An article-by-article analysis of eUCP variant 2.0 and eURC version 1.0 to explain for the new guidelines.
|Definitions||UCP 600||eUCP Version 2.0|
|Definitions||Where not defined or amended in the eUCP, definitions given in UCP 600 will continue to apply||Where terms are also used in UCP 600, definitions are updated for application to an electronic record|
|Scope||Paper documents (and electronic records if strictly defined, although UCP 600 only provides limited protection)||Electronic records alone or in combination with paper documents|
|Application||UCP 600||UCP 600 & eUCP Version 2.0|
|Relationship||UCP 600||In event of conflict, eUCP prevails|
|Presentation of only paper documents||UCP 600||UCP 600|
|Documents examined on their face||Review of data within a document in order to determine that a presentation complies with international standard banking practice and the principles contained in UCP||Electronic records are examined only for the data received and not the reality that such data represents|
|Document||The term suggests format in a paper medium: unless specifically allowed under the terms and conditions of a UCP 600 credit, it is expected that all presentations under such a credit be in a paper format||Adds the term ‘electronic record’ to the meaning||Place for presentation||The place where the documentary credit is available||Extends the phrase to include an electronic address||Data Processing System||Not necessarily used||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||Electronic signature||Not specifically defined: article 3 highlights that ‘a document may be signed by handwriting, facsimile signature, perforated signature, stamp, symbol, or any other mechanical or electronic method of authentication’||Data attached to an electronic record with the intent of identifying the signer and authenticating the record||Format||Unless specifically stated otherwise, expected to be paper||The protocol by which data is organised, the version of that format, or the shorthand name by which that protocol is recognised and described||Paper document||Unless otherwise stipulated, assumption is that all ‘documents’ are in a paper medium: however, as is often the case with UCP 600, this fundamental assumption is not stated expressly and, instead, the term ‘document’ is used||Refers to a document in a paper medium, the type of document which is expected to be presented under UCP 600||Authentication||The process by which the validity of the representations and the paper documents containing them are ascertained: under UCP 600, the level of authentication of paper documents is facial||Identifying the person sending a message and the source of the message, and associating the person authenticating with the content of the message authenticated||Goods, Services or Performance||Banks deal with documents and not with goods, services or performance to which the documents may relate||Also addresses electronic records||Notice of completeness||Not applicable||Presentation does not take place until the presenter provides a notice of completeness to the nominated bank, confirming bank, if any, or to the issuing bank||Time for examination||Once presentation is made to an issuing or confirming bank, the time for examination commences||Electronic records may be presented separately and, even if paper documents are presented in one lot, they must be coordinated with the electronic records: the time for the examination of documents does not commence until the notice of completeness is received||Period for examination||Maximum of five banking days following the day of presentation to determine if a presentation is complying||Remains applicable||Approach by the issuing bank to the applicant in order to seek a waiver of discrepancies||UCP 600 sub-article 16 (b) (Discrepant Documents, Waiver and Notice)||Remains applicable||Notice process for discrepant documents||UCP 600 sub-article 16 (b) (Discrepant Documents, Waiver and Notice)||Remains applicable||Disposition of documents in event no instructions received subsequent to notice of refusal||Paper documents can be held or returned||Paper documents can be held or returned||Originals and copies||UCP 600 sub-articles 17 (b) and (c)||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||Date of issuance||Requirement for a document to be dated is with respect to the identification of certain dates on transport and insurance documents. In addition, there are expectations that other documents, such as statements or certifications, must contain a date. ISBP 745 goes into more detail as to documentary requirements under UCP 600. Credits may also contain a specific requirement that a document be dated||Effectively dates electronic records, with the result that all such records must be dated: if there is to be any other way of determining the date of issuance then this will be for the eUCP credit itself to determine||Date of shipment or dispatch or taking in charge or a date the goods were accepted for carriage||Contains elaborate rules for determining the date of shipment or dispatch that are individualised according to the type of transport document involved||Date of shipment is the date in the electronic transport record indicating shipment or dispatch or taking in charge or the goods were accepted for carriage. If there is no date indicating shipment or dispatch or taking in charge or goods accepted for carriage, the date of shipment or dispatch is the date of issuance of the electronic transport record unless there is a notation evidencing shipment or dispatch or taking in charge or