In this first of a new series of newsletters we look at the origins and
development of the wording of certain UCP articles, and where certain ICC
Banking Commission Opinions refer to, and reinforce, the current wording. In
this newsletter we look at UCP 600 article 31 - Partial Drawings or Shipments.
In the first UCP, published in 1933, the sub-heading to article 36 was 'Partial
Shipments'. It was not until reference to standby letters of credit was
incorporated into article 1 of UCP 400 (1983 Revision) that the sub-heading
changed to "Partial drawings and/or shipments".
1933 Revision – "Uniform Customs and Practice for
Commercial Documentary Credits Publication No. 82"
Partial Shipments
Article 36
Banks may refuse to pay for partial shipments if they think it advisable.
In May 1938, the USA Commission on Foreign Banking adopted UCP 82 but issued a
number of guidelines to the rules including an exception to article 36. This
exception stated that documents covering a partial shipment were acceptable
unless expressly prohibited by the credit. It was also stated that even if the
credit mentioned the name of a steamer (vessel), partial shipment or shipments
by that steamer (vessel) were acceptable.
It should be noted that the concept adopted by the Commission on Foreign
Banking, of partial shipments being accepted unless expressly prohibited, forms
the basis of article 31 today. This guideline then formed the basis for the
wording that appeared in the revision of UCP 82, i.e., UCP 151 (article 36).
It would be very interesting to see how the rule in UCP 82 article 36 would be
applied if the wording were the same in UCP 600!!
It was not until UCP 400 sub-article 44 (c) that reference was first made to the
effect of partial shipments involving dispatch by post. It was UCP 500
sub-article 40 (c) that expanded this rule to also cover dispatch by courier.
2007 Revision – "Uniform Customs and Practice for
Documentary Credits Publication No. 600"
Partial Drawings or Shipments
Article 31
a. Partial drawings or shipments are allowed.
b. A presentation consisting of more than one set of transport documents
evidencing shipment commencing on the same means of conveyance and for the same
journey, provided they indicate the same destination, will not be regarded as
covering a partial shipment, even if they indicate different dates of shipment
or different ports of loading, places of taking in charge or dispatch. If the
presentation consists of more than one set of transport documents, the latest
date of shipment as evidenced on any of the sets of transport documents will be
regarded as the date of shipment.
A presentation consisting of one or more sets
of transport documents evidencing shipment on more than one means of conveyance
within the same mode of transport will be regarded as covering a partial
shipment, even if the means of conveyance leave on the same day for the same
destination.
c. A presentation consisting of more than one courier receipt, post receipt or
certificate of posting will not be regarded as a partial shipment if the courier
receipts, post receipts or certificates of posting appear to have been stamped
or signed by the same courier or postal service at the same place and date and
for the same destination.
There is often confusion in understanding the meaning of "means of conveyance"
and "mode of transport" as referred to in UCP 600 sub-article 31 (b). ICC
Opinion R240 offered a definition of each term whilst responding to the
following request for an interpretation of UCP 500 sub-article 40 (b):
"The issue is whether the term 'means of conveyance' as used in UCP 500
sub-article 40 (b) has a meaning which in substance is different from the
meaning of the term 'mode of transport' as used in UCP 400 sub-article 44 (d)."
In the analysis of the referenced opinion, it was stated:
"The term 'means of conveyance' has the meaning of a single vehicle (e.g.
vessel, aircraft, truck) whereas the term 'mode of transport' means the
type/nature of the transport (e.g. transport by sea, transport by air, transport
by road).
That both terms are not synonymous is evident from the context in which they are
used in a number of provisions, i.e. in UCP 400 [e.g. sub-article 25(c), article
28, sub-article 29(a), sub-articles 44 (b) and (d), UCP 500 (e.g. sub-article
26(a), sub-articles 28(c) and (d), sub-article 40(b), Incoterms 1990 (various
places)]."
