Estimated reading time: 12 minutes
This article was written by John Dunlop and Simona Racek.
These are the first ICC universal rules for completely digital trade transactions using Internet protocols. The following are edited highlights.
Preliminary Considerations
“The ICC Uniform Rules for Digital Trade Transactions (URDTT) are intended:
- for a fully digital environment
- to be neutral with regard to technology and messaging standards
- to extend into the corporate space, including commercial transactions and the growing community of non-bank providers of financial services.“
Article 1: Scope of the Uniform Rules for Digital Trade Transactions (URDTT) Version 1.0
- The URDTT provides a framework that applies to each Party or Person that participates in a Digital Trade Transaction (DTT).
- A Digital Trade Transaction is a process, whereby Electronic Records are used to evidence the underlying sale and purchase of goods or services, and the incurring of a Payment Obligation (new document).
- The URDTT shall apply when the terms and conditions of a Digital Trade Transaction specify that it is subject to these rules. The URDTT are binding on each Party or Person …
Article 2: Definitions
Addressee means the Party or Person that receives or is granted access to an Electronic Record by the Submitter.
Beneficiary means the Seller or any other Party or Person that has acquired the rights and benefits of a Payment Obligation, in whole or in part, as a transferee.
Business Day means a day on which a Party or Person is regularly open
Buyer means a purchaser of goods or services.
Data Corruption means any distortion or loss of data.
Data Processing System means a computerised used to process and manipulate data.
Electronic Record means data created, generated, sent, communicated, Received or stored by electronic means.
Electronic Signature means a data process in order to identify that Party or Person.
Financial Services Provider (FSP) means a financial institution or a Person, other than a Principal Party.
FSP Payment Undertaking means an irrevocable undertaking of a Financial Services Provider to effect payment to the Beneficiary of a Payment Obligation.
Obligor means a Buyer that incurs a Payment Obligation or any Financial Services Provider that adds its FSP Payment Undertaking to a Payment Obligation.
Party means a Principal Party or a Financial Services Provider.
Payment Obligation means an irrevocable obligation, incurred by a Buyer, that constitutes a definite undertaking to effect payment at sight, or on a fixed or determinable future date, to the Beneficiary.
Person means any type of person or entity, whether physical, corporate or other legal person or entity.
Principal Party means a Buyer or a Seller.
Seller means a seller of goods or services.
Submitter means a Party or Person that sends, or makes available, an Electronic Record to an Addressee.
Transfer means the transferring of the rights and benefits of a Payment Obligation (in whole or in part) and, where added, an FSP Payment Undertaking (in whole or in part), by the Beneficiary to one or more transferees.
UTC means Universal Time Coordinated
Article 3: Interpretations
For the purpose of these rules:
a. Where applicable, words in the singular include the plural and in the plural include the singular
Article 4: Principal Party
For the purpose of these rules:
a. The role of a Seller includes:
- The delivery of goods or the supply of services in accordance with the terms and conditions of a Digital Trade Transaction;
- Providing information required to enable the delivery of goods or the supply of services; and
- Providing any additional information as may be required including Electronic Records of certificates of inspection and insurance.
Article 5: Financial Services Provider
a. The role of a Financial Services Provider includes:
- Providing finance or risk mitigation to a Beneficiary or Buyer or other Financial Services Provider; or
- Effecting payment to a Beneficiary; or
- If requested by a Principal Party or any other Beneficiary, adding its FSP Payment Undertaking to a Payment Obligation and effecting payment thereunder at sight.
b. A Financial Services Provider does not deal with the goods or services
c. 1. A Financial Services Provider assumes no liability or responsibility for the form, sufficiency, accuracy, any Electronic Record,
2. If a Financial Services Provider, as Addressee of an Electronic Record, acts subsequently as a Submitter of the same Electronic Record, it assumes liability and responsibility for that Electronic Record
d. When a Financial Services Provider adds its FSP Payment Undertaking to a Payment Obligation, it is bound by the same version of the URDTT that is applicable to the Principal Parties
Article 6: Submitter and Addressee
a. A Submitter has responsibility to ensure the authenticity, accuracy and completeness of an Electronic Record
b. An Addressee has no responsibility for the accuracy and completeness of an Electronic Record, as Received from a Submitter.
c. Each Submitter and Addressee assumes no liability or responsibility for the consequences arising out of the unavailability of a Data Processing System other than its own.
