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URDTT Version 1.0

eUCP Version 2.0

URBPO Version 1.0

Preliminary Considerations

Intended: 

(a) for a fully digital environment; 

(b) to be neutral with regard to technology and messaging standards; and 

(c) to extend into the corporate space, including commercial transactions and the growing community of non-bank providers of financial services 

Designed to be compatible with UNCITRAL Model Laws, including those on Electronic Commerce, Electronic Signatures and Electronic Transferable Records 

Mode of presentation (electronic records alone or in combination with paper documents) is outside the scope of the eUCP 

Where not defined or modified in the eUCP, definitions given in UCP 600 will continue to apply 

Banks should satisfy themselves that they can examine the required electronic records in a presentation made under an eUCP credit 

No comparative rule

Applicable instrument

Digital Trade Transaction (DTT) - a process whereby Electronic Records are used to evidence the underlying sale and purchase of goods or services, and the incurring of a Payment Obligation, as agreed between the Principal Parties

Documentary Credit - any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation

Bank Payment Obligation (BPO) - an irrevocable and independent undertaking of an Obligor Bank to pay or incur a deferred payment obligation and pay at maturity a specified amount to a Recipient Bank

Scope

Provide a framework that applies to each Party or Person that participates in a DTT

Intended for a fully digital environment whereby Electronic Records are used to evidence the underlying sale and purchase of goods or services, and the incurring of a Payment Obligation, as agreed between the Principal Parties

Electronic records alone or in combination with paper documents 

Limited to bank- to-bank undertakings in support of collaboration between participating financial institutions leaving banks to compete in terms of their corporate service agreements - the rules provide a framework for a BPO - a BPO relates to an underlying trade transaction between a buyer and seller

Application

When the terms and conditions of a Digital Trade Transaction specify that it is subject to the URDTT

Documentary credit issued subject to UCP 600 & eUCP Version 2.0

When the Payment Obligation Segment within an Established Baseline expressly states that it is subject to the URBPO or when each Involved Bank agrees in a separate agreement that a BPO is subject to the URBPO

Version number

Version 1.0 - if the terms and conditions of a DTT do not indicate the applicable version of the URDTT, it will be subject to the latest version in effect on the date the DTT is first agreed by the Principal Parties

Version 2.0 - an eUCP credit must indicate the applicable version of the eUCP. If not indicated, it is subject to the latest version in effect on the date the eUCP credit is issued or, if made subject to eUCP by an amendment accepted by the beneficiary, on the date of that amendment

Version 1.0

Relationship

URDTT are stand-alone

In event of conflict, eUCP prevails over UCP 600

URBPO are stand-alone

Autonomy

A Financial Services Provider does not deal with the goods or services to which an Electronic Record submitted under a DTT refers

Banks do not deal with the goods, services or performance to which an electronic record or paper document may relate 

An Involved Bank deals with data and not with documents, or the goods, services or performance to which the data or documents may relate

Modification or exclusion

Binding on each Party or Person unless and to the extent expressly modified or excluded by the terms and conditions of that DTT

Binding on all parties thereto unless expressly modified or excluded by the credit

Binding on each Involved Bank unless expressly modified or excluded by the Established Baseline or by the separate agreement

Definitions

Definitions, where applicable, are consistent with those used in the ICC eRules (eUCP & eURC) and aligned with those used in local law - however, many legal definitions differ among themselves in formulation if not meaning

As a result, URDTT definitions, to the extent possible, are modelled on those stated in the UNCITRAL Model Law on Electronic Commerce (MLEC) and the UNCITRAL Model Law on Electronic Transferable Records (MLETR)

Where terms are also used in UCP 600, definitions are updated for application to an electronic record

The URBPO includes a list of defined terms for the roles of the various banks and other key terms used within the scope of the rules 

In order to differentiate the URBPO from other ICC rules, terminology that is often associated with existing rules, such as issuing bank, advising bank, confirming bank, etc. was not used and, instead, a new terminology was introduced 

