Coastline newsletter / 2011 edition

ISSUE 38 Jun2011

Overview of the Opinions discussed at the March 2011 ICC Banking Commission (Part 2)

By Gary Collyer

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

Full transcripts available on

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.


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.

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

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

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

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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