UCPDC or UCP 600 refers to The Uniform Customs and Practice for Documentary Credits which is basically a set of rules published by the International Chamber of Commerce, Paris on 1st July, 2007, which apply to finance institutions which issue Letters of Credit – financial instruments helping companies finance trade.
It is a set of 39 articles on issuing and using Letters of Credit, which applies to 175 countries around the world, constituting some $1tn USD of trade per year.
These rules were formulated with an objective to create a set of contractual rules that would establish uniformity in that practice, obtain global understanding, a common interpretation and application of documentary credit, so that practitioners would not have to cope with plenty of conflicting national regulations.
SUMMARY OF THE ARTICLES IN UCP 600
It comprises of 39 articles to cover the following:
Articles 1 – 3 – Application, Definition & Interpretation
Articles 4 – 6 – Characteristics of LC
Articles 7 – 13 – Liabilities and Responsibilities
Articles 14 – 17 – Presentation & Examination of Documents
Articles 18 – 28 – Documents
Articles 29 – 33 – Miscellaneous Provisions
Articles 34 – 37 – Disclaimers
Articles 38 – 39 – Transferable Credit & Assignment
FEATURES OF UCP – 600
- The UCP 600 are only applicable if they are expressly incorporated (and there is provision for including them at field 40E in the SWIFT MT700)
- If provisions of LC and UCPDC are contradictory , provisions of LC will prevail.
- The first UCP was created in 1933 and has been revised by the ICC up to the point of the UCP 600.
- The UCP 600 rules are voluntarily incorporated into contracts and have to be specifically outlined in trade finance contracts in order to apply.