|
| |
| |
UCP RITES de PASSAGE
By Ravi
Mehta, Ph.D.
|
| |
First, debate whether or
not to revise. The ICC dithered to revise. It then denied revising when
there was a rumor of revision. Then, all of a sudden a decision to revise.
Followed by hectic attempt to revise. To attempt revision the ICC formed an
organization, called Drafting Group, which worked under the supervision of
ICC’s Banking Commission. The Drafting Group is unsurprisingly and
expectedly dominated by the European bankers. The European domination is
traditional. It is a historical mistake. It is rightly said that those who
use LCs, Asia and Middle East, don’t make LC rules. The traders use LCs but
they are not involved in UCP making. Presently, the use of LC is declining
in Europe. Therefore, the European bankers do not have much practical
experience of LC management, but still the ICC prefers them for UCP making.
Therefore, a question naturally arises whether the UCP made by European
bankers is relevant, understandable and workable in Africa, Middle East,
Latin America and Asia, whether helpful to the trader and trade. The
Drafting Group prepared draft after draft on revision after revision. The
National Committees commented on the drafts. The next stage was debate after
debate on the revision in the Banking Commission meetings. Ultimately,
approval of the revision, by a unanimous vote. These are the stages UCP 600
went through. Kim Christensen, Banking Commission member, has witnessed the
UCP rites de passage. He participated in the debate on revision in the
Banking Commission meeting in Austria in May 2006. He voted for approval of
UCP 600 in the Banking Commission’s Approval Meeting in Paris in October
2006. It is tempting to know from Kim Christensen his eyewitness story of
behind the curtain Approval Ceremony. When the ICC raises the curtain we
see the approved product – UCP 600. One question that naturally arises when
a new product is launched. Will the consumers like UCP 600? Time will tell.
A new broom sweeps well. Will the new UCP sweep well to clear the mess of
controversies and disputes in LC world? Time will tell. Till then, hopes
and expectations - new UCP, new hope, great expectations. Does the unanimous
vote indicate that the UCP 600 is a perfect product? No, not necessarily.
The yes vote may not be the inner voice. Time will test UCP 600 to determine
whether it is perfect. Time will tell the test result. But the history tells
UCP has never been perfect. The history predicts UCP will never be perfect.
Because UCP making has never been perfect. And, UCP making will never be
perfect if it is based on extraneous matters like regionalism, favoritism.
|
| |
When the ICC raises the Curtain
When the ICC raises the curtain on October 25,
2006 in Paris it announces:
Banking commission approves revised rules on
documentary credits. By a unanimous vote of 91 to 0, the ICC Banking
Commission today approved UCP 600, ICC’s revised rules on documentary
credits. This is the first revision of the rules since UCP 500, the previous
version, was approved in 1993. The new rules are the result of more than
three years of intensive work by the banking commission.
And, then it displays:
When the ICC
raises the curtain
New UCP becomes certain
|
| |
On the stage the ICC
tells what’s new in new UCP:
The revision, which will come into effect on 1 July
2007, incorporates a number of changes from UCP 500:
• New sections on "definitions" and
"interpretations" have been added to clarify the meaning of ambiguous terms
• The phrase "reasonable time" for acceptance or
refusal of documents has been replaced by a firm period of five banking days
• New provisions allow for the discounting of
deferred payment credits
• Banks can now accept an insurance document that
contains reference to any exclusion clause
|
| |
BEHIND THE CURTAIN
Uneventful Approval Event
Kim Christensen’s Eyewitness Report
He went. He participated.
He witnessed.
|
| |
From one point of view
there is really not much to tell. For anyone who has participated in the ICC
Banking Commission meetings for the last 3 years, this one may actually
stand as an anti climax. The reason for this is
that the UCP revision usually has taken so much time on the agenda. This
meeting was dedicated to other issues, and the only topic solely dedicated
to the UCP 600 was the actual voting process. As you may be imaging this one
went rather smooth; countries were mentioned – “yes” was announced. Keeping
in view the draft comments stage during this year one would have expected
that at least one or two countries would actually vote “no”. But that did
not happen. So in a very short while – the whole thing was over, and some
other topic was started. Nevertheless, one could not help thinking that we
were seeing history being made here. The room was packed, many had brought
their cameras – there were those almost nervous jokes “what if it is not
approved? The next day the ICC held a full day seminar on the UCP 600, and
the drafting group were treated like movie stars, signing autographs on the
“provisional copies” of the UCP 600 – and there were full photo sessions .
OPEN SCENE MORE EVENTFUL
However, the ICC Seminar on 26 October was, to some
extent, very interesting – even though that was not entirely behind the
scenes. I think that really reminded us that this is where the work starts –
or perhaps rather that the work has not really stopped. First of all even
though the rules are there now – the practice that goes with them are not
there at all. To go with the UCP 600 the ISBP will be revised – but also a
commentary will be published. So much of the “practice” will come from those
sources – but as also practice of course comes out of “practice”, so when
banks start to use the rules, and interpret them – then we will see what
happens, and of course there will be many questions. Much wording has been
changed, and it may not be absolutely evident whether or not the general
view and the practice that goes with it have changed.
In any case the UCP 600 is there now; no doubt many
of us expected more – expected something else (perhaps “hoped” is a better
word), but nothing we can do now will change things. So for the next year I
will dedicate my time and energy in making the implementation of the UCP 600
as good as ever possible. And that for one reason primarily: Denmark voted
“yes” 25 October – so I certainly feel obligated to work for that!
|
|
