URR E. Effective date: 01 October It is an updating process that has followed the same manner as the eUCP, i. These changes include the removal of capitalisation of terms and grammatical changes to match UCP wording. As an example the s have been removed throughout the rules and the term honour has also been used to replace the phrase "pays, incurs a deferred payment undertaking, accepts draft s.
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At the time, reimbursement authorizations had begun to be issued in currencies other than what had been the more common currency i.
It should be noted that there had been Bank-to-Bank Reimbursement rules operating in the US for many years and these formed the basis for the establishment of the principles to be considered in drafting URR From July 1, issuing banks were faced with the decision as to whether their reimbursement authorizations should be made subject to URR or UCP article It is true to say that the usage of URR varies from country to country and will, no doubt, continue to do so with the updated version URR when it comes into effect on October 1, Today, the majority of credits are issued available by negotiation and the issuing bank provides reimbursement of a complying presentation at sight or on a future due date.
This form of issuance negates the need for any Bank-to-Bank reimbursement instructions to appear in a credit. It is an updating process that has followed the same manner as the eUCP i. These changes include the removal of capitalization of terms and grammatical changes to match UCP wording. As an example the s have been removed throughout the rules and the term honour has also been used to replace the phrase "pays, incurs a deferred payment undertaking, accepts draft s.
Due to this change and the wording in UCP sub-article 13 a , the previous SWIFT stance that a reimbursement authorization will automatically be subject to the version of URR in effect on the date of issue is no longer applicable. As with the MT, issuers of an MT are required to indicate the applicable rules. Sub-article 6 a regarding the operative reimbursement authorization or amendment has been changed to reflect the UCP position i. In all cases, the teletransmission is the operative instrument and any mail confirmation will be disregarded.
In sub-articles 6 d iv and 8 b the term "freely negotiable" has been changed to "credit available with any bank" so as to mirror the wording used in UCP sub-article 6 a. A new sub-article 9 g has been added stating "A reimbursing bank is irrevocably bound to honour a reimbursement claim as of the time it issues the reimbursement undertaking. The remaining sub-articles of article 9 have been renumbered to accommodate this inclusion.
The same addition has been made in sub-article 9 h iii , for amendments, to reflect the same concept as UCP sub-article 10 b. In sub-article 11 e the reference to reserve or indemnity has been removed. Whether or not a claiming bank has paid under indemnity or reserve does not concern a reimbursing bank. The reimbursing bank is not involved in the examination of documents, the determination of compliance nor the manner of honour or negotiation of that presentation.
It may have escaped the notice of a number of practitioners that in URR sub-article 11 e the word "honour" was used, even though it did not appear in UCP In URR sub-article 11 e that use of the word "honour" has not been changed as it was used in a more generic sense and not in the manner that the term "honour" is defined in UCP Article 16 on charges has been aligned with the style of UCP to create the rule that a reimbursing bank? This can, of course, be modified by the terms of the reimbursement authorization if such charges are to be for account of the beneficiary.
As mentioned at the beginning of this article, the use of URR is quite sporadic and whilst a large percentage of non-usage can be attributed to the type of availability of the majority of credits, there are still a number of banks whose choice of rules remains UCP. I will not attempt to try and dissuade them from whatever views they may have of URR that gave rise to such a policy, but it is worth looking at the gaps that exist between UCP article 13 and URR URR Article 2 provides a list of definitions of the parties and products associated with reimbursements; Article 3 creates the separateness of the credit and the reimbursement authorization; Article 4 a reimbursing bank is not obligated to reimburse unless they have provided a reimbursement undertaking see article 9 ; Article 5 statement of responsibility of the issuing bank for failing to incorporate necessary information into the reimbursement authorization; Article 6 requirements for the issuance of a reimbursement authorization although the SWIFT MT will prompt completion of most of this information.
Issuing bank cannot send a copy of the credit to serve as a reimbursement authorization. Form of reimbursement authorization. Requirements for pre-debit notification or pre-notification of a claim; Article 7 reimbursing bank may disregard any expiry date that may be stated. Clearly, there are aspects of a reimbursement process that are not suitably covered by UCP article This is a deliberate position to encourage usage of rules that are specifically designed for the product.
To expand the content of UCP article 13 to cover more areas of reimbursement processes would serve no useful purpose.
It was determined very early on in that process that the URR was required to remain a separate set of rules due to the reference that is made in ISP98 rule 8. URR and the impending seek to achieve this. The content of UCP article 13 covers the bare essentials without tackling the specifics. An issuing bank may find UCP article 13 as more flexible due to its lack of content, but for the sake of establishing international practice serious consideration should be given to adoption of URR now and from October 1, Training the professionals of the future.
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ICC Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits - URR 725
An updated version of the UCP took effect on 1 July last year. They clarify a number of issues in bank-to-bank reimbursements, such as expiry and conditions under which claims can be authenticated. URR will be used by practitioners who elect to incorporate the updated URR into their letters of credit. URR is now available as a four-page leaflet and is sold in sets of A bilingual edition in English and French will be available soon.
URR 725 : ICC uniform rules for bank-to-bank reimbursements under documentary credits
At the time, reimbursement authorizations had begun to be issued in currencies other than what had been the more common currency i. It should be noted that there had been Bank-to-Bank Reimbursement rules operating in the US for many years and these formed the basis for the establishment of the principles to be considered in drafting URR From July 1, issuing banks were faced with the decision as to whether their reimbursement authorizations should be made subject to URR or UCP article It is true to say that the usage of URR varies from country to country and will, no doubt, continue to do so with the updated version URR when it comes into effect on October 1,
URR 725 – The Uniform Rules for Bank-to-Bank Reimbursements
URR has been effective since 01 October The rules are binding on all parties thereto, unless expressly modified or excluded by the reimbursement authorization. The issuing bank is responsible for indicating in the documentary credit that the reimbursement is subject to URR Thursday, June 4, Homepage Letter of Credit Consultancy Contact. Payment Methods in International Trade 20 February Irrevocable Letter of Credit Sample 11 January
ICC updates bank-to-bank reimbursement rules
Bank-to-Bank reimbursements play an important role in the documentary credit process. The use of a reimbursing bank is often a determining factor when a nominated bank decides to honour or negotiate. Banks that are requested to add confirmation will often prefer a reimbursing bank to be nominated in the documentary credit rather than rely on settlement being made directly by an issuing bank upon the issuing bank's receipt of complying documents. It is, therefore, often the case that an issuing bank will nominate another bank a reimbursing bank to provide reimbursement on its behalf. The use of a reimbursing bank, which is very often located in the country of the currency of the documentary credit, allows an issuing bank to utilise foreign currency it holds on an account with that bank, rather than face exchange rate risks associated with converting local currency to a foreign currency on a payment-by-payment basis. In such circumstances, the issuing bank, at the time of issuing its documentary credit, should send a reimbursement authorisation to the reimbursing bank instructing it to reimburse the claiming bank a named nominated bank or any bank should the documentary credit be available with any bank. The reimbursing bank will usually only pay a complying claim if funds are available in the account of the issuing bank, or where there is a sufficient overdraft facility in place, unless it has issued its own Irrevocable Reimbursement Undertaking IRU.