International Chamber of Commerce UCP 600

International Chamber of Commerce’s UCPDC articles.
UCPDC Uniform Customs and Practice for Documentary Credits
The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance
and use of letter of credit. The UCP is utilized by bankers and commercial parties in more than 175
countries in trade finance. Some 11-15% of international trade utilizes letters of credit, totaling over a
trillion dollars (US) each year.
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 moulded the UCP by regular revisions, the current
version being the UCP600. 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, formally commenced on 1 July 2007
UCP 600
The UCP 600 has come into effect from July 1, 2007 onwards and UCP 600 has a number of substantial
changes that affect not only how banks will determine compliance, but also how contracts for sales
utilizing Letter of Credits should be written. Some of the new articles in UCP 600 have adopted practices
in International Standard Banking Practices (ISBP) and followed principles of International Standby
Practices (ISP 98), besides providing new articles in examination, documentation and other aspects for
issuing the letters of credits for banks involved in foreign exchange.
"UCP" is the common reference for the Uniform Customs and Practice for Documentary Credits. The
objective of the UCP is to create a set of contractual rules that would establish uniformity to conflicting
national regulations.
The Uniform Customs and Practices (UCP) for Documentary Credits were first issued in 1933 by the
International Chamber of Commerce. The purpose was to overcome conflicting national laws on letters of
credit as well as to bring about uniformity in banking practices. The rules have been revised a number of
times. The recent revision, UCP 600, took more than three years of consultation and the Consulting
Group, which comprised more than 40 representatives from 26 countries proposed changes to the various
drafts. During its 24-25 October 2006 meeting, the ICC Commission on Banking Technique and Practice
approved new UCP 600 rules for documentary credits.
UCP 600
UCP 600 is the latest version of the rules that govern letters of credit transactions worldwide.
UCP 500 was the rules that had been in implementation before UCP 600. There are several significant
differences exist between UCP 600 and UCP 500. Some of these differences are as follows;
The number of articles reduced from 49 to 39 in UCP 600;
In order to reach a standard meaning of terms used in the rules and prevent unnecessary repetitions two
new articles have been added to the UCP 600. These newly added articles are Article 2 “Definitions” and
Article 3 “Interpretations”. These articles bring more clarity and precision in the rules;
A definitive description of negotiation as “purchase” of drafts of documents;
New provisions, which allow for the discounting of deferred payment credits;
The replacement of the phrase “reasonable time” for acceptance or refusal of documents by a maximum
period of five banking days.
History of UCP
First uniform rules published by ICC in 1933. Revised versions were issued in 1951, 1962, 1974, 1983
and 1993.
1933 – Uniform Customs and Practice for Commercial Documentary Credits
1951 Revision - Uniform Customs and Practice for Commercial Documentary Credits
1962 Revision - Uniform Customs and Practice for Documentary Credits
1974 Revision – Uniform Customs and Practice for Documentary Credits
Currently majority of letters of credit issued everyday is subject to latest version of the UCP. This widely
acceptance is the key sign that shows the importance of the UCP, which are the most successful private
rules for trade ever developed.
eUCP
Almost all of the presentations are being made in paper or traditional format still in today's letters of
credit environment. However, as telecommunication technology is expanding its borders, it is highly
expected that in the very near future traditional processes will be substituted with the electronic paperless
transactions. In order to establish set of rules that governs electronic presentations the ICC Banking
Commission established a Working Group consisting of experts in the UCP, electronic trade, legal issues
and related industries, such as transport, to prepare the appropriate rules for electronic and mixed
presentations. Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic
Presentation or "eUCP" is the result of the efforts of this committee.
The eUCP is not a revision of the UCP. The UCP will continue to provide the industry with rules for
paper letters of credit for many years. The eUCP is a supplement to the UCP that, when used in
conjunction with the UCP, will provide the necessary rules for the presentation of the electronic
equivalents of paper documents under letters of credit.

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International Chamber of Commerce’s UCPDC articles.

UCPDC Uniform Customs and Practice for Documentary Credits

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