The ICC Banking Commission, held in Athens on April 15 and 16 saw another mixed bag of opinions to be discussed by the members. As usual, a lively debate ensued but not to the level or detail that was expected by some, including the writer!

The first item on the agenda was an opinion that had been held over from October 2007 pending input from the Transport and Commercial Law & Practice Commissions. The issue centered on whether a party could sign a bill of lading in the capacity of agent for itself i.e., ABC Co. Ltd as agent for ABC Co. Ltd, the carrier. At the October 2007 meeting, the proposed response (to refuse the document on the grounds that a company could not sign as agent of itself and the bill of lading was therefore inconsistent within itself ) was accepted by the majority of the national committees, but a couple requested that the Officer's seek input from the other two Commissions before we ratified the opinion. The response from the two Commissions was somewhat mixed in that one determined that the party ABC Co. Ltd was the agent, whilst the other referred to the fact that different parts of the same organization could perform different tasks and therefore it was not inconceivable that ABC Co. Ltd could sign as agent of ABC Co. Ltd. Based on this input, the original response was changed to reflect that a bill of lading signed in such a manner would be acceptable under the UCP.
See opinion TA625rev2 for the full transcript of the opinion.

Should a bank refuse a bill of lading that indicates "freight paid" (as required by the credit) but then states in the pre-printed text on the face of the bill of lading "for freight prepaid bill of lading, delivery of goods is subject to realization of cheque"? That was the question posed in opinion TA642. Due to the nature of the query, the ICC's Transport Commission was approached for their concurrence to the proposed response. That response "It should be noted that banks are not required to examine the terms and conditions of a bill of lading to determine compliance (sub-article 20 (a) (v)). The bill of lading is not discrepant." was supported. In addition, they commented that "If a carrier or their agent issues a bill of lading and takes the commercial risk to stamp it "freight prepaid" then they must release the goods to the consignee or holder whether or not they have actually received payment. The bill of lading, as issued, clearly would not require the consignee or holder to pay the freight."
See opinion TA642rev for the full transcript of the opinion.

A topic that has been a bone of contention for some time, in fact since the issuance of ICC Position Paper Number 3 which referred to the dreaded word "linkage", is where there are non-documentary conditions within a credit and a bank's responsibilities with regard to examination of documents that may be affected by such non-documentary conditions or where the beneficiary provides data that conflicts with a non-documentary condition. This issue has been tackled in opinion TA644. A question was posed in relation to a credit that incorporated details of shipment (latest shipment date, shipment from and to, etc.,) but did not require the presentation of a transport document. Should these conditions be treated as non-documentary irrespective of the presentation of the stipulated documents or any data that may appear thereon? The response that was given, and supported by the vast majority of those national committees that either commented in writing or verbally at the meeting (putting aside the issue of a credit covering shipment of goods but not calling for a transport document to evidence shipment of those goods), was that the conditions could be disregarded in accordance with the content of sub-article 14 (h). However, if the beneficiary chose to add data to any stipulated document beyond that required by the credit or UCP, then they must ensure that that data does not conflict with the non-documentary condition. The final sentence of the opinion makes the position clear "The view of the Banking Commission is that sub-article 14 (h) is not absolute and is qualified by the content of sub-article 14 (d)."
See opinion TA644rev for the full transcript of the opinion.

A number of requests for opinions stem from a dispute between banks or between a bank and a beneficiary in relation to a presentation of documents. ICC opinion TA647 is no different. A credit required that all documents be issued in English. Among the required documents was a CMR which is printed in dual language (sometimes even a third language). The confirming bank refused documents due to "CMR not preprinted in English". All data within the document was completed in English, but the heading of the individual boxes was completed in Croatian and French. However, on the reverse of the document the headings were described in German, Italian and English. Included in the analysis and conclusion to this opinion is the following "The data inserted in the respective fields of the CMR document was in English, there is no discrepancy."
See opinion TA647rev for the full transcript of the opinion.

