ICC to revise guidelines on L/Cs

ICC to revise guidelines on L/Cs

Leony Aurora , The Jakarta Post/Jakarta

In a bid to keep standards for customs and practices in issuing
and using letters of credit (L/Cs) up-to-date with current
developments, the International Chamber of Commerce (ICC) is
preparing to revise the existing standards.

The ICC Indonesian chapter invited the country's import and
export players, including banks, on Wednesday to gather input for
the new draft of the internationally recognized Uniform Customs
and Practice for Documentary Credits, more commonly known as the
UCP 500.

"The main point is for us to secure our national interests,"
said Saul Daniel Rumeser, who represented Indonesia in the ICC
consulting group. "For example, we can try to speed up the
settlement of payment," he added.

An L/C is issued by a bank to guarantee that its customer --
the buyer, or importer -- can pay the seller, or exporter. The
instrument is commonly used in trade between firms in different
countries.

To receive payment, the exporter must provide the product
documents listed on the L/C, which must be checked by the issuing
bank. Rules and language of the L/C are spelled out in the UCP
500.

The UCP 500 is by itself not legally binding. However, as it
is included in the L/C, it becomes part of the contract.

"Based on experience in court (when disputes occur), judges
rule based on the UCP," said JB Kendarto, managing director of
Bank Mandiri, which hosted the meeting.

The ICC will welcome input for the draft until the end of this
week. Comments and suggestions, however, can only be admitted via
the country's national committee.

The practices on L/Cs were first standardized by ICC in 1933
and have been revised every 10 to 15 years. The last revision was
in 1993. The current draft, which will be called UCP 600, is
expected to be finalized by the end of next year.