgated in 1933. When the uniform terms and conditions for documentary credits were revised in 2006 under publication no. Thank you for joining us today for this panel discussion on ucp 600. Article 34 states that the banks are not liable for the effectiveness of the documents, i. Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit. Commentary on ucp 600 icc knowledge 2 go international. As already mentioned, article 14 contains some key rules in respect of the standards to be.
Liability of the issuing bank is for undefinite period of time. Accordingly, when the letter of credit expressly states that it is governed by the ucp 600 the contracting parties are bound by the rules set out in the ucp 600 and may exclude or modify its. Insurance documents under documentary credits trade. To comply with ucp 600 article 20, a bill of lading must appear. It is also appropriate to point out that ucp 600 sub article 14 j states that when the addresses of the beneficiary and the applicant appear in any stipulated document, they need not be the same as those stated in the credit or in any other stipulated document, but must be within the same country as the respective addresses mentioned in the. Ucp 600 ebooks that every exporter and importer should. International standard banking practice 92 application of ucp 600 article 20 if a credit requires presentation of a bill of lading marine, ocean or porttoport or similar covering sea shipment only, ucp 600 article 20 is applicable. The principle is that the buyer cannot refuse to pay based on the condition of the goods.
Overview of ucp 600 articles 17 39 other related ucp documents what needs to be done to prepare. Hfw ucp600 judgment the implications for letters of. Ucp600 judgment the implications for letters of credit the court of appeals judgment demonstrates that the court will interpret the ucp 600 in a way which reflects its underlying aims and purposes as well as international banking and trading practice. Contents acronyms xvii introduction 1 the rst to the sixth revision of the ucp. Detailed comparison for each article article 1 application of ucp the uniform customs and practice for documentary credits, 2007 revision, icc publication no. The notice required in subarticle 16 c must be given by telecommunication or. The authors of the seventh edition of gutteridge and megrah 1985 believed, at p119, that the problem could be removed by a clause in the ucp similar to article 14 h. Principle of strict compliance in letter of credit. Please share your experiences, problems and opinions with us. Two kinds of form about refusing have been added in ucp600, refer to subarticle 16 c iii. It explains how the practices articulated in ucp 600 are applied by documentary practitioners.
Icc uniform customs and practice for documentary credits 2007 revision icc publication no. The problem with article 14d, ucp 600 for documentary credits. Data in document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that. The uniform customs and practice for documentary credits ucp is a set of rules on the issuance and use of letters of credit.
Commentary on ucp 600 is the latest version of iccs universally used rules on documentary credits. Isbp ucp 600 information isbp paragraph 1 to 5 the application and issuance of the credit 1. Icc ucp, lc rules, letter of credit, ucp 600, ucp 600 articles, ucpdc ucp 600 article 14 standard for examination of documents a. This note provides an overview of the uniform customs and practice for documentary credits ucp, 2007 revision, icc publication no. The 39 articles of ucp 600 are a comprehensive and practical working aid to bankers, lawyers, importers, and exporters, transport executives, educators, and everyone involved in letter of credit transactions worldwide. Insurance documents under documentary credits trade finance. When the addresses of the beneficiary and the applicant appear in. Let us together discover the beauty of letter of credit. Ucp 600 and the opinions and decisions of the icc banking commission. Sep 03, 2015 ucp 600 comes into effect on 01 july 2007. Article pdf available in international journal of economics and business research 12 january 2009 with 15,401.
Article 1 of the ucp 600 has introduced a significant change to the applicability of the rules. Important articles article 1 application of ucp the uniform customs and practice for documentary credits, 2007 revision, icc publication no. Some of the reasons for this and general notes about the ucp are outlined below. The notice required in sub article 16 c must be given by telecommunication or, if that is not possible, by other expeditious means no later than the close of the fifth banking day following the day of presentation. The 39 articles of ucp 600 are a comprehensive and practical. The ucp was again revised in 1983, the ucp400, but it was not until the 1993 revision, the ucp500, that an clause dealing with nondocumentary conditions was introduced. Importantly, the new ucp 600 is likely to increase the use of letters of credit and, in turn, better facilitate international trade as new global markets and suppliers emerge. Furthermore, article 14 j provides that addresses of the beneficiary and applicant need not be the same as those in the credit, provided that they are in the same respective country. The article 14 d of ucp600 states that the data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to. Advising bank means the bank that advises the credit at the request of the issuing bank applicant means the party on whose request the credit is issued. Article 1 application of ucp the uniform customs and practice for documentary credits, 2007 revision, icc publication no. Definitions this is a new article not found in ucp 500. Pdf ucp 600 rules changing letter of credit business for. Ucp 500, article, saw the first reference to a subheading in ucp described as standard for examination of documents.
Third, ucp 600 article 14 a standard for examination of documents. Whether iob should be precluded under subarticle 16f of ucp 600 from claiming that the documents did not constitute a complying presentation. A complying presentation is one that meets the requirements of the credit and the applicable provisions of the ucp 600 and international standard banking practice ucp 600 article 2. Ucp 600 article 14 to article 16 icc ucp, lc rules, letter of credit, ucp 600, ucp 600 articles, ucpdc ucp 600 article 14 standard for examination of documents a. Ucp 600 ucp 600 are the latest revision of the uniform customs and practice that govern the operation of letters of credit. Source international chamber of commerce icc ucp 600 article 14 d as pdf. The extent to which specific articles of ucp600 are applicable to.