In reviewing requests for opinions under UCP 600, it is often the case that the question would have equally applied under UCP 500. The request for an opinion under TA650 is no exception. This query centers on whether a multimodal transport document is required to evidence a dated shipped on board notation where the credit requires "clean on board multimodal transport document ......" and shipment from a port to an inland destination. Also whether a dated on board notation is required where the first leg of the carriage of goods is by sea and the credit did not request an 'on board' transport document. In answer to the first part of the question, the opinion states that if the credit required an on board transport document then the document must evidence that the goods are shipped on board, either pre-printed or by way of a notation. Also, where the first leg of the carriage involves a sea leg, the transport document must contain an on board notation.
See opinion TA650rev for the full transcript of the opinion.

Another, on similar lines to TA650, in that it could equally apply under UCP 500, is the next request.... under which rule is a house bill of lading examined where there is a requirement in a credit for a house bill of lading or a credit calling for a bill of lading that states "house bill of lading acceptable". If such a document is presented is it reviewed under sub-article 14 (f) and not article 20? In previous opinions the ICC has tackled the issue of what is the interpretation of "freight forwarder bills of lading acceptable"? This is no different. In the transport articles, there is reference to 'however named'. In the context of a bill of lading and article 20,this could be "bill of lading, marine bill of lading, ocean bill of lading, liner bill of lading, house bill of lading, forwarders bill of lading etc.,". The document, however named, will be examined (in this case) under article 20 and not sub-article 14 (f). Where a credit requires or allows the presentation of a house bill of lading or forwarders bill of lading, the exception to article 20 is that the bill of lading may be signed by the forwarder in the capacity as forwarder without naming the carrier. The premise behind this position is that the UCP already allows for the presentation of a bill of lading (or other transport document) 'however named', which would include the house bill of lading or forwarder bill of lading. These documents would still need to indicate the name of the carrier, be signed according to sub-article 20 (a) (i) and meet the conditions expressed in the remainder of article 20. To make specific reference to house bill of lading or forwarder bill of lading acceptable implies the acceptance of a document issued in a manner different to that contemplated by article 20. Thus, the allowance for the transport document to be signed in the capacity of forwarder and not naming the carrier. Banks and applicants should take note that there is no need to make specific reference to allowing house bills of lading or forwarder bills of lading. If they do, they will be required to accept a document in a form that maybe they did not expect to receive.
See opinion TA651rev for the full transcript of the opinion.

An opinion that was held over from the April meeting is one that is causing a number of banks problems - namely, the issue of sanctions clauses appearing in credits. Sanctions clauses were, historically, associated with US banks and the sanctions imposed by the US Government and the UN. More recently, the issue of sanctions has become more widespread with Governments across the globe introducing varying levels of sanctions against individuals, companies, banks and countries. With a proliferation of different clauses appearing on credits, it is becoming unclear as to how a nominated or confirming bank should act under a credit incorporating such a clause. At the end of the day, this is a legal issue and not a UCP one. In a case highlighted in the presented query, a confirming bank honoured under a credit incorporating a sanctions clause and the issuing bank sent a MT799 indicating that one of the documents contravened one of the sanctions criteria and that they would not be able to honour. The initiator of the query enquired as to whether a MT799 was valid given that the bank should have refused the documents under UCP. As mentioned above, this is not a UCP issue and in most cases, the documents must be seized by the bank. It therefore follows that a bank cannot provide a refusal according to sub-article 16 (c) (iii) (a-d) as for (a) they cannot seek instructions on the documents, (b) they cannot seek waiver - if they are the issuing bank, (c) they cannot return the documents and (d) they cannot act according to instructions previously received. A number of national committees requested that this issue be addressed outside of an opinion and the decision was taken to withdraw this query pending a review of the position and reporting back to the national committees at the next meeting in October.


More from the ICC Banking Commission meeting opinions in the next newsletter.