In this newsletter, we will continue to look at the Opinions that were approved
by the ICC Banking Commission at their meeting on 22-23 March.
TA735 and TA736 – These opinions were approved at the September 2010
meeting of the Banking Commission.
TA737rev – This query referred to a Certificate of Origin that had been
produced in what appeared to be a scanned form. The document indicated that it
can be "verified online" and included the text "For online verification of this
Certificate, please visit our website". The document also indicated the address
of the website as well as a 'verify ID'. Attached to the document was a copy of
an invoice and this was stamped 'attachment to the Certificate of Origin - [name
of Chamber of Commerce]'. The goods description field on the Certificate of
Origin stated "as per the attached invoice".
A question was asked whether this document could be considered as an original
under article 17, given that it had apparently been downloaded from a website.
The analysis and conclusion referred to the fact that banks are not required to
review websites or other sources to determine whether a document is compliant or
not (sub-article 14 (a)). The document did not profess to be a copy of an
original or bear any evidence to that effect. The invoice of the beneficiary was
attached to the Certificate of Origin and was stated to form part of that
document. In this context, the document was not completely reproduced and,
therefore, the conclusion was that it would be compliant under article 17.
However, this query raises the wider issue of how to determine whether a
document has been completely reproduced or not, given the quality of prints that
are obtained from printers today. The ISBP drafting group will be looking at the
ICC Decision on Original Documents (dated 12 July 1999) as part of the ISBP
revision process to update it for reference under UCP 600 and this will need to
be one of the issues that are reviewed.
See opinion TA737rev for the full transcript of the above opinion
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TA738rev – This query referred to a standby credit subject to UCP 600
that required, among other documents, a beneficiary signed certificate and a
copy of unpaid invoice(s). The credit stated that these documents "must bear the
confirmation of the beneficiary's bankers that signatories thereon are
authorised to sign."
A drawing was made under the standby and documents were forwarded to the issuing
bank. Instead of the requested confirmation appearing on the stated documents,
the advising bank gave a certification, as required by the credit, on their
covering letter. They also sent a SWIFT MT799 to the issuing bank giving the
same certification. The issuing bank refused the drawing due to the documents
not containing the countersignature as requested by the standby. The advising
bank objected arguing that a certification given by SWIFT MT799 was equally
acceptable and that confirmation of signatures did not necessarily equate to a
countersignature of the bank certifying the correctness of the signatures. The
advising bank subsequently agreed that the certification on their covering
letter could be disregarded, as it was not a document called for under the
credit. The advising bank sought clarification from the Banking Commission (a)
that the SWIFT MT799 was an acceptable and recognised means of conveying the
required confirmation and that it complied with the content of paragraph 8 of
ISBP publication 681; and (b) whether the issuing bank referred to the wrong
discrepancy when it stated "not countersigned" as opposed to not bearing a
confirmation of the signatures?
The conclusion to this query stated that the confirmation of the signatures
should have appeared on the specified documents, and that the SWIFT MT799 was
not a required document under the credit and could not serve that purpose.
Despite the fact that the answers to the questions did not support the views of
the initiator, the conclusion added that the issuing bank must still honour as
their refusal notice did not contain a status of the documents that complied
with sub-article 16 (c) (iii) (a-d). Despite the fact that documents under a
standby do not usually have any commercial value, a refusal must still comply
with the full requirements of article 16.
See opinion TA738rev for the full transcript of the above opinion.
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TA739 - The response to this query was drafted but withdrawn prior to the
meeting due to it becoming apparent that the question related to a current court
case.
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TA740rev - The questions in this query focussed on the URDG 758 (and 458)
in the context of whether (a) there are any circumstances under the URDG that
allow the guarantor to be released from its obligations; (b) in that situation
how is the relationship regulated between the beneficiary and the guarantor; (c)
are there any specific requirements for the beneficiary to make a claim against
the guarantor in such circumstances; and (d) can the beneficiary take court
action against a guarantor for non-payment?
