In 2013, the ICC issued its rules known as the Uniform Rules for Bank Payment Obligation (URBPO). These rules were seen, at the time, as a gateway for banks to offer services in the open account space; not just by offering financing products but also in the delivery of reporting services etc. Based on the matching of data elements, as opposed to the physical examination of paper documents, it was hoped that this product would entice banks to look beyond current paper-driven offerings and help facilitate the transition of trade finance into the digital world.
The rules themselves were not new. Since 2007, SWIFT had produced what were known as the TSU rules. TSU standing for 'Trade Service Utility', the platform on which the delivery and routing of ISO 20022 messages were handled. These messages contained various types of data ranging from the establishment of a transaction, to an amendment thereof ,and, finally, the data relating to the actual shipment of the goods that had been made. It should be noted that under such transactions paper shipping documents would often still exist and the required data would be extracted from those documents and inserted into the specific ISO message for the automatic matching of data to occur.
However, due to a requirement to use ISO 20022 messages, the product was bank-to-bank based. All interactions between the buyer or seller and its respective bank was outside the rules and the TSU. The URBPO made specific reference to a transaction matching application, of which the SWIFT TSU was the only one in existence at the time.
Unfortunately, and despite positive interest at the outset, the volume of transactions has not met the market or SWIFT's expectations.
In 2019, SWIFT announced that it will unplug the TSU platform in December 2020.
However, it appears that all is not lost. essDOCS announced in November 2019 that several banks had commenced testing its newly developed CargoDocs Transaction Matching Application (Cmatch). CMatch enables banks to continue offering two-corner Bank Payment Obligations (BPOs) – alongside next-generation digital trade instruments, such as four-corner Bank Payment Undertakings (BPUs) – by replacing the soon-to-be-discontinued SWIFT Trade Services Utility (TSU). See details here
Occasionally, questions are raised as to whether a documentary credit issued by a non-bank financial institution may be made subject to UCP 600. In 2002, the ICC tackled this topic by issuing an Opinion under reference R505 (TA537). Until this day, and due to the importance of its contents, it is the only Opinion that can be found published on the ICC's website. The content of the Opinion can be found at the following link:
IIn February 2009, the ICC first commissioned a global survey to obtain reliable quantitative and qualitative data on the impact of current market conditions at that time on the delivery of trade finance, and an outline of future expectations for the marketplace. To highlight the impact of the credit crisis at the time, the survey questions targeted trends occurring in trade finance operations in banks between Q4 2007 and Q4 2008. At the time, Pascal Lamy, Director-General of the World Trade Organization commented "The ICC has been instrumental in mobilizing the international community by completing its Global Survey on Trade Finance, and delivering strong recommendations ahead of the London G20 Summit."
The ICC has since commissioned further surveys in subsequent years and a copy of the 2017 and 2018 survey can be downloaded from the following link:
ICC Global Trade Surveys 2017-2018
The ICC did not issue a survey document in 2019.
Incoterms 2020 became effective as of 1 January 2020. Despite this new revision, a buyer and seller may choose to apply any previous version of the Incoterms rules e.g., Incoterms 2010, 2000, etc. to their sale contract. The rules can be found in ICC Publication No. 723.
It should be noted that the Incoterms rules may be used for domestic as well as cross-border transactions. The key factor for any buyer or seller, in choosing the correct Incoterm, is determining where delivery is to (or will) occur. For example, if goods are being shipped by sea, in a container, the likelihood is that the container will be collected by the carrier or its agent either at the place of the seller or received at the applicable container terminal. Therefore, Incoterms such as FCA, CPT or CIP will be more appropriate than FOB, CFR or CIF. The terms FOB, CFR and CIF indicate that the seller delivers the goods when they are loaded on board the vessel.
At the ICC Banking Commission meeting held in Brussels in November 2009, it was agreed that the ICC would commence a revision of ISBP. When the content of the ISBP was previously updated in 2007, it was to coincide with the implementation of UCP 600 and reflected some textual changes to match those in UCP 600, as well as to facilitate the removal of two paragraphs where the practices were changed by the content of UCP 600 (1. that the date of dispatch shown in a notation on an air waybill will be considered to be the date of shipment, even if not called for in the credit (sub-article 23 (a) (iii)) and 2. that exclusion clauses appearing on insurance documents will be acceptable (sub-article 28 (i)).
