Coastline newsletter / 2008 edition

ISSUE 22 Oct2008

Overview of the DOCDEX issues and Opinions discussed at the ICC Banking Commission in October '08  - Part 1

By Gary Collyer


The ICC Banking Commission met in Paris on 23 and 24 October. As usual there was an assortment of issues that made up the Opinion requests. Before looking at the main points of the Opinions, and their conclusions, the first topic for discussion was the cases that had been decided under the DOCDEX process following the last meeting of the Commission. There had been 6 cases heard and decided upon, of which 4 related to UCP 500. There were three themes focussed on in the decisions - 2 cases related to issues where the credit had been transferred, 2 cases where non-bank issuers had failed to refuse documents according to the requirements of UCP and 2 cases relating to banks failing to refuse according to the requirements of UCP. 

It was also mentioned in the meeting that due to a number of retirements of members of the Banking Commission and people moving to different positions within their organisations, there was a need for more experts to enrol in the DOCDEX process. Any person that believes that they possess the necessary qualifications i.e., full understanding of the principles and application of UCP, URC, URR and URDG, should forward their CV to their local ICC national committee for their consideration and if the national committee is satisfied to recommend that person to ICC HQ, a recommendation should be sent to the ICC Centre for Arbitration for their further consideration.

There were 16 Opinions discussed at the meeting.

The first Opinion to be discussed focussed on two issues.

1. Whether a CMR was acceptable showing two carrier names.

2. Whether the insertion of the day of the month of the shipment, by pen, was acceptable when the rest of the date i.e., month and year were typed onto the CMR.
The CMR showed, in box 16 (titled: Transporteur) the name of Company S and in box 23 (titled: Signature et timbre du transporteur) the name and address of Company C. The presenting national committee had offered their own analysis and conclusion to the query and determined that the document was discrepant. The Banking Commission agreed with this position.

The CMR showed in boxes 4 (date of taking in charge) and 21 (date of issuance) ".... -11-2007" and had been completed, in pen, with the addition of "28". The presenting national committee had differing views as to whether or not this was acceptable. The Banking Commission took the view that the document had been created on the basis that the actual day would be inserted later; that it would be acceptable according to the content of ISBP paragraph 11 and would not require authentication by the carrier or their agent.

See Opinion TA.657 (rev) for the full transcript of the above Opinion.

The next Opinion to be discussed was the misquoting of a credit number on the bill of lading where the issuing bank had itself misquoted the LC number within their own credit.

The view of the Banking Commission was that the misquoting of the credit number for this query was not a reason to refuse. It should be noted at this point that each Opinion given to an enquiry is clearly marked that the analysis and conclusion is based on the facts provided in the query. Therefore, the answer given to any query may or may not apply in every instance.

See Opinion TA.658 for the full transcript of the above Opinion.

A number of credits were issued stating that all banking charges except LC opening charges were for the account of the beneficiary. The credits did not specify the amount or percentage of those charges. The beneficiary shipped the goods and presented documents. The issuing bank deducted over USD1000 from a number of drawings under these credits. Was the issuing bank entitled to make such a deduction where they had not indicated the level of fees? This was the question before the Banking Commission. Issuing such a credit without specifying the amount or percentage of the charges was seen as a bad practice on the part of the issuing bank. The conclusion reached by the Banking Commission was that if the issuing bank wishes to make a deduction of their fees then the credit must clearly indicate the level of those fees so that the beneficiary may make a decision as to whether to perform under the credit.

See Opinion TA.659 (rev) for the full transcript of the above Opinion.

An issuing bank refused documents, under a UCP 500 credit, due to the reason that the certificate of origin showed the weights as "78880 kg net / 71920 kg gross" whereas other documents stated "71920 kg net / 78880 kg gross". The initiator of the query requested confirmation that the transposing of the weights would constitute a simple mistake and not a reason for refusal. The Banking Commission agreed with this view. The conclusion to the query includes "it is not possible to have a net weight that is greater than the gross weight of the same goods".

See Opinion TA.660 (rev) for the full transcript of the above Opinion.

Questions relating to the issuance of drafts formed the basis of the next Opinion. If the credit was available at 90 days sight with any bank or a specific nominated bank, on whom should the draft be drawn? The answer given reflected that if it is the specific nominated bank then it should be drawn on that bank if they agree to act on their nomination. If the credit is available with any bank, the draft must be drawn on the bank that agrees to act on the nomination to accept the draft. The last question was whether a draft drawn on the issuing bank could be accepted by a nominated bank. Whilst it was recognised that it may be possible, in some jurisdictions, for a draft to be accepted by a different party to that on whom it is drawn, the answer reflects the position under the UCP and documentary credit practice i.e., if the draft is to be drawn on the issuing bank, then the credit should be available by negotiation and not acceptance. The nominated bank will negotiate the draft and the issuing bank will accept it.

See Opinion TA.661 (rev) for the full transcript of the above Opinion.

The next request focussed on charter party bills of lading and the UCP rule of "contain no indication that it is subject to a charter party". Three examples were provided of marine bills of lading that bore (1) "Issued pursuant to charter party dated ...." [no date inserted], (2) "freight payable as per charter party" and (3) the title "charter party bill of lading". In all 3 examples, the documents otherwise fully complied with article 20. The question was whether these three statements were an indication that each bill of lading would be considered to be a charter party document. The answer of the Banking Commission was yes to all 3 examples. The Commission was mindful of the fact that to try and draw different viewpoints on different manners of statements could lead to confusion for document examiners and the position taken should be one of "any indication of a charter party = a charter party document for the purposes of UCP 600".

See Opinion TA.662 (rev) for the full transcript of the above Opinion.

A credit required an inspection services certificate indicating that the goods were of 'crop year 2007'. The presented document evidenced "applicant states that this is from the crop year 2007". Was the document acceptable? The view of the Banking Commission was yes.

See Opinion TA.663 (rev) for the full transcript of the above Opinion.

The last Opinion to be reviewed in this newsletter was in relation to a credit that stated "all corrections must be authenticated by the issuer of the respective document". The query highlighted a number of scenarios including one where the invoice that had been certified by a chamber of commerce bore a correction. The correction was approved by the chamber of commerce but not the beneficiary. The Banking Commission decided that the invoice would require authentication by both the beneficiary and the chamber of commerce.

See Opinion TA.664 (rev) for the full transcript of the above Opinion.
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The next newsletter will contain the remaining Opinions that were discussed and approved at the ICC Banking Commission meeting.

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The course content is written by Gary Collyer, Technical Adviser to the ICC Banking Commission.

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