Definition - Addressee

(Also refer ‘Submitter / Addressee - responsibilities' below)

Party or Person that receives or is granted access to an Electronic 

Record by the Submitter

Presentation means either the delivery of documents under a credit to the issuing bank

or nominated bank or the documents so delivered

Refer to article 4 ‘Message Definitions'

Definition - Beneficiary

The Seller or any other Party or Person that has acquired the rights and benefits of a Payment Obligation, in whole or in part, as a transferee

The party in whose favour a credit is issued

The Recipient Bank, which is always the Seller's Bank

Definition - Business Day

A day on which a Party or Person is regularly open at the place at which an act subject to these rules is to be performed by such Party or Person

References banking hours and calendar days

References Banking Day which is a day on which an Involved Bank is regularly open at the place at which an act subject to the URBPO is to be performed by such Involved Bank

Definition - Buyer

A purchaser of goods or services

Applicant on whose request the credit is issued

References the Buyer's Bank rather than the buyer

Definition - Data corruption

(Also refer ‘Data corruption' below)

Means any distortion or loss of data that renders an Electronic Record, as submitted, unreadable in whole or in part, as determined by the Addressee - if an Electronic Record appears to have been affected by Data Corruption, it may be re-submitted

Provides a method by which corrupted data may be re-presented; based on the assumption that all electronic records are replaceable 

"Data Mismatch" means a comparison of all required Data Sets with an Established Baseline resulting in one or more mismatches as specified in a Data Set Match Report

Definition - Data Processing System

(Also refer ‘Data processing system' below)

A computerised or an electronic or any other automated means used to process and manipulate data, initiate an action or respond to data messages in whole or in part

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 centralised data matching and workflow application, whether or not proprietary to an Involved Bank, which provides the service of processing messages received from Involved Banks

Definition - Electronic Record

Data created, generated, sent, communicated, received or stored by electronic means - likely that common usage will refer to ‘electronic documents'

Data created, generated, sent, communicated, received or stored by electronic means

Refers to a ‘Data Set' - ‘commercial, transport, insurance, certificate or other certificate' 

Definition - Electronic signature (Also refer ‘Electronic signature' below)

A data process attached to or logically associated with an Electronic Record and executed or adopted by a Party or Person in order to identify that Party or Person and to indicate authentication of the Electronic Record by that Party or Person

A data process attached to an electronic record with the intent of identifying the signer and authenticating the record 

The URBPO require use of the appropriate ISO 20022 Trade Services Management (TSMT) messages registered with the International Standards Organisation (ISO)

Definition - Financial Services Provider

(Also refer ‘Roles of a Financial Services Provider' below)

A financial institution or a Person, other than a Principal Party

Represented by a bank

Represented by a bank

Definition - ‘Confirmation' / Financial Services Provider Payment Undertaking (FSPPU)

(Also refer ‘FSPPU' below)

Financial Services Provider Payment Undertaking (FSPPU) - an irrevocable undertaking of a Financial Services Provider to effect payment at sight or on a fixed or determinable future date to the Beneficiary of a Payment Obligation

It is possible for an FSPPU to be added to a conditional Payment Obligation

Both a conditional Payment Obligation and any associated FSPPU are subject to the conditionality of the DTT, but independent of the commercial contract

However, an unconditional Payment Obligation and any associated FSPPU are separate and independent of the commercial contract and the DTT

UCP 600 definition applies - a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation 

An Obligor Bank must pay or incur a deferred payment obligation and pay at maturity a specified amount to a Recipient Bank in accordance with the payment terms specified in the Payment Obligation Segment of an Established Baseline

Definition - Obligor

A Buyer that incurs a Payment Obligation or any Financial Services Provider that adds its FSPPU to a Payment Obligation

Confirming bank that adds its confirmation to a credit upon the issuing bank's authorisation or request

Obligor Bank is the bank that issues a BPO

Definition - Party

A Principal Party or a Financial Services Provider 

No comparative rule

No comparative rule

Definition - Payment Obligation 

(Also refer ‘Payment Obligation' below)