goods accepted for carriage||Data corruption||No rule for paper documents that are lost or rendered unreadable by a bank after they have been received; most banks have procedures in place that minimise the consequences of such loss and there is no perceived need for such a rule. These procedures involve refusing payment based on discrepancies in the documents that are presented, requesting a substitute document, or indemnifying the applicant for any harm that may result from the lost document||Provides a method by which corrupted data may be re- presented; based on the assumption that all electronic records are replaceable||Disclaimers||Contains several disclaimers that are also relevant to an eUCP credit||Additionally, disclaims banks’ liability for any divergence from the realities represented in authenticated electronic records||Force Majeure||States the force majeure events for which a bank assumes no liability or responsibility||Extended to cover the inability of a bank to access a data processing system, or a failure of equipment, software or communications network|
When applied to UCP 600, ‘presentation’ means either the delivery of documents under a credit to the issuing bank or nominated bank or the documents so delivered. If the presentation occurs on or prior to the expiry date of the credit, it is timely. If not, neither the issuing bank nor any confirmer banks have any obligation under the credit. The presentation may also impact other deadlines such as the requirement of UCP 600 sub-article 14 (c) (Standard for Examination of Documents) for transport documents to be presented within 21 calendar days after the date of shipment.
Although UCP 600 articles 14 (Standard for Examination of Documents) and 16 (Discrepant Documents, Waiver and Notice) do not expressly require that documents be presented in one lot, banks commonly expect the presentation to be in one single mailing.
Place of presentation.
The eUCP repeats the requirement of UCP 600 sub-article 6 (d) (Availability, Expiry Date and Place for Presentation) that credit must state the place for presentation. The eUCP also distinguishes between the place where electronic records and paper documents are to be presented. Under UCP 600, it is implied that a paper document would be presented to a physical address.
The place for the presentation of an electronic record would, in general, be an electronic address. However, there are situations where an electronic record could be sent to a physical address. For example, the data could be saved on a portable storage medium and mailed. The data is in the form of an electronic record but it is presented to a physical address.
No indication of a place for presentation
In the rare event that a credit fails to indicate a place for presentation, neither UCP 600 nor eUCP indicate the subsequent consequences. In the paper world, the presenter would be entitled to make a presentation to the address of the issuing bank stated in the credit, or to any place at which the issuing bank or any confirming bank does business. It is normal practice that, under UCP 600, a physical location will be stated within the credit. The eUCP defines ‘place for presentation’ as
an electronic address of a data processing system. As such, in order to ensure compliance with regulatory and sanctions issues, it is essential that an eUCP credit also indicate a physical location. Mailing a portable storage medium in the proper format to a physical address may also suffice.
Closure of place for presentation.
The eUCP sub-article does not address the situation where the electronic address has ceased
to be functional even though the bank is able to receive electronic messages. In such a case, the provisions of eUCP sub-article e6 (e) regarding closure for electronic business would apply.
Direct presentation to issuing bank.
The eUCP does not address the question of whether or not the presenter may present an electronic record and paper documents directly to the issuer or confirmer even if a different place for presentation is given in the eUCP credit. Absent any express provision, there is no basis for changing the practice under UCP 600 permitting the presenter the option of making presentation directly to any bank that is obligated under the credit. As a practical matter, however, the presenter may not have an electronic address to which presentation may be made unless it is stated in the credit.
Non-receipt of presentation.
As is the case with paper documents under UCP 600, the risk of non-receipt ultimately remains with the beneficiary. The issuing bank or any confirming banks obligation is predicated on the timely presentation of complying documents. It would be good practice for beneficiaries to monitor presentations of electronic records, particularly when utilising another party for full or partial presentation of the electronic records.
Separate presentation of electronic records.
The eUCP expressly provides that electronic records may be presented separately, reflecting
the realities of electronic transmission. Even if the same sender sends electronic records at approximately the same time,
it does not follow that they will be received simultaneously unless they are combined into one file. Moreover, the issuing bank and applicant may prefer certain electronic records to be sent directly by the third party that creates them. As a result, a transmission receipt of documents under an eUCP credit will commonly be fragmentary. Electronic records will also be presented separately from any paper documents required or permitted by the eUCP credit.