Under UCP 600, sub-article 19 (b) also includes both terms and outlines the
different context in which they are used:
"For the purpose of this article, transhipment means unloading from one means
of conveyance and reloading to another means of conveyance (whether
or not in different modes of transport) during the carriage from the
place of dispatch, taking in charge or shipment to the place of final
destination stated in the credit." (emphasis added)
Opinion R240 also responded to a common enquiry made to the ICC Banking
Commission:
"Suppose that the transport documents (two separate CMRs) indicate that shipment
has/shipments have been made on two separate trucks but for the same journey and
to the same destination. The documents further indicate the same date and place
of taking in charge.
Question: Have partial shipments been effected or not?".
The analysis and conclusion given by the ICC Banking Commission stated that two
separate trucks are not the same means of conveyance. Therefore, the use of two
trucks is to be regarded as a partial shipment. The second paragraph of UCP 600
sub-article 31 (b) reflects this position.
In ICC Opinion R478 a question was asked as to whether, under a L/C that
prohibits partial shipment, it is correct to accept a drawing evidencing
shipment by one truck with a trailer?
The analysis and conclusion given by the ICC Banking Commission stated that
dispatch by a truck with a trailer does not constitute a partial shipment. The
truck and trailer are considered to be one means of conveyance.
ICC Banking Commission Opinion R369 focusses upon a shipment made by rail,
consisting of 3 wagons each containing 60 tonnes of wheat flour. The initiator
described the shipment as being "in one and the same day, in one and the same
direction, in one and the same place by one and the same train."
A bank refused the documents based upon ICC Opinion 470/GE46 which included the
following : "... separate trucks are not the same means of conveyance …". "The
term "means of conveyance" has the meaning of a single vehicle (e.g. vessel,
aircraft, truck … )."
The bank was clearly attempting to apply the principle outlined above, of
separate trucks indicating a partial shipment event, to a shipment made by rail
when more than one wagon is used, but they are part of the same train.
The analysis and conclusion given to this opinion included "the use of a train
with wagons attached, is a different set of circumstances to that in query
470.GE.46. Here we have one train with three (or more) wagons attached. On this
basis, transport documents which evidence that the wagons were attached to the
same train for the same journey would not constitute a partial shipment, as they
are part of the same means of conveyance."
The principle of "A presentation consisting of more than one set of transport
documents evidencing shipment commencing on the same means of conveyance and for
the same journey, provided they indicate the same destination, will not be
regarded as covering a partial shipment, even if they indicate different dates
of shipment or different ports of loading, places of taking in charge or
dispatch" (as stated in UCP 600 sub-article 31 (b)) is generally well
understood.
If a credit prohibits partial shipment, the beneficiary may present one or more
sets of transport documents always provided the transport documents indicate the
same destination and otherwise comply with the content of sub-article 31 (b).
ICC Opinions R368 and 370 refer to situations where the intention of the
applicant or beneficiary is for the goods to be offloaded at more than one port
of discharge. In these circumstances, the credit must clearly indicate these
ports of discharge, or that discharge may be made at one or more ports within a
given range or geographical area. A credit so worded will modify the effect of
the reference to 'same destination' in sub-article 31 (b).
Confusion can often occur when a credit contains a shipment schedule and there
is no further reference made to partial shipments. ICC Opinion R690 covers one such
example. The credit stated in field 43P "allowed see under Field 47A". Field 47A
gave details of a shipment schedule indicating the need for a certain quantity
of goods to be shipped no later than certain specified dates. These dates were
latest shipment dates as opposed to shipment requirements falling within given
periods. The result of this (poor) construction was that the beneficiary could
ship any quantity of goods, subject to complying with the minimum quantity to be
shipped by each respective date. The credit did not prohibit partial shipments
within each stated latest shipment date. The issuing bank refused the documents
on the basis that the beneficiary had made a number of shipments within the
latest shipment date stated for the first quantity.
The conclusion given by the ICC Banking Commission referred to the fact that
there was no reference in the credit that each item in the shipment schedule was
to be shipped in one lot. If the intention, where the credit contains a shipment
schedule, is for no partial shipment to be effected within each period then the
credit must so state.
The condition, partial shipments, is often seen as a simple decision of stating
'allowed' or 'not allowed'. In most cases, it is as simple as that. However,
when the credit includes conditions relating to the shipment and, possibly, a
shipment schedule, care should be taken to ensure that the credit fully reflects
the requirements of the applicant as to the basis and number of shipments that
are to be made.
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