US UCC Article 5’s Non-Variable Provisions
How UCC Article 5 governs letters of credit in the US, its non-variable provisions, and the legal nuances that affect issuers and beneficiaries.
Following its decision to initiate a six-month review of all 140 ICC Opinions issued since formulation of ISBP745 in 2013 and evaluate the fitness of ISBP745 (Oct 2022 DCW 25), the ICC Banking Commission released the findings of its Working Group. Nine Opinions were identified as containing content that would be meaningful for addition within ISBP. As outlined in a 28 February 2023 email from ICC Banking Commission Policy Manager Tomasch Kubiak, these comprise:
Simultaneously, another Working Group conducted a review of eUCP and eURC for purposes of aligning these eRules with the UNCITRAL Model Law on Electronic Transferrable Records (MLETR). In his email, Kubiak elaborated on the nature and intention of the effort:
“It is very important to note that this was not a revision nor an update of the eRules. It was solely an alignment with MLETR with respect to electronic transferable records.
As stated in the ICC Commentary on the eRules, it is necessary to consider each applicable legal system with respect to usage of the eRules in order to determine whether there is any substantive conflict between the eRules definitions and those contained in the local law.
At the time of drafting the eRules, very little key legislation was in place, thereby negating any need at the time to include definitions or clarification of the meaning of an electronic transferable record.
However, recent developments have now made it evident that enhanced alignment with MLETR, and similar legal developments elsewhere around the world, would provide intrinsic benefit.”
The specific changes involve various adjustments to eUCP sub-article e3(b) and eURC sub-article e4(b), including a new definition: “Electronic transferable record means an electronic record that contains the information that would be required in the equivalent paper document, such as a negotiable bill of lading or an assignable insurance document.”
The newly aligned Versions of the eRules will be known as eUCP Version 2.1 and eURC Version 1.1. Work has also commenced on formulating electronic documentary credit templates as an appendix for the eUCP.
In responding to an email from DCW, Kubiak indicated that the versions will not be finalized before all members through their ICC National Committees have the opportunity to provide comments. In the case of ISBP, “given the update is aiming at implementing already final opinions we anticipate minimal feedback”, Kubiak added. The intended aim for entry into force is 1 July 2023.
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