eUCP article e4: An eUCP credit must indicate the format of each electronic record. If the format of an electronic record is not indicated, it may be presented in any format.
Format is used to describe the system language or protocol in which the electronic record is encoded. Data processing systems are not able to access every format into which data is organised. Therefore, it is vital that the data be formatted in a manner that is readable by the data processing system to be used. The failure to do so will mean that the data cannot be accessed or read in an intelligible manner.
The eUCP do not indicate how the format should be specified; the onus is on the issuer to indicate with sufficient preciseness the required format in which it desires data in the electronic record to be arranged. It is within the documentary credit that any format issues should be addressed - such an approach is good practice. This is not a rules issue. The ultimate aim should be to achieve a standardised electronic record format, as is, for instance, the case with SWIFT messages.
When considering the format of an Electronic Record, the below points must be taken into account:
eUCP sub-article e3 (b) (iii): "electronic record" means data created, generated, sent, communicated, received or stored by electronic means, including, where appropriate, all information logically associated with or otherwise linked together so as to become part of the record, whether generated contemporaneously or not, that is: capable of being authenticated as to the apparent identity of a sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered, and capable of being examined for compliance with the terms and conditions of the eUCP credit.
eUCP sub-article e3 (b) (iv): "electronic signature" means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.
eUCP sub-article e6 (f): An electronic record that cannot be authenticated is deemed not to have been presented.
The eUCP do not define 'authenticate', or how to authenticate an electronic record. The method of authentication used in the eUCP is intended to be technology-neutral and not to endorse any specific technique.
Furthermore, the eUCP do not require an electronic record to have been authenticated for it to become an electronic record, merely that it be capable of being authenticated. Whether it is actually authenticated is the responsibility of the bank. As long as the data is authenticable, it is an electronic record for purposes of the eUCP. The eUCP require that, in order to qualify as an electronic record for purposes of the eUCP, data must be able to be authenticated with respect to the apparent identity of the sender, must be able to be authenticated with respect to the apparent source of the data, and must be able to be authenticated with respect to its complete and unaltered character.
As such, the parties to a documentary credit must decide on the level and amount of security used to authenticate the message. The UNCITRAL Model Law on Electronic Commerce, amongst others, provides a guide to this process. Various national laws may also impose specific requirements for an electronic record to be authenticated. As such, this cannot be an issue for the rules.
Below are the key considerations for authentication:
eUCP sub-article e3 (a) (iii): "place for presentation" of an electronic record means an electronic address of a data processing system.
Although the eUCP does not define or explain the meaning of 'electronic address', the term signifies the precise electronic location or a proprietary system to which an electronic record can be sent. It could include, inter alia, a URL, an email address, or an address on a dedicated system.
There is no need to provide a definition in the rules, as any relevant requirements will be within the terms of the documentary credit. This is an issue of practice, and not for the rules.
Below are the key considerations for an electronic address:
eUCP sub-article e3 (b) (iv): 'electronic signature' means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.
An electronic signature in an electronic record can take place by indication of the name of the signer, a code, key or acceptable digital signatures and public key cryptography given in a manner that appears to be intended to authenticate. The definition given for "electronic signature" is intended to be technology neutral and not to endorse any specific technology.
While the method of authenticating the document differs when it is electronic, "signing" an electronic message serves the same functions as does signing a paper document. Current technology provides for a number of commercially reasonable methods for digital signatures.
The UNCITRAL Model Law on Electronic Commerce provides a guide to this process. Many of the laws dealing with eCommerce contain a definition of the term. In addition, expanded possibilities of verification of the identity of the signer have emerged, based on systems of identification and assurance.
Below are the key considerations for an electronic signature:
DATA PROCESSING SYSTEM
eUCP sub-article e3 (b) (ii): "data processing system" means a computerised or an electronic or any other automated means used to process and manipulate data, initiate an action or respond to data messages or performances in whole or in part.
Any bank engaging in the type of transaction associated with the eUCP is responsible for maintaining a data processing system. This responsibility is a fundamental pre-condition for using the eUCP. A bank cannot excuse itself from responsibility for the failure to authenticate electronic records due to errors or inadequacies in its systems where those systems are not acceptable. This formulation also imposes on banks that engage in processing transactions under the eUCP, the task of upgrading their systems to keep them current.
The aim was to align definitions in the eRules with those used in local law. However, many legal definitions differ among themselves in formulation if not meaning. As a result, the eRule definitions are modelled on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce, which is the most widely imitated in eCommerce legislation. In working with the eUCP, it is necessary to consider each applicable legal system with respect to the eUCP definitions.
Below are the key considerations for a data processing system:
Sub-article 1 (b) of eUCP version 2.0 requires that, for the rules to be applicable, the text of a documentary credit should expressly indicate that it is subject to the eUCP.
Whilst all MT700 fields must be considered for applicability when handling a transaction subject to the eUCP, the following should have an additional emphasis:
The documentary credit application form of most banks will incorporate a selection of the main types of documents that are presented under a documentary credit. For example, invoices, various forms of transport documents, insurance documents, packing lists, weight lists, etc. Where feasible, electronic alternatives should be considered.
Neither UCP 600 nor eUCP version 2.0 indicate which documents must be presented under a documentary credit or which documents are to be presented in certain circumstances. This is left to the applicant and beneficiary to determine. However, an issuing bank may insist on certain documents being presented from a local regulatory perspective or due to its own internal policy.
Field 46A - Main UCP/eUCP considerations
UCP 600 article 3 indicates that terms such as "first class", "well known", qualified", "independent", "official", "competent" or "local" should not be used to describe the issuer of a document. If a documentary requirement is so phrased, it will mean any issuer except the beneficiary is acceptable.
UCP 600 provides specific rules in respect of the content and signing requirements for commercial invoices (article 18), transport documents (articles 19-25) and insurance documents (article 28).
UCP 600 sub-article 14 (f) states that if a documentary credit does not indicate the issuer or data content of a document other than an invoice, transport or insurance document, the document will be accepted as presented provided that it fulfils its function and otherwise complies with sub-article 14 (d), i.e., there is no conflict of data between documents. It is in the interests of an applicant that each documentary requirement provides, at the very least, the data that should appear thereon.
When documents such as inspection or analysis certificates are to be presented, specific wording should be given as to the quality or standard to which the inspection or analysis is to be completed and determined. Terms such as "detailed" preceding the name of a document should be avoided, and the documentary credit should indicate the detail that is expected to be shown.
UCP 600 sub-article 28 (f) (ii) requires, unless the documentary credit states otherwise, that the amount of insurance coverage is to be at least 110% of the CIF or CIP value of the goods. It is good practice for the documentary credit to indicate the amount of insurance coverage that is required and not rely on the text in this sub-article.
SWIFT Solution for Digital Exchange of Trade Documents
SWIFT platforms (namely FileAct and MT 759) assist Banks and SWIFT connected Corporates in exchanging Trade documentation electronically, quickly, safely, and reliably.
It is recommended by participating banks that banks looking to adopt FileAct as a digital channel to promote the digitisation of documents under documentary credits, take notice of the eUCP and the associated ICC article by article analysis.