This newsletter completes the roundup of opinions that were discussed at the most recent ICC Banking Commission meeting. In the previous newsletter we covered opinions 688-697. Here we cover opinions 698-705 (706 was withdrawn at the meeting and will be submitted again for the April 2010 meeting).

The next opinion to be discussed focussed on the effect of an MT799 message that corrected details sent in the MT700 and added a further documentary requirement. The advising bank was authorised to add confirmation through the insertion of 'May Add' in field 49 of the MT700. The issuing bank then amended the credit using the correct format, an MT707 extending the shipment and expiry dates. The nominated bank determined that the documents complied but the issuing bank found a discrepancy, amongst others, that the additional document mentioned in the MT799 was not presented. The beneficiary had complied with the other conditions of the MT799. The nominated bank contested the discrepancy relating to the MT799 on the grounds that it could not be considered to be an amendment and had not been accepted by the beneficiary. The nominated bank also asked the Banking Commission whether they were obliged to inform the issuing bank of which amendments had been rejected by the beneficiary. 

The Banking Commission determined that the content of the MT799 constituted an amendment to the credit and was subject to the consent of the beneficiary. The issuing bank was obliged to honour documents that complied with the original credit; the original credit and the MT799 but not the MT707; the original credit, MT799 and MT707; or the original credit and the MT707, but not the MT799.

By use of the term 'May Add' in relation to adding confirmation, the confirming bank was at liberty to determine if and when they would add their confirmation. Lastly, the nominated bank was under no obligation to advise the issuing bank of which amendments had been accepted or rejected by the beneficiary.

See opinion TA698 (rev) for the full transcript of the above opinion

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The next opinion was one of the longest on record – some 7 pages! This opinion related to 3 discrepancies that had been found in a set of documents and whether or not they were valid.

The first discrepancy related to the languages used in the commercial invoice – Russian and English. Russian was used to the extent of the applicants name and address. The credit was silent with respect to the language of the documents and otherwise fully complied with the credit terms.

The next discrepancy related to the language of the CMR document. The content of the document was completed in Czech language, but again the credit was silent with respect to the language of the documents.

Related to the CMR discrepancy was an indication that the place of delivery was not as per the LC. The CMR showed "Minsk OOUNN 100027309, BY" whereas the LC stated "Minsk, Belarus".

These alleged discrepancies were found not to be valid.

The remaining discrepancy related to the insurance policy showing a different place of departure to the CMR. The credit stated place of taking in charge as Czech Republic, the CMR showed Podebrady CZ and the insurance policy Kolin, Czech Republic.

The nominated bank maintained that there was no discrepancy. The Banking Commission disagreed and determined that the documents would be discrepant for this reason.

See opinion TA699 (rev) for the full transcript of the above opinion

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This is one of the queries that could have related to any set of UCP rules. It focussed on the deduction of charges, given 4 scenarios, and whether issuing banks were entitled to deduct such fees without specific mention in the credit.

The first related to discrepancy fees. The issuing bank had paid less a discrepancy fee although the LC was silent in respect of such fees being deducted. The credit stated "all charges outside country X for account of the beneficiary". The view of the Banking Commission was that if a bank wishes to deduct a discrepancy fee then reference to that fee (and the amount thereof) should be stated in the credit.

The next related to a credit stating "all charges outside country x for account of the beneficiary". The issuing bank deducted a fee covering telex/SWIFT and reimbursement commission. The Banking Commission view was that this fee was not justified and the costs in making a payment is a fee that should be borne by the applicant.

The third scenario involved similar circumstances as above except that the nominated bank requested an advice of maturity from the issuing bank. The view of the Banking Commission was that as the nominated bank had specifically requested a form of advice (SWIFT) then the costs for that advice should not be borne by the applicant.

The last scenario refers to the situation where a discrepancy fee has been deducted from the proceeds but no refusal message has been sent to the nominated bank. The credit made specific reference to the fact that a discrepancy fee would be charged. The issuing bank had approached the applicant for a waiver, received an acceptable waiver and decided to make payment. They then deducted a discrepancy fee. The view of the Banking Commission was that the issuing bank was entitled to a discrepancy fee but the issuing bank should inform the nominated bank of the discrepancies for which the documents were originally refused. This would allow the nominated bank to contest the discrepancies if they did not believe them to be valid.

See opinion TA700 (rev) for the full transcript of the above opinion

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A credit was issued stating:

44A Prague, Czech Republic
44E Hamburg, Germany
44F Any Port in China
44C 090331
46A Full set of Multimodal Transport Bills of Lading

Documents were presented with a MMTD document dated 31 March 2009, bearing an on board notation stating "shipped on board vessel X in Hamburg on 04/04/2009".

