The new rules for Uniform Customs and Practice for Documentary Credits will come into force on 1 July 2007. These rules are called the UCP 600. The previous version, UCP 500, had been operative since 1994. Historically, ICC does revision of UCP every 10 years to incorporate changes in international business practice. UCP 500 still contained discrepancies that seemed to hinder the smooth operation of documentary credit transactions. The Banking Commission in Paris in May 2003 established a Drafting group and a Consulting group to formulate UCP 600. After three years of rigorous review, UCP 600 was finalized, hoping to remove the discrepancies in the previous version. Coupled with the ICC’s Documentary Credit Dispute Resolution Expertise Rules (DOCDEX), there was much confusion amongst businesspersons and bankers regarding documentary credit transactions, resulting in 70% of the presentations not being honoured due to discrepancies. The objective of UCP 600 is therefore to reduce dispute rates, lower rates of inquiries regarding interpretations of certain articles and reduce lawsuits resulting from such confusion.
Whereas UCP 500 contained 49 Articles, UCP 600 now has 39 Articles that are clearer, more concise and more organized. Major amendments have been enacted in relation to various Articles of UCP 500 that used to induce the most number of inquiries. The major changes are best understood when comparison is made between the two versions, an outline is sketched below: