Commentary on eUCP Version 2.0 and eURC Version 1.0
The ICC Banking Commission released electronic supplements to the existing Uniform Rules for Collections (URC 522) and Uniform Customs and Practice for Documentary Credits (UCP 600) rules, which came into effect on 1 July 2019, and provide rules for banks operating in today's increasingly digital trade finance system.
The eRules (eUCP Version 2.0 & eURC Version 1.0) will be continually monitored and updated to reflect future technological developments and trends that emerge in trade finance. By embracing a paperless future, this safeguards the applicability of traditional trade solutions in a digital environment. ICC will ensure that the eRules remain relevant and applicable to banks and other trade finance institutions.
The guidance note provides an article by article analysis and in-depth explanation for each rule, as well as the preparation and drafting process.
Supplement to the Commentary on eUCP Version 2.0 and eURC Version 1.0 (eRules)
The focus of the eRules is concentrated upon the presentation of electronic records under the eUCP and the eURC, alone or in combination with paper documents, and not to issuance of an eUCP credit or an eURC collection instruction. With respect to the eUCP, this decision was based on the fact that documentary credits had, for many years, already been issued electronically. In addition, there was concern that any rules surrounding issuance could encumber present and evolving practices of electronic issuance, whilst additionally endangering the technological neutrality of the rules.
The principles on which the eRules have been based are the underlying principles in the UCP and URC and standard practice currently existing for eCommerce transactions. As such, most of these principles are reflected in the definitions contained in eUCP Article e3 and eURC Article e4.
Guidance paper on the impact of COVID-19 on trade finance transactions issued subject to ICC rules
As mentioned in a joint statement by ICC and the World Health Organization related to the COVID-19 situation worldwide: "as an immediate priority, businesses should be developing or updating, readying or implementing business continuity plans."
Accordingly, in April 2020, the ICC Banking Commission issued a guidance paper providing practical advice and highlighting best practices in the handling of trade finance transactions that are subject to ICC rules. It is expected that, as circumstances evolve, further guidance on trade finance transactions will need to be produced in reaction to new developments and market needs, and this will be in the form of a regularly updated FAQ section that will be added to the ICC website.
The scope of this guidance paper is strictly focused on the application of ICC rules and, in particular, the force majeure provisions within those rules.
Interpretative Paper on the correct interpretation of the first paragraph of UCP 600 article 35
On 29 May 2020, the ICC Banking Commission issued an interpretative paper that provided further clarity in respect of the "Guidance paper on the impact of COVID-19 on trade finance transactions subject to ICC rules".
For the avoidance of any doubt, the ICC Banking Commission confirms that, in its true interpretation, article 35 of UCP 600 should be read also to apply to the case where the nominated bank or the confirming bank is not able to transmit or to send letters or documents in paper form (collectively "Documents") in accordance with the requirements stated in the documentary credit because:
provided that, in both cases, the nominated bank or the confirming bank has first made reasonable efforts to (a) find a courier or postal service provider that would accept or collect and thereafter deliver the Documents and (b) obtain the consent of, or instructions from, the issuing bank approving delivery in that manner.
This Interpretative Paper applies generically to all situations involving the application of UCP 600, including to documentary credits that are outstanding at the time of its publication. It does not amend Article 35 of UCP 600, but merely states its correct interpretation.
Where operational problems arise or are anticipated, it is recommended that all banks involved in the documentary credit are encouraged to liaise without delay to seek to agree on a mutually acceptable solution.