On 17 April 2013, the ICC Banking Commission approved the final draft of the ISBP and it was published under ICC Publication No. 745 (ISBP 745). It should be noted that the ISBP 745, in the main, reflect the content of opinions that have been approved by the ICC Banking Commission over the years. It should also be noted that there are far more international standard banking practices than those mentioned in the publication. However, whenever the publication is updated this can only be achieved by contributors such as the members of ICC national committees indicate the practices that prevail in their own countries. These can then be analysed, discussed and, where deemed appropriate, incorporated into any future publication. The message is clear, the publication is not all encompassing - if only that all the opinions approved by the ICC Banking Commission since 2013 have not been documented in an ISBP publication.
February 2015 - ICC released an updated document relating to the process to be followed when requesting an ICC Opinion. ICC Opinions may now be requested in relation to transactions subject to URF (Uniform Rules for Forfaiting) and URBPO (Uniform Rules for Bank Payment Obligations). For details Opinion Handling Procedure and Terms of Reference.pdf
The initial drafts of eUCP version 2.0 and eURC version 1.0 were sent to ICC National Committees (NC’s) on 25 September 2017, with an amended deadline of 28 February 2018.
Pursuant to feedback on the original drafts, work commenced on a second and third draft, which then led to a fourth draft of the rules being disseminated on 6 November 2018, indicating a deadline of 4 January 2019 for feedback.
At that stage, and following a thorough review of all comments received to date, it was considered to be an appropriate time to draft a final version of the rules. These were consequently sent to ICC NC’s on 31 January 2019, specifying that the deadline for voting would be 22 March 2019. It is worth commenting that this timeframe was only 16 months after distribution of the first draft and included an enforced 3-month extension, as required by the ICC (NC’s) for the first draft.
During the course of the first four drafts, almost 2,000 comments were received from ICC NC’s. For the purposes of transparency and clarity, every comment received an individual response.
Approval
For the first time in the history of the ICC Banking Commission, a new approach was introduced for the ICC rules voting process, via the Simply Voting platform. This initiative provided an online voting system to be used for the approval of the revised eUCP and new eURC rules.
Each NC was requested to choose one designated representative with the right to cast the vote on its behalf and the platform was opened for voting from 11 until 22 March 2019. NC’s were invited to vote on the revised eUCP and new eURC separately by choosing ‘YES’ or ‘NO’ to the following options:
· Does your National Committee approve the Uniform Customs and Practice for Documentary Credits (UCP 600) Supplement for Electronic Presentation (eUCP) Version 2.0?
· Does your National Committee approve the Uniform Rules for Collections (URC 522) Supplement for Electronic Presentation (eURC) Version 1.0?
Voting result:
- Votes were received from 49 NC’s, plus one further NC vote after the voting deadline had passed.
- The eUCP received 100% approval with two countries abstaining.
- The eURC received 97.5% approval (on a weighted basis) with one county voting ‘no’ and two countries abstaining.
Based upon the above, both sets of rules came into force on 1 July 2019.
Copies of the rules can be found here eUCP Version 2.0.pdf and eURC Version 1.0.pdf
ICC Banking Commission statement – February 2019 – Uniform Rules for Digital Trade (URDT) - now (URDTT)
“Today, rapid evolutions in new technology are changing how we see trade and supply chain finance. Businesses are looking for solutions that will deliver greater control and visibility within their supply chain ecosystem. Financiers (banks and non-bank entities) are looking for tools that will support regulatory compliance and optimize the use of capital. A variety of technologies are being proactively introduced, ranging from Optical Character Recognition (OCR) and Artificial Intelligence (AI) to Distributed Ledger (DLT) and smart contracts.
Such solutions encompass:
• Digitalisation of the execution processes
• Continuous flow of data which can be split across a large number of transactions
• Creation of a network effect to capture data flows among participants in the supply chain
The objective of the rules, whose development have now been approved by the ICC Banking Commission Executive Committee:
• To develop a high-level framework in which the above-referenced consortia can operate by referencing the rules in their establishment and execution of financial obligations within their own unique process and technology constructs.”
To date, two draft text of the rules have been distributed to ICC National Committees for comment. The third draft will be distributed in early June 2020.
The final draft of the URDG 758 was approved by the ICC Banking Commission on 24 November 2009. The following day, the ICC's Commercial Law and Practice Commission also conveyed their agreement to the final text. The rules came into effect on 1 July 2010. It is fair to say that most guarantees that are issued today are made subject to local law. Some headway has been made in recent years to convert some guarantee applicants and beneficiaries to URDG 758 but there is a long way to go.