The UCP 600, while being invaluable in a paper world, is not to be intended to be applied to transactions involving electronic documents. Over time, traditional trade instruments will inevitably move towards a mixed ecosystem of paper and digital and, ultimately, to electronic records alone.

With this in mind, the ICC published the eUCP Version 1.0 in 2002 to address the presentation of electronic records under documentary credits. They issued an update in 2007 known as Version 1.1. To bring the rules in line with the changes in terminology in UCP 600, the ICC published Version 2.0 in 2019. Version 2.0 provides a complete update of the rules to ensure ongoing “e-compliance”.

The latest update, Version 2.1, published in July 2023, aligns the eUCP with the UNCITRAL Model Law on Electronic Transferable Records (MLETR) regarding issues of electronic transferable records. Furthermore, the rules align with the Electronic Trade Documents Act (ETDA) introduced in the UK in September 2023.

It was recognised at the outset that the likely end of the evolution to electronic presentations would be automated compliance checking systems in the documentary credit field. This is all too apparent when looking at evolving technology and digital trade finance, with the advent of the Internet of Things (IoT), Distributed Ledger Technology (DLT), Smart Contracts, Artificial Intelligence (AI), Machine Learning, and Optical Character Recognition (OCR).

The ICC will continually monitor the content of the eUCP to ensure applicability, with these rules providing many benefits in advancing documentary credits in a digital environment and ensuring the continued relevance of this valuable instrument in mitigating trade risk. They have also produced several guides regarding the eUCP, including guidance for buyers and sellers in handling documentary credits subject to the rules.

The eUCP focuses on the presentation of electronic records, alone or in combination with paper documents, and not on the issuance of an eUCP credit. This decision was based on the fact that the industry has already issued electronic documentary credits for many years.

In addition, there was concern that any rules surrounding issuance could encumber present and evolving electronic issuance practices while endangering the rules’ technological neutrality. The rules are based on the underlying principles in the UCP and standard practice currently existing for eCommerce transactions.

It is essential to consider the implications of the eUCP when issuing a documentary credit that will provide for the presentation of electronic records solely or in combination with traditional paper documents. Not doing so could negate many benefits.

For instance, as with credits solely subject to UCP 600, an applicant must ensure that any request for the issuance of an eUCP credit expressly clarifies and determines the appropriate documentary requirements as agreed with the beneficiary.

Concerning an eUCP credit, an applicant needs to make several additional considerations. The fundamental requirement, from which all else will evolve, is to jointly agree with the beneficiary of the credit that presentation of electronic records will be permitted and to determine which documents they can handle in this way.

During this dialogue, the beneficiary must provide reassurance that it can present any required electronic records and that such documents will be in an acceptable format. Before finalising the structure, they must also determine that it suits the issuing and nominated banks.