Debate persists on when an independent undertaking is issued: upon leaving the issuer’s control or only when advised to the beneficiary. Various rules clarify issuance timing.
Perceiving a need among the letter of credit community for guidance on interpretation of the phrase “without delay” regarding the context in which it is used in UCP600, the ICC Banking Commission released on 5 April 2022 “Technical Advisory Briefing No. 2” addressing the “Meaning of ‘without delay’ in UCP 600”.
After noting that the phrase is used in four UCP600 articles and that no formal definition of “without delay” is provided in the rules, the three-page briefing (TAB-2) quotes the text of the six places in which the phrase appears: UCP600 Sub-Articles 8(d); 9(e); 9(f); 10(b); 11(a); and 11(b). TAB- 2 then references two recent ICC Opinions and one UK court case which address “without delay”.
ICC Opinion TA909rev (March 2021) quotes from the April 2020 “Guidance Paper on the impact of COVID-19 on trade finance transactions subject to ICC rules” addressing aspects of banking practice impacted by COVID-19:
“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.”
This reference to “without delay” speaks generally of the need for banks to be pro-active in communicating with each other in timely fashion when operational problems crop up or are anticipated. That is, this “without delay” mention does not address any of the specific situations covered in the six UCP600 sub-articles, but instead addresses them collectively overall.
Asked about the appropriateness of referring to the April 2020 Guidance Paper over the ICC’s May 2020 “Interpretative Paper on the correct interpretation of the first paragraph on UCP 600 article 35”, ICC Banking Commission Senior Technical Advisor David Meynell said:
“It is stated in TA909rev that the interpretative paper relates to the Guidance Paper. Without the Guidance Paper the interpretative paper would not have been issued; they go hand in hand. The interpretative paper expanded on the text of the Guidance paper. The Briefing paper could have referred to either paper to make the point.”
ICC Opinion R905/TA891rev (October 2019) took up the matter of whether 12 days for an issuing bank to return documents to the presenter can be considered as not being without delay or is outside the scope of UCP 600. ICC answered it is outside the scope of the rules.
In Fortis Bank and Stemcor UK Limited v. Indian Overseas Bank (2011), a UK Court of Appeal determined that “an issuing bank that elects to return documents is expected to do so promptly and without delay.” Drawing from the case, TAB-2 points out: “The Court of Appeal also stated that whilst there was no express obligation on the issuing bank to return the documents promptly and without delay upon giving notice, such an obligation was implicit in the wording of article 16 and was in line with international practice.”
Quote to Note: “Although Article 9(e) uses the mandatory term “must”, no sanctions are (or could be) imposed for failure to inform of an unwillingness to advise a credit or to do so “without delay” except those informal ones that arise from issues of reputation.”— Professor James E. Byrne in UCP600: AN ANALYTICAL COMMENTARY, IIBLP (2010), p. 437
Citing UCP600 Sub-Article 9(e) as an example, TAB-2 goes on to explain that “without delay” is a recognized term in the rules and UCP600’s references to it could not be replaced with a specified period of time because that would require indication of a consequence (penalty) for failure to comply which UCP600 could not impose.
While ISBP745 contains no mention or explanation of “without delay”, TAB-2 concludes that: “Under international standard banking practice, reference in the UCP 600 to without delay means that the concerned bank must complete an action as soon as practicable for that activity and with due consideration to any given circumstance(s).”
Asked by DCW about the absence of “without delay” in ISBP, Meynell explained: “ISBP specifically refers to the Examination of Documents under Documentary Credits. None of the articles within UCP 600 which mention ‘without delay’ specifically apply to the examination process. As such, no mention was made in ISBP.” Meynell added: “It is worth highlighting that some practitioners, including myself and Gary Collyer, wished to expand the ISBP to other areas – however, this was not supported by ICC National Committees – maybe this will change in the event of an ISBP revision.”
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“Without Delay” in UCP: A Brief History
UCP82 (1933) – The phrase “without delay” appeared in UCP82 Article 43. This first use of “without delay” described when documents must be presented to banks lest banks refuse presentation.
UCP151 (1951) – The phrase did not appear. UCP151 Article 43 changed “without delay” to “undue delay”.
UCP222 (1962) – The phrase did not appear.
UCP290 (1974) – The phrase “without delay” reappeared in UCP290 Article 8(e). UCP290 Article 41 avoided use of both “without delay” and “undue delay” in favor of requiring a stated expiry date and imposing the default 21-day rule. At the same time, “without delay” was used in UCP290 Article 8 to describe when a bank must provide notice of refusal.
UCP400 (1983) – Appeared in UCP400 Article 10(c), Article 12(a), Article 14, and Article 16. UCP400 kept the UCP290 use and also added references to “without delay” to describe when a bank must inform issuer that it will not confirm a credit (Article 10(c)), when a bank should forward the operative credit or operative amendment to an advising bank (Article 12(a)), and when bank should provide information related to incomplete or unclear instructions (Article 14).
UCP500 (1993) – Appeared in UCP500 Article 7 (Advising Bank’s Liability), Article 9(c)(i) and 9(d)(iii) (Liability of Issuing and Confirming Banks), Article 11(a)(ii) and 11(c) (Teletransmitted and Pre-Advised Credits), Article 12 (Incomplete or Unclear Instructions), and Article 14 (Discrepant Documents and Notice). UCP500 largely tracked UCP400’s use of “without delay” with one notable exception being UCP500 Article 14 putting a 7-day limit on when notice must be given.
UCP600 (2007) – The phrase is used in UCP600 Article 8(d) (Confirming Bank Undertaking), Article 9(e) and 9(f) (Advising of Credits and Amendments), Article 10(b), and Article 11(a) and 11(b) (Teletransmitted and Pre-Advised Credits and Amendments).
(Source: UCP600: An Analytical Commentary, Professor James E. Byrne, IIBLP (2010), p. 460)
The second of ICC Banking Commission’s intended series of educational briefings on matters encountered by trade finance practitioners which either need clarification or guidance, this Briefing on “without delay” follows TAB-1 on the topic of Non- Documentary conditions in Documentary Credits subject to UCP 600 which was issued 13 January 2022.
The Briefings are intended to be freely available to the public, however they are presently not yet accessible on an ICC webpage apart from the ICC Digital Library.
Debate persists on when an independent undertaking is issued: upon leaving the issuer’s control or only when advised to the beneficiary. Various rules clarify issuance timing.
On 15 Feb 2023, DCSA members pledged to issue 50% of bills of lading (B/Ls) electronically by 2028 and 100% by 2030, aiming to cut costs and boost global trade.