Article 7: Electronic Records
a. A Digital Trade Transaction must specify the terms and conditions by which compliance of an Electronic Record will be determined.
b. All data relating to a Digital Trade Transaction must be associated with, and be submitted by, a Submitter to an Addressee, in the form of an Electronic Record.
c. Any requirement for submission of one or more originals or copies of an Electronic Record is satisfied by the submission of one Electronic Record.
d. An Electronic Record submitted but not required by the terms and conditions of a Digital Trade Transaction may be disregarded …
e. Unless applicable law requires otherwise, a requirement that information should be in writing is satisfied when an Electronic Record containing such information is accessible to an Addressee.
f. Where the applicable law requires or permits delivery, transfer or possession of an Electronic Record, that requirement or permission is met by the transfer of that Electronic Record to the exclusive control of the Addressee.
Article 8: Non-compliance of an Electronic Record
a. If an Electronic Record does not comply with the terms and conditions of a Digital Trade Transaction or sub-article 7 (b), the Addressee must inform the Submitter, by means of a single notice, stating each reason for non-compliance of that Electronic Record.
b. In this event, the earliest to occur of the following:
- The Submitter replaces the non-compliant Electronic Record with a compliant Electronic Record
- The Principal Parties, amend the terms and conditions of the Digital Trade Transaction
- The Principal Parties, any other Obligor and any other Beneficiary accept the non-compliant Electronic Record
c. If an Addressee does not inform the Submitter by 23.59.59 UTC on the second Business Day following the date an Electronic Record is Received that it is non-compliant, that Electronic Record shall be considered as having been accepted by that Addressee.
Article 9: Data Corruption
a. If an Electronic Record appears to have been affected by Data Corruption, the Addressee may inform the Submitter and may request that it be re-submitted.
Article 10: Electronic Signature
Where an Electronic Signature of a Party or Person is used, it is to be in compliance with any conditions specific to that Electronic Signature in the Digital Trade Transaction.
Article 11: Data Processing system
Any acknowledgment of receipt generated by a Data Processing System does not imply that an Electronic Record has been viewed, examined or determined to be compliant or non-compliant by an Addressee.
Article 12: Payment Obligation
a. A Payment Obligation is incurred by the Buyer upon compliance with the terms and conditions of the Digital Trade Transaction by the Seller.
b. When a Payment Obligation is stated to be conditional, the obligation of the Buyer is to pay upon compliance with the terms and conditions of the Digital Trade Transaction by the Seller. As of that moment, the Payment Obligation is automatically amended to become unconditional and independent.
c. A Payment Obligation must include the following data elements:
- A unique reference linking the Payment Obligation to the Digital Trade Transaction;
- The name and address of the Principal Parties and any other Beneficiary;
- The currency and amount;
- If the amount is subject to payment of interest, this must be specified together with the basis on which interest is to be calculated and apportioned;
- The date it is incurred;
- The latest date for submission of Electronic Records;
- The payment terms:
- a.) payable at sight; or
- b.) the fixed or determinable future date or the basis for determining the payment date in accordance with the Payment Obligation and the Electronic Records themselves;
- Whether the Payment Obligation is conditional or unconditional and, if conditional, its conditions are to be as set out in the Digital Trade Transaction; and
- The applicable law.
d. A Payment Obligation may specify in its terms and conditions that it is transferable.
e. A Payment Obligation may only be amended or cancelled by a Principal Party with the agreement of the other Principal Party, any Financial Services Provider that has added its FSP Payment Undertaking, and any other Beneficiary.
Article 13: FSP Payment Undertaking
a. A Financial Services Provider may, at any time, add its FSP Payment Undertaking to a Payment Obligation
b. When a Financial Services Provider adds its FSP Payment Undertaking to a Payment Obligation, it undertakes to effect payment to the Beneficiary of that Payment Obligation.
c. If a Financial Services Provider is not prepared to do so, it must inform the requesting Principal Party
d. An FSP Payment Undertaking that is unconditional, is separate from and independent of, the Digital Trade Transaction, even
e. There may be more than one FSP Payment Undertaking added to a Payment Obligation
f. When a Principal Party or any other Beneficiary makes a request to a Financial Services Provider for an FSP Payment Undertaking to be added to a Payment Obligation (must) inform the other Principal Party and any other Beneficiary
g. An Electronic Record submitted but not required may be disregarded and disposed of.
