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UCP600 - Uniform Customs and
Practice for Documentary Credits
Uniform Customs and Practice for Documentary Credits, ICC Publication
No.600 (UCP 600) is the fully revised rules covering the use of
documentary letters of credit produced by the International Chamber of
Commerce. These rules will be implemented worldwide when they come into
force on July 1, 2007. UCP 600 will replace UCP 500.
ABOUT UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS
For many years, the International Chamber of Commerce has been providing
rules for the use of letters of credit. These rules affect all parties
involved in transactions covered by documentary credits including:
- banks and other institutions that issue, confirm or otherwise
process them
- buyers (applicants) who cause them to be issued
- sellers (beneficiaries) who look to them for payment
- service providers such as forwarders, carriers, customs brokers
who provide or use the documents that the credits stipulate
UCP rules are regularly reviewed and updated when necessary to reflect
current banking and trade practice. The current revision process started
when the ICC Banking Commission authorized work to begin in 2003. A
nine-person drafting group and a forty-one person consulting group were
formed to develop proposed revisions for the ICC national committees
worldwide. Based on national committee feedback, successive meetings
provided revised drafts, repeating the cycle over a three year period.
The UCP is utilized by bankers and commercial parties in more than 175
countries. Some 11-15% of international trade utilizes letters of
credit, totaling more than a trillion dollars (US) per annum.
Historically, the commercial parties, particularly banks, have developed
the techniques and methods for handling letters of credit in
international trade finance. This practice has been standardized by the
ICC (International Chamber of Commerce) by publishing the UCP in 1933
and subsequently updating it throughout the years. The ICC has developed
and molded the UCP by regular revisions. The result is the most
successful international attempt at unifying rules ever, as the UCP has
substantially universal effect. The latest revision was approved by the
Banking Commission of the ICC at its meeting in Paris on 25 October
2006. This latest version, called the UCP600, will have a commencement
date of 1 July 2007.
The latest revision of UCP is the sixth revision of the rules since they
were first promulgated in 1933. It is the fruit of more than three years
of work by the ICC's Commission on Banking Technique and Practice
The UCP remain the most successful set of private rules for trade ever
developed. A range of individuals and groups contributed to the current
revision including: the UCP Drafting Group, which waded through more
than 5000 individual comments before arriving at this final text; the
UCP Consulting Group, consisting of members from more than 25 countries,
which served as the advisory body; the more than 400 members of the ICC
Commission on Banking Technique and Practice who made pertinent
suggestions for changes in the text; and 130 ICC National Committees
worldwide which took an active role in consolidating comments from their
members.
During the revision process, notice was taken of the considerable work
that had been completed in creating the International Standard Banking
Practice for the Examination of Documents under Documentary Credits (ISBP),
ICC Publication 645. This publication has evolved into a necessary
companion to the UCP for determining compliance of documents with the
terms of letters of credit. It is the expectation of the Drafting Group
and the Banking Commission that the application of the principles
contained in the ISBP, including subsequent revisions thereof, will
continue during the time UCP 600 is in force. At the time UCP 600 is
implemented, there will be an updated version of the ISBP to bring its
contents in line with the substance and style of the new rules.
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eUCP
The eUCP was developed as a supplement to UCP due to
the strong sense at the time that banks and corporations together with
the transport and insurance industries were ready to utilize
electronic commerce. The hope and expectation that surrounded the
development of eUCP has failed to materialize into day to day
transactions and its usage has been, to put it mildly, minimal. Owing
to this lack of usage, it was felt that this was not the right time to
incorporate the eUCP into the UCP600 and it will remain as a
supplement albeit slightly amended to identify its relationship with
UCP600.
The current version of eUCP is V 1.1, Supplement for electronic
presentation under UCPDC 600) effective 1.7.07
CDCS
The Certified Documentary Credit
Specialist is a qualification awarded by IFSA US and CIB UK and
endorsed by ICC Paris as the only International qualification for
Trade Finance Professionals, recognizing the competence, and ensuring
best practice. It requires Re-Certification every Three years. UCP 600
rules will be included from April 2008 examinations only. CDCS
requires some 4-6 months of independent study and a pass in 3 hour
examination of 120 multiple choice questions as well as 3 "in basket"
exercises with questions which demonstrate skill in real-world
applications of UCP.
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