Paper documents under an eUCP credit.
Although the eUCP allows for separate presentation of electronic records, this does not apply
to presentation of paper documents under an eUCP credit. Under such circumstances, UCP 600 would apply to the paper component. When paper documents are to be presented in one lot, the issuing bank would probably expect the same transmission of paper documents under an eUCP credit as under a UCP credit. However, it should be borne in mind that
there is less reason to insist on transmission of paper documents in one lot under the eUCP, owing to the fact that the time for examination will not commence until the notice of completeness has been received. An issuing bank that does not wish to receive separate paper presentations under an eUCP credit should consider specifying in the eUCP credit that the presentation of any paper documents must be in one lot.
UCP 600 Article 33 (Hours of Presentation) provides that a bank ‘has no obligation to accept a presentation outside of its banking hours’. This provision is understood to mean that a presentation received after the hours in which the relevant department is open is received the next banking day unless the bank elects to treat it otherwise.
Although electronic records can be received 24 hours a day, seven days a week, this rule still remains in force. As a practical matter, only the notice of completeness will be affected. While the presenter is obligated to make a presentation before the close of business on the expiry date, an issuer would be well advised to state the time for the close of business (e.g. “Before 1600 hours GMT on the expiry date”) in the eUCP credit so as to avoid any misunderstanding due to differing expectations.
Document medium not stated.
When an eUCP credit states the name of a document without stating whether it should be in
a paper or an electronic medium (or format), and requires at least one other electronic record, giving no other indication that other required documents are to be in a paper medium, the eUCP provides no express rule but presumes that, were an electronic record required, it would be stated. This presumption is based on the common UCP 600 practice of specifying an electronic record where one is required and simply indicating the name of the document where a traditional paper document is expected, assuming that a document will be in a paper medium unless otherwise stated. Therefore, if an eUCP credit indicates that specific documents are to be presented as electronic records but is silent about other documents, those documents must be presented in a paper medium. This assumption that paper is a default medium in an eUCP credit is, however, rebuttable where there is ambiguity. For example, if the eUCP credit specifies that several documents are to be paper documents and several other documents are to be electronic records, but does not provide any actual indication as to the medium of the document at issue, that document could be presented either as a paper document or an electronic record.
Notice of Completeness.
Many banks are not prepared to monitor the receipt of paper documents presented separately under UCP 600 credits because of the costs and risks involved. The processing necessary to make eUCP credits economically viable makes such intensive monitoring of separate documents even less feasible. To solve this problem in the eUCP, the burden of determining whether presentation is completed is shifted to the presenter and, by default, ultimately to the beneficiary. It states that the presentation has not taken place until the presenter provides a notice of completeness. When the notice of completeness is received, the reasonable time within which to examine documents begins to run. Strictly speaking, it is incorrect to say that the presenter is ‘required’ to present a notice of completeness under the eUCP. It is no more ‘required’ to do so than it is required to present any document or record. However, its entitlement to honour is conditioned on presentation of the notice.
The eUCP states that the notice of completeness must signify that the presentation is complete and ‘identify the eUCP credit to which it relates’. It allows the notice of completeness to be provided either by electronic record or paper document unless the credit otherwise provides. Even if the credit requires that the notice of completeness be given as an electronic record, the rules provide that it may be presented as a paper document in the event that the bank to which the presentation is to be made is unable to receive an electronic presentation and the only remaining item to be presented is the notice. Although not mandated by the eUCP, it would be good practice for a presenter to expressly label any such document as a notice of completeness, therein stating that the specified presentation under a referenced credit is now complete. In addition, while it is not necessary for an eUCP credit to expressly include a requirement for a notice of completeness, it would constitute good practice if issuing banks stated within the credit that a notice of completeness must be given when the presentation is complete and that examination will not begin until that point. In accordance with eUCP, the lack of a notice of completeness deems that a presentation has not been made.
Non-requirement for notice of completeness.
