You are on page 1of 19

CDCS MENTOR

…....for Professionals

CDCS exam 2017


(April Intake)
preparation Program

A PRESENTATION BY
Md. Mohiuddin,
Mohiuddin, CDCS, CITF

1
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

UCP 600 - Article 1


Application of UCP
The Uniform Customs and Practice for
Documentary Credits, 2007 Revision, ICC
Publication no. 600 ("UCP") are rules that apply to
any documentary credit ("credit") (including, to
the extent to which they may be applicable, any
standby letter of credit) when the text of the credit
expressly indicates that it is subject to these rules.
They are binding on all parties thereto unless
expressly modified or excluded by the credit.

2
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals
UCP 600 - Article 1
Application of UCP

1. UCP are rules.


2. Applicable to any documentary credit (including standby LC)
3. For applicability, the text of the credit must expressly indicate the
UCP as applicable rules.
4. Incorporation of UCP as applicable rules bind all parties engaged
5. UCP are subject to modification
6. UCP are subject to exclusion
7. Documentary Credit = Credit

3
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals
UCP 600 - Article 1
Application of UCP

……….. apply to any documentary credit …….....

 Commercial Credits (DC/LC)


 Standby Credits

4
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals
UCP 600 - Article 1
Application of UCP

……….. to the extent to which they may be applicable…….....


…….....

That is UCP600 rules may not be applicable to


standby LCs in full extent.

5
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals
UCP 600 - Article 1
Application of UCP

……….. when the text of the credit expressly indicates that


it is subject to these rules. …….....

Applicability of UCP600 depends on “Express Indication”.

Examples of express indication:


(i) This credit is subject to UCPDC600.
(ii) In SWIFT MT700 Field 40E: ‘UCP LATEST VERSION’

6
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

MT700
Application
of UCP by
express
indication

7
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals
UCP 600 - Article 1
Application of UCP

……….. They are binding on all parties thereto. …….....

UCP as applicable rules binds all parties engaged with the credit
viz. issuing bank, beneficiary, negotiating bank, advising bank to
the extent of their respective responsibilities.

8
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals
UCP 600 - Article 1
Application of UCP

……….. expressly modified or excluded by the credit.. …….....

1. UCP are subject to modification


2. UCP are subject to exclusion
3.Modification or exclusion can be effective only credit wording.

9
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

Application
of UCP by MT700
express
indication

10
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
F27: Sequence of Total: 1/1 …....for Professionals
F40A: Form of Documentary Credit: IRREVOCABLE
F20: Documentary Credit Number: 140814010201
F31C: Date of Issue: 140401 2014 Apr 01
F40E: Applicable Rules: UCP LATEST VERSION MT700
F31D: Date and Place of Expiry: 2014 Jun 28 U.A.E
F50: Applicant: M/S. EURO FRUITS AGENCY
F59: Beneficiary: AL BILAL FOODSTUFFS L.L.C.
F32B: Currency Code, Amount: USD31800,00
Modification F41D: Available with, By: Any Bank in UAE by negotiation
by express F42C: Drafts at: SIGHT
indication F42A: Drawee: DHBLBDDH104
F44E: Port of Loading: ANY PORT OF U.A.E.
F44F: Port of Discharge: CHITTAGONG
Exclusion
F45A: Description of Goods: 53 MT FRESH DATES by
F46A:Documents Required express
+ Beneficiary’s signed commercial Invoice
+FULL SET OF BILL OF LADING indication
+CERTIFICATE OF ORIGIN
F47A: Additional Conditions
+UCP600 ARTICLE 32 EXCLUDED.

11
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
ICC Banking Commission Opinion …....for Professionals
R716 [TA 704rev]
Query:
Query: An LC, subject to UCP600, contains the following condition:

‘Should any terms or conditions stipulated in this credit be contradictory


to or inconsistent with that of the UCP600, the relative UCP600
provisions are deemed expressly modified and/or excluded’.

Is the language in the credit sufficient to conform with the


last sentence of UCP600 Article 01? Or must the credit
explicitly identify which articles of UCP 600 are being
modified or excluded?

12
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
ICC Banking Commission Opinion …....for Professionals
R716 [TA 704rev]

Opinion:
Opinion: Modification to the UCP 600 rules do not necessarily require a
bank to specifically state the article that has been modified or the manner
in which it has been modified.
For example, the insertion of ’15’ in the field 48
(presentation period) of an MT 700 would modify the rule
stated in sub-article 14(c) that presentation must be made
by or on behalf of the beneficiary not later than 21
calendar days after the date of shipment. There is no
explanation of the modification but the insertion of ’15
days’ clearly create a modified rule in respect of the
presentation period.

13
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
ICC Banking Commission Opinion …....for Professionals
R716 [TA 704rev]
Opinion:
Opinion: It should be noted that when a rule is to be excluded, for
whatever reason, there must be an express indication of this by
saying, for example: “sub-article 14(i) is excluded”. In most cases
when an exclusion occurs, the credit will need to contain a new rule
replacing the language or article excluded. In respect of exclusion of
sub-article 14(i), this would necessitate the credit stating the new
conditions relating to the dating of documents.

*UCP 600 Artilce 14(i):


14(i): A document may be dated prior to
the issuance date of the credit, but must not be dated later
than its date of presentation.

14
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

Are
Are domestic letters of credit covered under the UCP rules or not?

 Yes. No distinction is drawn in the UCP between credits that can be


classified as domestic as opposed to cross border.

15
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

As
As an issuing bank, when we stipulate some clauses different from the
concepts in UCP, should we state at the same time that “XX article of UCP
600 is excluded”? Or, is the UCP 600 article excluded automatically?

 If the wording of your credit will give a different outcome to that


which a particular UCP 600 article will give, you are modifying the rule
rather than excluding it. Exclusion is where the entire article is deemed to
be inapplicable to the credit and no alternative wording is inserted.

16
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

Does
Does UCP 600 apply only to documentary credits or to other forms of
payment like cash against documents, those with different payment terms,
terms, etc.

 The UCP can be applied to any transaction that is irrevocable and


thereby constitutes a definite undertaking of the issuer. This would
include a letter of credit, standby letter of credit and a guarantee. Cash
against documents conveys no undertaking of a bank and therefore
would not fall under the UCP. A cash against documents transaction may
be handled as documentary collection and be subject to URC522 (ICC
Uniform Rules for Collections).

17
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

18
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com
CDCS MENTOR
…....for Professionals

19
CDCS MENTOR,
MENTOR Md. Mohiuddin; Cell: 01716308384; e-mail: cdcs.mentor.bd@gmail.com