The analysis and conclusion referred to the obligation of the guarantor to
honour a complying demand and that under the URDG the guarantor cannot be
released from their liability. However, the initiator of the query was referred
to the fact that the applicable law may provide for a different conclusion based
on fraud, provisional court measures, or the nullity of the undertaking, but
these factors are outside the URDG.
See opinion TA740rev for the full transcript of the above opinion
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TA741rev - A similar question to that posed in opinion
TA740rev was asked in relation to UCP 600. Namely, (a) there are any
circumstances under the UCP that allow the issuing bank to be released from its
obligations; (b) in that situation how is the relationship regulated between the
beneficiary and the issuing bank; (c) are there any specific requirements for
the beneficiary to make a claim against the issuing bank in such circumstances;
and (d) can the beneficiary take court action against an issuing bank for
non-payment?
The analysis and conclusion referred to the obligation of the issuing bank to
honour a complying presentation and that under the UCP the issuing bank cannot
be released from their liability. However, the initiator of the query was
referred to the fact that the applicable law may provide for a different
conclusion based on fraud, provisional court measures, or the nullity of the
undertaking, but these factors are outside the UCP.
See opinion TA741rev for the full transcript of the above opinion
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TA742rev - Can a confirming bank 'reinstate' its confirmation once the
issuing bank approves discrepancies in the documents? This was the question that
was asked in this opinion.
ICC Opinion R520 has previously made it clear that if a confirming bank finds
discrepancies in the documents then the confirmation is no longer applicable for
the respective drawing. This question asked whether the bank could reinstate
their confirmation if they were in agreement to do so and whether such action
required the consent of the issuing bank.
The response from the Banking Commission stated that when a nominated bank,
following the receipt of an advice from the issuing bank that the documents have
been taken up, agrees to accept a draft, incur a deferred payment undertaking or
negotiate without recourse, this would constitute an undertaking of that bank.
This position is irrespective of whether the bank reinstated its confirmation or
not. However, a decision to accept a draft, incur a deferred payment undertaking
or to negotiate without recourse may only have been made as a result of the bank
determining that it agrees to reinstate its confirmation, and it does not matter
whether this was at the instigation of the bank or as a result of a request from
the beneficiary.
The UCP contains no rules in respect of a bank reinstating its confirmation and
the request or authorization of the issuing bank to add confirmation can only be
withdrawn by an amendment from the issuing bank that will be subject to the
consent of the confirming bank, if the confirmation is still valid, and the
beneficiary.
The conclusion stated that once a nominated bank's confirmation has lapsed as a
result of complying documents not being presented within the validity of the
credit, any subsequent agreement by the nominated bank either to reinstate its
confirmation or to agree to act as if its confirmation still stands in respect
of the presentation, is solely for the nominated bank to decide. It may do so
without further reference to, or authorization from, the issuing bank.
See opinion TA742rev for the full transcript of the above opinion
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TA743rev - This query referred to a refusal that had been issued
stating "on board notation not showing goods loaded on board the ocean vessel
(L)."
The credit required shipment to be effected from Sibu, Malaysia to Hong Kong
with presentation of a full set of bills of lading. The bills of lading showed
the following information:
Pre-carriage by: Vessel N Place of Receipt: Sibu,
Malaysia
Ocean Vessel: Vessel L Port of
Loading: Sibu, Malaysia
Port of Discharge: Hong Kong
There was also an on board notation stating "Shipped on board MV 'N' at Sibu,
Malaysia on 18.11.2010 for transhipment via Bintulu on MV 'L'".
The initiator requested confirmation from the Banking Commission as to whether
the discrepancy was correct using the argument that data appearing in an on
board notation will always override any conflicting data elsewhere in the bill
of lading.
The Banking Commission agreed that the wording of an on board notation can
correct an anomaly in the data appearing elsewhere on a bill of lading BUT this
will not always be the case.
However, for this example, the Banking Commission agreed that the wording of the
on board notation provided a clear indication that the goods were shipped on
board the vessel N from Sibu and that they were to be transhipped on to the
vessel L at Bintulu. The discrepancy was not valid.
See opinion TA743rev for the full transcript of the above opinion
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Qualifies for 6 PDUs towards recertification for the Certified Documentary Credit Specialist (CDCS)
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