**When Negotiable Cargo Documents Move Beyond Ocean Bills of Lading: A New Challenge for Letters of Credit and the UCP**

Introduction

The United Nations’ formal adoption of a new convention on negotiable cargo documents — the United Nations Convention on Negotiable Cargo Documents (New York, 2025), also known as the Accra Convention on Negotiable Cargo Documents — marks a notable development in international trade law. For the first time, the negotiability of transport documents — long primarily associated with ocean bills of lading — is extended to all modes of transport, including multimodal transport and electronic documents.

This development has been widely regarded as significant for global logistics and supply chains. However, from the perspective of letters of credit (LCs) and banking practice governed by UCP 600, its implications may be considerably more far-reaching than a purely legal adjustment.

1. Negotiability and Traditional LC Practice

In LC practice, negotiable documents have, in essence, been understood and applied primarily through ocean bills of lading issued “to order.” This characteristic enables banks to link financing to the document, thereby exercising control over the goods through negotiability during transit.

By contrast, other transport documents — such as air waybills (AWB), sea waybills, and road, rail or inland waterway transport documents (such as CMR and CIM) — have traditionally been regarded as non-negotiable. While such documents entitle the named consignee to delivery of the goods, they do not represent transferable rights to the goods by endorsement, and therefore play only a limited role in trade finance.

This understanding has shaped a relatively stable framework in LC operations and forms the basis of UCP 600’s approach to transport documents.

2. A Challenge to the Current Approach of UCP 600

UCP 600 reflects a relatively clear and structured approach to transport documents in documentary credit transactions, under which negotiability is linked to specific document types and modes of transport.

Under this approach, transport documents may be divided into two groups.

Negotiable transport documents

• Article 20, governing ocean bills of lading, which in LC practice are regarded as the typical form of negotiable document when issued “to order” and transferable by endorsement;
• Article 19, governing multimodal transport documents, which may also be negotiable and transferable by endorsement if issued “to order”;
• Article 22, governing charter party bills of lading, which may likewise be negotiable when issued “to order.”

Non-negotiable transport documents

• Article 23, governing air transport documents, which are not documents of title and cannot be transferred by endorsement in the manner of ocean bills of lading;
• Article 24, governing road, rail or inland waterway transport documents, which are also non-negotiable and do not allow transfer of rights to the goods through endorsement.

This classification demonstrates that UCP 600 primarily determines negotiability based on the type of document and mode of transport, rather than directly on the legal nature of the document and the manner in which rights to the goods may be transferred or controlled through the document.

In this context, if transport documents falling within Articles 23 or 24 are, under the new United Nations convention, legally recognised as negotiable — that is, capable of being issued “to order” and of transferring rights to the goods through endorsement — the current approach of UCP 600 would no longer fully reflect evolving practice.

The issue that then arises is not whether banks should examine documents under transport law, but whether UCP 600 and the ISBP guidelines require revision to ensure that the classification and handling of documents in LC transactions remain consistent with emerging legal realities.

3. The Potential Need for UCP Revision in the New Context

Against this background, a future revision of the UCP is a possibility that warrants careful consideration.

Rather than approaching transport documents primarily by reference to the mode of transport, a revised UCP framework may need to place greater emphasis on the legal nature of the document, particularly on whether and how rights to the goods may be transferred or controlled through the document.

Any such revision would be aimed at ensuring that the UCP rules, together with the documentary examination guidelines set out in the ISBP, continue to reflect the evolving legal nature of transport documents recognised in international trade practice.

It remains a fundamental principle of LC operations that banks examine documents on the basis of the terms and conditions of the credit and the provisions of the UCP, as guided by the ISBP, and not on the basis of the transport law applicable to the document.

However, if negotiable cargo documents under the new United Nations convention become widely accepted and used in LC transactions, ICC consideration of revisions to UCP 600 and the ISBP to align them with the new legal framework would be difficult to avoid, in order to preserve both legal coherence and operational certainty in documentary credit practice.

4. Implications for LC Issuance Practice

If this new legal approach is accepted, LC issuance practice will also require corresponding adjustments.

In the future, credits may no longer merely require a “full set of original bills of lading” in the traditional sense, but may need to specify more clearly:

• which documents confer control over the goods;
• the mechanism by which rights to the goods are transferred through the document; and
• the legal effectiveness of the document under the applicable law.

Accordingly, possibilities that have received limited attention in LC practice — such as air transport documents issued “to order” and treated as negotiable — may need to be reassessed from both legal and risk-management perspectives.

5. Impact on Document Examination and Risk Management

If implemented, these developments would have a direct impact on core banking operations, particularly document examination in LC transactions.

In LC practice, banks examine documents on the basis of the terms of the credit and the provisions of the UCP, as guided by the ISBP, and not on the basis of the transport law applicable to the document.

Nevertheless, if negotiable cargo documents become widely recognised under the new United Nations convention, the existing UCP and ISBP may no longer fully reflect new legal realities. In such circumstances, ICC consideration of revisions to UCP and ISBP would be difficult to avoid.

From a risk-management perspective, banks would also need to reassess the degree of control over goods exercised through documents, as well as associated risks, including fraud risk and risks arising from inconsistencies between UCP, ISBP and national laws during any transitional period.

6. Conclusion

The United Nations Convention on Negotiable Cargo Documents represents more than a step forward in logistics or the digitalisation of international trade.

From the perspective of letters of credit, it raises issues of a structural nature, calling into question long-standing assumptions regarding transport documents, control of goods, and documentary compliance.

For LC practice, the critical issue is not whether banks should apply or interpret transport law directly, but whether the rules governing documentary examination — specifically UCP 600 and the ISBP — continue to reflect evolving legal realities.

Should the convention be widely adopted and recognised by the ICC in LC practice, UCP is unlikely to remain unchanged, and corresponding revisions to the ISBP would also be required to ensure consistency, certainty, and practical applicability in banking operations.

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Nguyen Huu Duc

References

1. UN adopts “game changer” treaty on negotiable cargo documents, Global Trade Review (GTR)

https://www.gtreview.com/news/global/un-adopts-game-changer-treaty-on-negotiable-cargo-documents/

1. United Nations Convention on Negotiable Cargo Documents (Accra Convention on Negotiable Cargo Documents), United Nations / UNCITRAL

https://uncitral.un.org/en/ncdconvention