As evidenced in the eUCP, it is implied that the requirement for a notice of completeness only applies to the presentation
by a presenter to the nominated bank, confirming bank, if any, or to the issuing bank. It is the responsibility of the presenter,
and ultimately the beneficiary, to ensure a complete presentation and to evidence such completeness by presenting the required notice. Any subsequent presentation by a nominated bank to a confirming or issuing bank is automatically considered to be complete and does not require a notice of completeness.
Identification of the credit.
The eUCP requires that each separate presentation identify the eUCP credit under which it is presented. Even though it imposes
a requirement that is not contained in the terms of the credit and would not normally be present in the document itself, this provision is necessary in order to avoid any potential confusion. It should be noted that the eUCP does not require each paper document to identify the credit under which it is presented, only that a presentation do so. As a result, in the event of several paper documents being presented in one lot, it would be acceptable if the cover letter indicated the credit under which the documents are presented. Similarly, if electronic records are batched together and sent in an electronic envelope, the credit may be identified in the message envelope. It should also be noted that the eUCP does not require identification of the credit in any particular manner, such as by its number. Such a shorthand means of identification would naturally be the easiest means of identifying the credit. It could also, however, be identified by other means. For example, giving the confirmation number and the name of the issuer and the amount and date of the credit may enable identification even without the credit number.
The crux is whether or not the bank would be able to identify the credit based upon the information provided in the normal course of its operations. When a bank cannot link an electronic record to the credit to which it relates without further information from the presenter, the eUCP provides that it ‘may be treated as not received’. Although the bank is not required by the eUCP under such circumstances to ask the presenter to identify the credit, it is very likely to do so, and would constitute good practice. Such a query must solely be for information purposes and does not constitute an attempted notice of refusal for purposes of UCP 600 sub-article 16 (d) (Discrepant Documents, Waiver, and Notice).
When a bank to which presentation of one or more electronic records is to be made is open for business but is unable to receive an electronic presentation, the eUCP provides that certain deadlines ‘shall be extended to the next banking day on which such bank is able to receive an electronic record’. To lessen the possibility of such electronic closure, banks should have backup systems in place and may wish to indicate alternative electronic addresses. It should be noted that the eUCP electronic closure rule does not apply to situations in which the bank to which the presentation is to be made is physically closed for business nor does it apply to the presentation of paper documents. In such situations, the rules of UCP 600 apply. If the place for presentation is closed in the ordinary course of business and not due to a force majeure event, UCP 600 article 29 (Extension of Expiry Date or Last Day for Presentation) would apply and the expiry date
and the last date after the date of shipment will be extended to the first following banking day. However, if the place for presentation is closed due to a force majeure event, as indicated in UCP 600 article 36 (Force Majeure), there will be no extension.
Under UCP 600, this risk is borne by the beneficiary. The eUCP rules regarding extension would not apply to the presentation of paper documents under an eUCP credit even if the electronic address for the presentation is unable to receive electronic records. As a result, the inability of the bank to receive an electronic record on a deadline will not excuse the presentation of a paper document if the place for the presentation of the paper document is open for business. If it is not, an excuse must be found in UCP 600 and not in the eUCP. On the other hand, even if the bank is closed in the ordinary course of business or due to a force majeure event, its electronic place of presentation may be able to receive presentations. In such a case, the presentation would be timely.
Covering schedule statement.
In line with the principles of UCP 600 sub-article 29 (b) (Extension of Expiry Date or Last Day for Presentation), the eUCP provides that, in the event of an extension under sub-article e6 (e) (i), the nominated bank must provide the issuing bank or confirming bank, if any, with a statement on its covering schedule that the presentation of electronic records was made within the time limits extended in accordance with that sub-article.
Remaining electronic record notice of completion.
As stated in eUCP, in a situation where the only electronic record remaining to be presented is the notice of completion, such notice may be given by telecommunication or by paper document and will be deemed timely, provided that it is sent before the bank is able to receive an electronic record.
eUCP article e6 (e) does not apply to all deadlines. As with UCP 600 article 29 (Extension of Expiry Date or Last Day for Presentation), it applies only to the expiry date in the credit and to the last date of the period of time after the date of shipment for the presentation of documents.