ELECTRONIC RULES FOR LETTERS OF CREDIT ARE INTRODUCED

ELECTRONIC RULES FOR LETTERS OF CREDIT ARE INTRODUCED    New international rules that allow the presentation of electronic documents for letters of credit and documentary credits, adopted by the International Chamber of Commerce, were introduced Monday.
   The rules are contained in an electronic supplement to the International Chamber of Commerce’s widely used rules on documentary credits, the UCP 500 rules. The “eUCP” electronic supplement, as it will be known, is also the first ever supplement to the documentary credit rules.
      “The eUCP responds to the growing numbers of documents ' including bills of lading, certificates of origin, insurance documents, etc. ' that are being presented in electronic form,” the International Chamber of Commerce said.
   The eUCP supplement accommodates presentation of electronic records alone or in combination with paper documents.
   The International Chamber of Commerce’s rules on documentary credit previously had some provisions relating to electronic issues, but they were essentially written for paper documents. Documentary credit, based on the presentation of an original paper-based bill of lading, was widely seen as a slow, inefficient process.
   “The supplement will govern if the parties specifically incorporate it in their credits,” the International Chamber of Commerce said. “It will apply in cases of part-electronic or all-electronic presentations.”
   The 12 articles of the eUCP supplement cover a range of issues, including the format of electronic records, presentation, examination and, most controversially, corruption of an electronic record, the International Chamber of Commerce said. In the latter case, if a bank receives an electronic record that is corrupted — by a virus or some other defect — it may, at its discretion, request that the electronic record be re-presented.
   Neil Chantry, of HSBC bank in London and a member of the group that drafted the supplement, believes the eUCP will be widely used, though not necessarily right away.
   Chantry said that the level of transactions using the eUCP rules in the first two years will be “relatively modest.”
   “After 10 years there will be virtually no paper-based trade documentation,” he predicted.
   CCEWeb, an Internet-based trade facilitating firm based in Canada, quoted a senior Singaporean banker as saying that    “letters of credit issued by banks in Asia will still be subject to the UCP 500 after the implementation of eUCP from April 1, 2002 as they are not ready for the eUCP.”
   “It may take time for banks as well as traders here to take part in the eUCP,” the banker said.
   Bolero.net, a British electronic communications system provider, said that it has already adopted the eUCP rules.