An irrevocable obligation, incurred by a Buyer, that constitutes a definite undertaking to effect payment at sight, or on a fixed or determinable future date, to the Beneficiary

UCP 600 definitions of ‘Credit' and ‘Honour'

‘Bank Payment Obligation' or ‘BPO' means an irrevocable and independent undertaking of an Obligor Bank to pay or incur a deferred payment obligation and pay at maturity a specified amount to a Recipient Bank following Submission of all Data Sets

Definition - Person

Any type of person or entity, whether physical, corporate or other legal person or entity

Not defined and only mentioned in relation to identification of a person in respect of an electronic record in order to indicate authentication

Not defined and only mentioned in relation to the disclaimer on effectiveness of data

Definition - Principal Party

(Also refer ‘Roles of a Principal Party' below)

A Buyer or a Seller

No comparative rule

No comparative rule

Definition - Received

(Also refer ‘Format' below)

The process by which an Electronic Record enters the Data Processing System of an Addressee in a format capable of being accepted by that Data Processing System and being examined by that Addressee for compliance with the terms and conditions of a DTT

Any acknowledgement of receipt generated by a Data Processing System does not imply that an Electronic Record has been viewed, examined or determined to be compliant or non-compliant by an Addressee

When an electronic record enters a data processing system, at the place for presentation indicated in the eUCP credit, in a format capable of being accepted by that system 

Any acknowledgment of receipt generated by that system does not imply that the electronic record has been viewed, examined, accepted or refused under an eUCP credit 

Any centralised data matching and workflow application, whether or not proprietary to an Involved Bank, which provides the service of processing messages received from Involved Banks

Definition - Seller

A seller of goods or services

References the beneficiary as the party in whose favour a credit is issued

References the Seller's Bank rather than the seller

Definition - Submitter

(Also refer ‘Submitter / Addressee - responsibilities' below)

A Party or Person that sends, or makes available, an Electronic Record 

to an Addressee 

Presenter means a beneficiary, bank or other party that makes a presentation

"Submitting Bank" means an Involved Bank whose only role is to submit one or more Data Sets required by an Established Baseline

Definition - Transfer

The transferring of the rights and benefits of a Payment Obligation (in whole or in part) and, where added, an FSPPU (in whole or in part), by the Beneficiary to one or more transferees

UCP 600 article 38 (Transferable Credits) - a credit that has been made available by the

transferring bank to a second beneficiary.

Article 39 (Assignment of Proceeds)

Transfer requires an amendment to the Established Baseline

Definition - Universal Time Coordinated (UTC) 

The international time scale defined by the International Telecommunications Union used by electronic computing and data management equipment, and the technical equivalent of GMT, Greenwich Mean Time - the time scale is used in respect of non-compliance and data corruption

In view of the fact that practice is still evolving in this field, it was recommended that the UTC concept would not, at this stage, be included within the eUCP rules

Should it be deemed necessary, the concept could be included in a future version of eUCP 

The international time scale defined by the International Telecommunications Union used by electronic computing and data management equipment, and the technical equivalent of GMT, Greenwich Mean Time, and is the applicable time scale for a BPO

Interpretations

• singular/ plural
• or / and
• include / includes / including

• singular/ plural
• irrevocability
• signed
• legalisation / certification
• branches
• general terminology
• from / after

• singular/ plural
• branches

Roles of a Principal Party

Seller

• delivery of goods or the supply of services 
• providing information enabling the above 
• providing any additional information as may be required 

Buyer

• taking delivery of goods or receiving services 
• incurring an unconditional Payment Obligation and effecting payment 

No comparative rule

No comparative rule

Roles of a Financial Services Provider

• providing finance or risk mitigation 
• effecting payment
• adding an FSPPU and, when doing so, bound by same version of URDTT as applicable to Principal Parties
• as Addressee of an Electronic Record and acts subsequently as a Submitter of the same Electronic Record, assumes liability and responsibility for that Electronic Record 

Various roles in UCP 600 including advising bank, confirming bank, issuing bank, nominated bank, claiming bank, reimbursing bank

