Banking commission approves revised rules on documentary credits
By a unanimous vote of 91 to 0, the ICC Banking Commission today approved UCP 600, ICC’s revised rules on documentary credits. This is the first revision of the rules since UCP 500, the previous version, was approved in 1993. The new rules are the result of more than three years of intensive work by the banking commission.
Used by letter of credit practitioners worldwide, the Uniform Customs and Practice for Documentary Credits (UCP) are the most successful private rules for trade ever developed. They were first issued in 1933 when ICC, to overcome the conflicting laws on letter of credit in different countries, created a set of rules to bring uniformity to the field. Now firmly established, the UCP are the essential ground rules for billions of dollars in trade transactions every year.
The revision, which will come into effect on 1 July 2007, incorporates a number of changes from UCP 500:
- New sections on “definitions” and “interpretations” have been added to clarify the meaning of ambiguous terms
- The phrase “reasonable time” for acceptance or refusal of documents has been replaced by a firm period of five banking days
- New provisions allow for the discounting of deferred payment credits
- Banks can now accept an insurance document that contains reference to any exclusion clause
These and other changes will have to be carefully studied by bankers, traders, corporations and other practitioners in the seven months remaining before the new rules are implemented.