Article 14: Amendments
a. An amendment to the terms and conditions of a Digital Trade Transaction requires the agreement of each Principal Party, (and) each Financial Services Provider
b. The terms and conditions of a Digital Trade Transaction, a Payment Obligation or an FSP Payment Undertaking are amended by the submission of a new Electronic Record, that incorporates the amended criteria,
c. Once submitted under a Digital Trade Transaction, a Payment Obligation or an FSP Payment Undertaking, an Electronic Record cannot be amended or deleted.
Article 15: Transfer
a. Where a Payment Obligation and, where added, an FSP Payment Undertaking is specified to be transferable, a Seller or any other Beneficiary, as transferor, may effect a Transfer in accordance with the Payment Obligation
b. i. If the rights and benefits of a Payment Obligation and, where added, an FSP Payment Undertaking have been transferred, the transferor must, … advise the Buyer or Financial Services Provider
ii. When an FSP Payment Undertaking has been added to a Payment Obligation that indicates that it is transferable, the FSP Payment Undertaking must state whether any Transfer is subject to the prior agreement of the Financial Services Provider.
c. Any Transfer shall include the transfer of the rights and benefits of any FSP Payment Undertaking If the Transfer of an FSP Payment Undertaking has been precluded by a Financial Services Provider then no Transfer of that Payment Obligation can be made unless that FSP Payment Undertaking has been amended or cancelled.
Article 16: Force Majeure
a. The Seller or any other Beneficiary assumes no liability or responsibility for the consequences arising out of the interruption of its business, including, caused by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, cyberattacks, or
Article 17: Applicable Law
The applicable law shall be as specified in the terms and conditions of the Digital Trade Transaction.
Conclusion
The ICC URDTT provides the rules and guidelines for millions of businesses in 200 countries to move trade transactions from paper to digital documents.
“In order to appreciate the true value of the URDTT we need to think beyond traditional instruments; think beyond traditional rulemaking; think beyond existing ways of doing business. The URDTT is not just a set of rules for banks; the rules extend into the corporate world and to the growing community of non-bank service providers as well.” ICC URDTT KS102E
Note: The eUCP GBM Workspace incorporates the URDTT Rules for Digital Trade Transactions and is available to the trade community worldwide to implement Digital Trade.
A work of thanks. Everyone involved with global trade owes thanks and respect to the farsighted vision of Gary Collyer, Dave Meynell, David Hennah, Geoffrey Wynne, and the URDTT Drafting Group.
About the Authors
John Dunlop
Mr. Dunlop is presently Director of Operations for ITFglobal.ie, and is responsible for the online trade transaction management team. The team’s vision is for all companies worldwide to be able to trade goods and services between themselves online via the Internet. He is a trade finance consultant with patents pending for online eUCP trade finance Internet solutions. Previously he was CEO of InterNetLC.com, LLC, providing management of international letters of credit for exporters and importers. He was past Director of International Services for Escrow.com. From that experience, he identified the need for simplified online international trade finance capability. Mr. Dunlop has been providing commercial letter of credit transaction management and documentation services since 1992. He has designed online trade finance capabilities for international banks and proprietary Internet-based software systems. He also teaches as an adjunct instructor for International Transactions at Grossmont College in San Diego, California. His work experience includes aerospace engineering, airline operations, and commercial jet engine marketing and management positions with major airlines and OEM manufacturers. During his four years of active service in the US Army, he served as a Captain commanding a company in Vietnam, and Deputy Director of Engineering at Corpus Christi Army Depot. Mr. Dunlop graduated from the University of Notre Dame in aerospace engineering and is a recipient of an Export Achievement Certificate from the US Department of Commerce and a member of their District Export Council.
Simona Racek
Simona Racek is the Director of Global Trade at Getting to Global, an innovative technology company that provides solutions and programs multiplying the impact of leading economic development, trade, and investment organizations around the world. Simona also serves as an International Expansion Advisor with the Los Angeles Regional Small Business Development Center Network and the California International Trade Center. Her expertise focuses on export solutions including assessing export regulations and facilitating applications for export-related financing and government grants. Simona is the President of Women In International Trade, Orange County Chapter.
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