Various roles including Buyer's Bank, Involved Bank, Obligor Bank, Recipient Bank, Seller's Bank, Submitting Bank

Submitter / Addressee - responsibilities

(Also refer disclaimers on effectiveness and liability below)

Submitter

• ensure authenticity, accuracy and completeness of an Electronic Record 
• no liability or responsibility for the consequences arising out of the unavailability of a Data Processing System other than its own 

Addressee

• no responsibility for accuracy and completeness of an Electronic Record except when subsequently acting as a Submitter for that Electronic Record 
• no liability or responsibility for the consequences arising out of the unavailability of a Data Processing System other than its own 

Refer to UCP 600 article 7 (Issuing Bank Undertaking), article 8 (Confirming Bank Undertaking), article 9 (Advising of Credits and Amendments), article 13 (Bank-to-Bank Reimbursement Arrangements)

Refer to article 4 ‘Message Definitions'

Document

URDTT solely covers electronic documents (‘electronic records').

All data relating to a Digital Trade Transaction must be associated with, and be submitted by, a Submitter to an Addressee, in the form of an Electronic Record 

Adds the term ‘electronic record' to the meaning of a document in UCP 600

The BPO works in an environment that is totally automated, relying on the comparison and matching of structured messages as opposed to the physical examination of paper or electronic documents 

Originals & copies

Any requirement for submission of one or more originals or copies of an Electronic Record is satisfied by the submission of one Electronic Record

Any requirement for an original is satisfied by the presentation of one electronic record: in the event of a requirement for multiple copies, the condition will be fulfilled by presentation of one electronic record

The URBPO require use of the appropriate ISO 20022 Trade Services Management (TSMT) messages registered with the International Standards Organisation (ISO) - the concept of originality does not apply

Presentation of only paper documents

This is a ‘practice' issue which cannot be mandated by rules that solely cater for a fully digital environment.  It is expected that, in the event part of a transaction ‘converts' to paper, then the involved parties would reach a separate agreement on how to proceed

UCP 600 applies

URBPO only provides a framework for the electronic presentation of data that has been extracted from the underlying documents 

Complying presentation

A DTT must specify the terms and conditions by which compliance of an Electronic Record will be determined

A presentation that is in accordance with the terms

and conditions of the credit, the applicable provisions of UCP 600 and international

standard banking practice

An Obligor Bank must pay or incur a deferred payment obligation and pay at maturity a specified amount to a Recipient Bank in accordance with the payment terms specified in the Payment Obligation Segment of an Established Baseline following the Submission of all Data Sets required by an Established Baseline on or before the expiry date of the BPO specified in the Established Baseline 

and following a data comparison 

Non-compliance

Submitter must be informed by the Addressee of each reason for non-compliance of that Electronic Record in a single notice

UCP 600 article 16 (Discrepant Documents, Waiver and Notice) - when a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter

‘Data Mismatch' means a comparison of all required Data Sets with an Established Baseline resulting in one or more mismatches as specified in a Data Set Match Report

Period for examination

If an Addressee does not inform the Submitter by 23.59.59 UTC on the second Business Day following the date an Electronic Record is Received that it is non-compliant, that Electronic Record shall be considered as having been accepted by that Addressee

Maximum of five banking days following the day of presentation to determine if a presentation is complying 

An Established Baseline must state an expiry date for the Submission of Data Sets

Document examination

Capable of being examined for compliance with the terms and conditions of a DTT

Electronic records are examined only for the data received and not the reality that such data represents 

The presenter is responsible for providing the nominated bank, confirming bank (if any) or the issuing bank, with a notice of completeness

The URBPO require use of the appropriate ISO 20022 Trade Services Management (TSMT) messages registered with the International Standards Organisation (ISO)

Non-required documents

An Electronic Record submitted but not required by the terms and conditions of a DTT may be disregarded and disposed of by an Addressee in any manner deemed appropriate without any responsibility