Article 3 provides some interpretations for documents and article 14 discusses examining them while 17 does list some of the requirements for considering a document an original or a copy isp 98 rule 109 document means a draft, demand, document of title, investment security, invoice. Again, such clauses are very common these days, so it might not be a good idea to forbid them, since the cover could then become prohibitively expensive. It requires that a notice be sent by the bank to the presenter an article 16 notice stating that there is a discrepancy and, consequently, the credit will not be honoured or negotiated. Thus, in the present position under the ucp 600, such noncompliance is no longer considered as discrepancy. The terms of a credit are independent of the underlying transaction even if a credit expressly refers to that transaction. Members of the drafting group that developed the new ucp have produced an articlebyarticle commentary on the rules that came into effect on july 1, 2007.
The background to the ucp 600 articles mentioned above is that the dc is dependent on the. Pdf ucp 600 rules changing letter of credit business. Ucp 600 subarticle 14 j states that when the addresses of the beneficiary and the applicant appear in any stipulated document, they need. This can have a significant impact on the insured applicant. Under article 14 j the addresses noted in the document need not be the same as those stated in the credit or other stipulated document provided they are in the same country. Article 16 of ucp 600 establishes the practice for banks dealing with discrepant documents presented under a credit. Ucp 600 the latest revision of ucp is the sixth revision of the rules since they were first promulgated in 1933. Nov 11, 2015 ucp 400, article 23, introduced the wording that is now the basis for ucp 600 sub article 14 f.
To avoid unnecessary costs, delays and disputes in the examination of. Documents must not be dated earlier than the date of the issuance of this credit. The 39 articles of ucp 600 are a comprehensive and practical working aid to bankers, lawyers, importers, and exporters, transport executives, educators, and everyone involved in. Ucp 600 ebooks that every exporter and importer should read. Icc uniform customs and practice for documentary credits ucp. Ucp 600 sixth 6th revision since its inception by the. The banks ability to confirm any credit will be subject to there being an appropriate confirmation facility in place for the issuing. Banks can now accept an insurance document that contains. The ucp is an internationally recognized and globally accepted set of rules governing the use of letters of credit. Sep 09, 2014 this feature is not available right now. Please feel free to go to the back of the room and grab a cup of coffee or tea if you are so inclined.
Uniform customs and practice for documentary credits. Why subarticle 14c is in ucp600 best trade solution. The articles dealing with transportation documents, comprising articles 1924 under the new ucp 600, have been amended to remove confusion over identification of carriers and agents. Pdf ucp 600 ruleschanging letter of credit business for. Ucp 600 are the latest revision of the uniform customs and practice that. The ucp remain the most successful set of private rules for trade ever developed. Uniform rules for documentary credits icc knowledge 2 go. New rules for commercial lcs byrne and davis article. A nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may accept a commercial invoice issued for an amount in excess of the amount permitted by the credit, and its. Ucp 600 comes into effect on 01 july 2007 the 39 articles of ucp 600 are a.
Home uncategorized ucp 600 subarticle 14f uncategorized. Hfw ucp600 judgment the implications for letters of credit. Frequently asked questions under ucp 600 is a series of 10 volumes containing 1600 questions and answers relating to the articles of ucp 600, documentary credits in general, isbp and urr issues. When looking at the ucp 600, it is important to look at the market environment and general notes about the current guidelines. If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with. A nominated bank acting on its nomination, a confirming bank, if any, and the issuing. Ucp 600 contains important new provisions in the fields of transport, insurance and compliance, which will form the basis of letter of credit transactions for years to come. Ucp600 article 14d do banks understand the article well. Now, article 14a of ucp 600 provides the following. It is noteworthy that article 14 contains a new provision regarding the addresses of applicant and beneficiary appearing in a stipulated document.
It is the fruit of more than three years of work by the iccs commission on banking technique and practice. In the commercial court, hamblen j found that the only discrepancies in the documents were in the beneficiarys consolidated certificate and also found against iob on the second and third issues. Uniform customs and practice institute of international banking. Credit, 12 incomplete or unclear instructions, and 38 other. Ucp 400, article 23, introduced the wording that is now the basis for ucp 600 subarticle 14 f. Contrary to article 32 of the ucp, this credit remains valid for subsequent installments despite any shipment or drawing not made within the period allowed. Some 1115% of international trade utilizes letters of credit, totaling over a trillion dollars us each year historically, the commercial parties, particularly banks.
Pdf the introduction of article 12b in the ucp 600. Whilst it is early days for ucp 600, it is hoped that the new rules will facilitate transactions by simplifying procedures and removing uncertainty and ambiguity which previously lead to the failure of up to 70%. Cdcs video lectures ucp 600 article 14 explained 3 by. A nominated bank acting on its nomination, a confirming bank, if any. It is general consensus that ucp 600 will not be revised any time soon. Compliance with standard international letter of credit practice. The bank as a confirming bank the confirmation of a documentary credit is governed by article 8 of ucp 600. Ucp 600 by icc the uniform customs practices for documentary credits or foreign trade. Commentary on ucp 600 is written by members of the ucp 600 drafting group and reflects the drafting groups personal. This publication and the ucp should be read in their entirety and not in isolation. You can increase your letter of credit comprehension by reading reliable ucp 600 educational ebooks. The ucp is utilized by bankers and commercial parties in more than 175 countries in trade finance.