You are creating a template in xslt 1.0, but this template has been built in xslt 2.0 before

You may get above error message when you to edit Oracle BI RTF which uses xslt tags in Windows word.

By default, BI Publisher is compatible with XSLT 1.0. But If you wish to use XSLT and XPath 2.0 features in your template you must disable XSLT 1.0 compatibility. This configuration is performed at the template level. The template-level setting will override the server setting. Reference

Just change the setting for Oracle BI Add on in Word

BI Publisher Tab > Options > Build Tab

Tick Mark the checkbox for Generate XSLT 2.0 compliant code