A document presented but not required by the credit will be disregarded and may

be returned to the presenter

Use of any other message type than ISO 20022 Trade Services Management (TSMT) messages means that the transaction is out of scope of URBPO - only those TSMT messages that are applicable to a BPO are referred to in the URBPO

Data corruption

In event of data corruption, the Addressee may inform the Submitter and may request that it be re-submitted

If an Addressee does not inform the Submitter by 23.59.59 UTC on the second Business Day following the date an Electronic Record is Received that it appears to have been affected by Data Corruption, that Electronic Record shall be considered as being in compliance with the terms and conditions of the Digital Trade Transaction 

If not resubmitted by Submitter, the Addressee may treat the Electronic Record as not submitted and may dispose of it in any manner deemed by it to be appropriate without any responsibility  

In event of data corruption, the receiving bank may inform the presenter and may request that it be re-submitted

In such circumstances, the time for examination is suspended and resumes when the electronic record is re-presented

If the nominated bank is not a confirming bank, it must provide any confirming bank and the issuing bank with notice of the request for the electronic record to be re-presented and inform it of the suspension

However, if the same electronic record is not re-presented within 30 calendar days, or on or before the expiry date and/or last day for presentation, whichever occurs first, the bank may treat the electronic record as not presented. 

No comparative rule

Electronic signature

Where an Electronic Signature of a Party or Person is used, it is to be in compliance with any conditions specific to that Electronic Signature in the DTT 

Sign and the like shall include an electronic signature 

No comparative rule

Data processing system

Any acknowledgement of receipt generated by a Data Processing System does not imply that an Electronic Record has been viewed, examined or determined to be compliant or non-compliant by an Addressee 

No separate article

No separate article

Payment Obligation

Incurred by a Buyer upon compliance with the terms and conditions of the DTT by the Seller 

When stated to be conditional, the obligation of the Buyer is to pay upon compliance with the terms and conditions of the DTT by the Seller and is then automatically amended to become unconditional and independent 

Sub-article 12 (c) outlines the required data elements 

May only be amended or cancelled by a Principal Party with the agreement of the other Principal Party, any Financial Services Provider that has added its FSP Payment Undertaking, and any other Beneficiary 

UCP 600 definitions of ‘Credit' and ‘Honour'

‘Bank Payment Obligation' or ‘BPO' means an irrevocable and independent undertaking of an Obligor Bank to pay or incur a deferred payment obligation and pay at maturity a specified amount to a Recipient Bank following Submission of all Data Sets

FSPPU

May be added, in whole or in part, at any time, by a Financial Services Provider

Once added, constitutes an undertaking to effect payment at sight or on a fixed or determinable future date to the Beneficiary of that Payment Obligation 

A Financial Services Provider is not obligated to add an FSPPU but, if not prepared to do so, must inform the requesting Principal Party or other Beneficiary without delay 

An unconditional FSPPU is separate from, and independent of, the DTT

More than one FSPPU may exist and, if so, each Financial Services Provider will be severally and individually liable to the extent of its FSPPU

May only be amended or cancelled with the agreement of each Principal Party and any other Beneficiary 

UCP 600 definition applies - a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation 

An Obligor Bank must pay or incur a deferred payment obligation and pay at maturity a specified amount to a Recipient Bank in accordance with the payment terms specified in the Payment Obligation Segment of an Established Baseline

Amendments

An amendment to the terms and conditions of a Digital Trade Transaction requires the agreement of each Principal Party, each Financial Services Provider that has issued an FSPPU and any other Beneficiary

UCP 600 article 10 (Amendments) - a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary

An amendment to an Established Baseline that incorporates a BPO or an amendment to incorporate a BPO in an Established Baseline requires the agreement of each Involved Bank

Transfer

A Payment Obligation and an FSPPU may specify in its terms and conditions that it is transferable 

Before agreeing to transfer an eUCP credit, banks should satisfy themselves that they can examine the required electronic records in a presentation made thereunder

