UCP 500 to 600: A forward movement

Abstract

The 5th revision of the Uniform Customs and Practice for Documentary Credits (UCP 500) proved inadequate in facilitating the operation of letters of credit. The introduction of the 6th revision of the Uniform Customs and Practice for Documentary Credits (UCP 600) is therefore an initiative of the International Chamber of Commerce (ICC) designed to overcome certain inadequacies found in the previous revision. This paper critically analyses the key changes brought about by this transition from 500 to 600 giving the background, evolution, details and implications these changes have on bankers, importers, exporters, carriers and insurers. This paper argues that the UCP 600's ability to strike a balance between the interests of bankers on the one hand and the business fraternity on the other, is indeed a forward movement of the ICC in introducing positive changes to the UCP 500. However, whether UCP 600 will succeed in practice where UCP 500 proved unsuccessful remains to be seen.