Text of the rules can be obtained here for free.
Background:
1. ICC Banking Commission Executive Committee provided the ICC Working Group on Digitalisation in Trade Finance with a mandate to proceed with a first revision of the Uniform Rules for Bank Payment Obligations (URBPO) in order to address the evolution of new technologies impacting trade and trade finance
2. The Working Group carried out a detailed analysis of the current and future requirements of a payment obligation and concluded that a revision of URBPO would not provide a satisfactory solution
3. A revised mandate was subsequently issued to proceed with the drafting of a new set of rules that would essentially be agnostic in nature with regard to the underlying technology and would effectively address the gaps in digital trade, focusing on payment undertakings and the use of data to determine how such undertakings would transition from a conditional to an unconditional state
4. It was agreed that the URBPO would continue to support existing and potential new users for whom the BPO represented a satisfactory construct and that the new rules would be independent from but compatible with the ongoing use of the BPO in its current state
5. It was noted at the time that there may be resistance to this new set of rules given that they would of necessity deviate from the traditional bank-centric approach. However, in recognition of the many other participants involved in a commercial transaction and the growing influence of non-bank service providers, it was acknowledged that failure to adopt a new approach would not only reinforce the trend towards digital islands in the trade finance market place but also result in the economic benefits of digitalisation not being fully realised with an associated negative impact on the SME business community, in particular
6. The approach taken reinforces the Banking Commission’s leadership position in the digitalisation of trade and trade finance
Process:
• Completion of 6 drafts with over 1,500 comments received from ICC National Committees, each responded to individually
• Voting concluded on 29 June 2021 for the adoption of the URDTT Version 1.0
• The use of version numbers allows for a more focused and shorter revision of the rules as and when technological advances are made or where market trends develop or expand from time to time
• Rules come into effect from 1 October 2021
Scope:
• Regarding any links with the ICC eRules (eUCP & eURC), the scope of the ICC eRules is entirely different. The eRules are supplements to UCP and URC, designed to accommodate the presentation of electronic documents under documentary credits and collection instructions. The eRules will continue to exist in their own right alongside URDTT
• As such, at this stage, there are diverse reasons for the continuing existence for each individual set of rules. In addition, the URDTT do not supplement existing rules that allow for paper – the rules are digital only. This will be monitored as the trade environment evolves
Context of the rules:
• A Digital Trade Transaction (DTT) is a representation of the underlying transaction and is the process by which the terms of the commercial contract between the seller and the buyer are recorded and progressed
• A DTT is distinct from the commercial contract
• A Payment Obligation (PO) is incurred when the terms of the DTT are first agreed between the seller and buyer
• A Financial Services Provider Payment Undertaking (FSP-PU) may be added to a PO at any time
Key considerations:
• A Financial Services Provider does not deal with the goods or services to which an electronic record submitted under a DTT refers
• Binding on the buyer and seller unless and to the extent expressly modified or excluded by the terms and conditions of a DTT
• An electronic record that incorporates technology that allows a party to distinguish between an original and a copy and provides a means to prove possession of an ‘original’ can be used in a DTT
• Applicable law shall be as specified in the terms and conditions of the DTT
• The choice of ‘platform’ is to be agreed between the buyer and the seller, and it is strongly recommended that the agreed format of an electronic record (refer next slide) be stated within the terms and conditions of the DTT
• Compliance is determined by electronic records submitted in accordance with the terms and conditions of the DTT
• Accordingly, a DTT must specify the terms and conditions by which compliance of an Electronic Record will be determined
Text of the rules can be obtained here for free.