Refer also UCP 600 article 38 Transferable Credits

Refer to article 16 Assignment of Proceeds

Force Majeure

In addition to eUCP coverage, covers ‘plague, epidemic, natural disaster or extreme natural event', and emphasises that force majeure applies to data processing systems ‘other than its own'

Extended to cover the inability of a bank to access a data processing system, or a failure of equipment, software or communications network

No liability or responsibility for the consequences arising out of the interruption of an Involved Bank's business, including its inability to access a Transaction Matching Application (TMA), or a failure of equipment, software or communications network, caused by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or any other causes, including failure of equipment, software or communications networks, beyond its control

Applicable Law

The applicable law shall be as specified in the terms and conditions of the DTT

Not expressly stated in either UCP 600 or eUCP Version 2.0 - there is no conflict between most eCommerce laws and the eUCP 

The governing law of a BPO will be that of the location of the branch or office of the Obligor Bank specified in the Established Baseline

Format

An Electronic Record must be in a format capable of being accepted by a Data Processing System and being examined by an Addressee for compliance with the terms and conditions of a Digital Trade Transaction

The protocol by which data is organised, the version of that format, or the shorthand name by which that protocol is recognised and described - an eUCP credit must indicate the format of each electronic record

The Bank Payment Obligation is based on a standard ISO 20022 messaging format that facilitates the technological integration of trade, payment and cash management data - ISO 20022 TSMT standards specify the format for commercial, transport, insurance and certificate Data Sets to be submitted by an Involved Bank in respect of an underlying trade transaction 

Authentication

An Electronic Record executed or adopted by a Person in order to identify that Person and to indicate that Person's authentication of the Electronic Record

Identifying the person sending a message and the source of the message, and associating the person authenticating with the content of the message authenticated 

ISO 20022 message types as published under the trade services management business area by the International Standards Organisation (ISO)

Disclaimer on effectiveness

Other than in respect of the submission of an Electronic Record, a Financial Services Provider assumes no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any Electronic Record, or for the general or particular conditions stipulated in an Electronic Record; nor does it assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance represented by any Electronic Record, or for the good faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee or the insurer of the goods or any other Person

A bank assumes no liability or responsibility for the form, sufficiency, accuracy,

genuineness, falsification or legal effect of any document, or for the general or particular

conditions stipulated in a document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for the good faith or acts or omissions, solvency, performance or

standing of the consignor, the carrier, the forwarder, the consignee or the insurer of the goods or any other person

An Involved Bank does not assume any liability or responsibility for: (i) the source, accuracy, genuineness, falsification or legal effect of any data received from the buyer or seller; (ii) the documents, or the description, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance, to which such data relates; or (iii) the good faith or acts or omissions, solvency, performance or standing of the consignor, carrier, forwarder, consignee or insurer of the goods or any other person referred to in any data

Disclaimer of liability

A Submitter has responsibility to ensure the authenticity, accuracy and completeness of an Electronic Record as set out in the terms and conditions of such Electronic Record, the DTT to which it refers, or as a result of applicable law or regulations. 

An Addressee has no responsibility for the accuracy and completeness of an Electronic Record, as Received from a Submitter, except when subsequently acting as a Submitter for that Electronic Record

Disclaims banks' liability for any divergence from the realities represented in authenticated electronic records -by satisfying itself as to the apparent authenticity of an electronic record, a bank assumes no liability for the identity of the sender, source of the information, or its complete and unaltered character other than that which is apparent in the electronic record received by the use of a data processing system for the receipt, authentication, and identification of electronic records

An Involved Bank assumes no liability or responsibility for the consequences arising out of the unavailability of a (TMA) for any reason whatsoever

Dispute resolution

Not expressly stated in URDTT - the ICC has developed rules for dispute resolution (DOCDEX)

DOCDEX will need to be expanded to include transactions subject to URDTT

Not expressly stated in either UCP 600 or eUCP Version 2.0 - the ICC has developed rules for dispute resolution (DOCDEX) 

Not expressly stated in URBPO - the ICC has developed rules for dispute resolution (DOCDEX)

SOURCE: www.tradefinance.training