Position Papers no 1, 2, 3, 4 on UCP 500
UCP 500 – Correcting some misinterpretations
The ICC Commission on Banking Technique and Practice notes with regret, and concern, that following the coming into effect of the ‘Uniform Customs and Practice for Documentary Credits’ – UCP 500 – various banks have been applying unilateral and incorrect interpretations to certain of its Articles. By prejudicing the proper and correct application of the UCP 500 rules, the effect has been to seriously interfere with the use of the documentary letter of credit issued in accordance with the UCP, as the means for effective and secure settlement of trade transactions on a worldwide basis.
For the first time, this latest revision of the banking rules specifically included mention of certain long-standing and customary banking practices but, in some cases, their mention has been read, quite incorrectly, as indicating changes in practice. We of the Banking Commission are greatly concerned that the misinterpretations and misapplications of the particular Articles of UCP 500 involved, adversely effect not only the banks along the transaction chain, but also their customers whether applicants or beneficiaries under the Credits and, at the same time, carriers and freight forwarders who may also be involved in ensuring the correctness of documentation to comply with the particular documentary letter of credit.