The issuing bank refused due to late shipment and that the country names were not quoted in the MMTD in respect of Prague, Hamburg and the port in China, i.e., Czech Republic, Germany and China was missing from the details shown – DE was used instead of Germany.

TThe Banking Commission determined that the documents were compliant on the basis that the goods were received in Prague on 31 March (as evidenced by the MMTD) and that there is no requirement in the UCP or international standard banking practice for the names of the countries to appear alongside the City/Port names.

See opinion TA701 for the full transcript of the above opinion

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A credit required presentation of an air waybill, but contained no information with regard to the consignee or notify party. The applicant's name and address appeared in field 50 of the MT700. The air waybill was presented evidencing the consignee and notify party details as the applicant with two different addresses to those stated in field 50.

The issuing bank refused on the grounds that the address of the applicant, in both the consignee and notify party boxes, were different from that in field 50 of the MT700 and therefore in breach of sub-article 14 (j).

The nominated bank refuted the discrepancy citing ISBP paragraph 144 which allows for any notify party to appear where the LC is silent.

The Banking Commission determined that the issuing bank was correct. Despite the wording in ISBP paragraph 144, sub-article 14 (j) specifically refers to situations "when" the name and address of the applicant appear as part of the consignee or notify party details on a transport document. The referenced sub-article draws no distinction between circumstances where the credit specifies the consignee and notify party details or not.

See opinion TA702 (rev) for the full transcript of the above opinion

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This opinion covered an issue that was raised in one of the other opinions, i.e., where the credit specifies that documents must be issued in English and a document is issued in a different language. In this case, it was the draft. The draft was a pre-printed form that was in Spanish but the data that was added was in English.

The Banking Commission determined that the document complied. The opinion also offered some advice with regard to examination of drafts where the credit requires "all documents" to be issued in a certain manner or contain certain data: "1. [F]or the purposes of a clause such as "all documents must be issued in English", a draft is not to be considered as one of those required documents unless the credit requires the presentation of a draft drawn on the applicant under "documents required".

2. A draft is to be examined to the extent required by the terms and conditions of the credit, the UCP and applicable local law."

See opinion TA703 (rev) for the full transcript of the above opinion

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The next opinion referred to a credit that contained the following clause "Should any terms or conditions stipulated in this credit be contradictory to or inconsistent with that of the UCP 600, the relative UCP 600 provisions are deemed expressly modified and/or excluded."

The national committee advised that some banks in their country were not happy with the tone of the comment or the extent to which it may be applied. They asked the question as to whether each credit should specifically mention which articles have been excluded or modified.

The Banking Commission view was that where a clause is to be excluded then there should be an express indication of this. Where a modification occurs, this can be as simple as stating "15" in field 48 of the MT700 to signify the presentation period as 15 days. This would, for example, modify the rule in sub-article 14 (c) which refers to 21 days. The Banking Commission did state that they saw no reason for such wording to appear in any credit as it was only emphasising what is stated in article 1. The Banking Commission also made the recommendation that modifications and exclusions should be kept to a minimum.

See opinion TA704 (rev) for the full transcript of the above opinion

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The last opinion for review focussed on a situation where an advising bank received a credit and observed that the name and address of the beneficiary had been incorrectly spelt. They informed the issuing bank of this fact and requested that they update their files. The issuing bank did not respond.

The beneficiary presented the documents in their correct name. The issuing bank refused on the grounds that the beneficiary name shown on a number of documents was not the one stated in the credit. It was decided that whilst the discrepancy was not valid based on the message from the advising bank to the issuing bank, the beneficiary and advising bank would have been wise to seek an amendment before proceeding to shipment , presentation of documents and their further handling.

This request for opinion also referred to another situation. A credit was issued requiring shipment from a Czech Republic port with presentation of a bill of lading. The Czech Republic is landlocked; therefore the condition is impossible to comply with. The advising bank informed the issuing bank of this fact and the issuing bank reverted saying "we have taken up with the customer". The beneficiary nevertheless proceeded to ship the goods and presented a bill of lading showing receipt in Czech Republic with the port of loading as Hamburg. The issuing bank refused the documents citing port of loading not as per LC.

The decision in this case was that the documents were discrepant as the applicant should be allowed to provide proper routing instructions for the goods. The beneficiary did not have the ability to make their own choice of routing.

See opinion TA705(rev) for the full transcript of the above opinion

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