Coastline newsletter / 2011 edition

ISSUE 40 Oct2011

A brief history of 'Presentation'

By Gary Collyer

In this newsletter we continue to look at the origins and development of the wording of certain UCP articles. A few ICC Banking Commission Opinions are also referred to, to reinforce the application of the current wording. This time, we look at UCP 600 sub-article 14 (c) – outlining the default presentation period and article 33 - Hours of Presentation.

In the first UCP, published in 1933 as UCP 82, the sub-heading to articles 43 and 44 was 'Presentation'. This heading encompassed two articles - one covering presentation period and the other covering a presentation made outside of banking hours. It should be noted by documentary credit practitioners that the wording of UCP 600 article 33 has changed minimally in relation to that which appeared in UCP 82, article 44.


1933 Revision - "Uniform Customs and Practice for Commercial Documentary Credits Publication No. 82"

Presentation

Article 43

Documents must be presented without delay. Banks may refuse the documents if presented to them too late, in other words at a date not justified by the usual time taken to cover the distance between the place of dispatch and the place where payment is made. 

Article 44

Banks are under no obligation to accept documents outside their banking hours.

The equivalent text in the next revision read:



1951 Revision – "Uniform Customs and Practice for Commercial Documentary Credits Brochure 151"

Presentation

Article 43

Documents must be presented within a reasonable time after issuance. Paying, negotiating or accepting Banks may refuse documents if in their judgment, they are presented to them with undue delay.

Article 44


Banks are under no obligation to accept documents outside their banking hours.

The wording of article 43 in both UCP 82 and UCP 151 gave latitude to the banks to determine whether a presentation had been made without delay or within a reasonable time. This was certainly so in relation to the wording in publication 82, where the length of time for the presentation to occur was taken into account based on the distance that existed between the place of dispatch and the place of the bank that was to pay.

Even with the introduction of the term 'reasonable time', UCP 151 article 43 did not provide any clear guidance on determining an acceptable (default) presentation period. A bank could still decide, based on their own judgment, as to whether there had been a delay in presentation. The wording of UCP 151 article 43 also appeared in the next revision of 1962 - UCP 222 article 41.

UCP 222 saw the first change to article 44 of UCP 82. The words "presentation of" was added so that the text read "Banks are under no obligation to accept presentation of documents outside their banking hours. (emphasis added)

It was not until the 1974 revision - UCP 290 - that the UCP introduced a requirement that a credit must specify a time period after the issuance of bills of lading or other shipping documents during which presentation must be made. If no such period was stated, banks were to refuse documents presented to them later than 21 days after the date of issuance of the bills of lading or other shipping documents. However, there was no mention in the rule of words to the effect that "documents must, in any event, be presented not later than the expiry date of the credit".

In UCP 290, we have the first reference to 21 days.

The 1983 revision - UCP 400 - saw the same position reinforced in article 47. However, in the 1993 revision - UCP 500 sub-article 43 (a) - the notion of a time period after the date of issuance of a transport document was changed to one of a period after the date of shipment. The words "In any event, documents must be presented not later than the expiry date of the credit" was also added.

The 2007 revision - UCP 600 - maintains the position of a specified period after the date of shipment but also amended two crucial aspects of UCP 500 sub-article 43 (a). The presentation period was specifically directed towards one or more original transport document issued under articles 19-25, and the reference to 21 days was enhanced to reflect that it is a calendar day period that is to be considered.

2007 Revision - "Uniform Customs and Practice for Documentary Credits ICC Publication No. 600"


ARTICLE 14

Standard for Examination of Documents


Sub-article 14 (c)

A presentation including one or more original transport documents subject to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit.

ARTICLE 33

Hours of Presentation

A bank has no obligation to accept a presentation outside of its banking hours.

The subject matter covered by sub-article 14 (c) and article 33 has not attracted as many requests for ICC opinions as some other articles of UCP. However, here is a summary of the main issues that have been covered.

The most common type of issue, raised under the articles that have referred to the presentation period, have related to the dating of a bank's schedule, in relation to the date that the documents were originally presented, and at which bank’s counters does the presentation period apply.

In Opinion R372, a bank negotiated documents and sent them to the issuing bank. The schedule was dated 4 days after the specified presentation period had ended. The nominated bank certified on their schedule "documents were negotiated as per terms of the L/C". The issuing bank refused the documents citing 'late presentation' as the discrepancy. The issue raised was whether a nominated bank was required to insert the date of presentation on their schedule.

The UCP does not require any evidence to be stated of the date of receipt of the documents by a nominated bank. In normal circumstances, the wording quoted on the schedule of the nominated bank would have sufficed although it may have been better to say something like "we confirm documents presented within presentation period [or XX days after date of shipment] [or expiry date]". The conclusion to the opinion supported the actions of the nominated bank.

For opinion R586, the issuing bank was located in Country C and the credit stated that it expired in Country C. Presentation was to be made within 10 days after the date of shipment. The issuing bank received documents from a presenting bank and refused them due to a few discrepancies, including late presentation. The question asked was whether the presenting bank could or should have confirmed that presentation was made within the specified period.

The conclusion given by the Banking Commission stated that as the credit expired at the counters of the issuing bank, the documents were to reach the issuing bank not only by the expiry date, but also within the 10 days after the date of shipment.

Opinions R691 and R692 referred to separate LCs whereby their terms and conditions required the presentation of separate invoices and drafts covering interest (the applicant bore the interest cost for the period following the date of negotiation until the specified due date). The credit also required that documents be presented within 21 days after the date of the bill of lading. The shipping documents were received within the 21 days and were negotiated. The beneficiary was contacted to present their interest invoice and draft that could only be created once the date of negotiation had been determined. By the time of presentation of the interest invoice and draft the period of 21 days had elapsed. The issuing bank refused the documents, but the nominated bank objected.

The conclusion of the Banking Commission agreed with the nominated bank. The presentation of the interest invoice and draft was a separate presentation. As there was no transport document associated with the interest invoice and draft, sub-article 14 (c) could not be applied.

It should be noted that where a credit requires a form of transport document that is not covered by UCP 600 articles 19-25 or where a copy of a transport document covered by articles 19-25 is presented, sub-article 14 (c) will not apply. The credit must make specific mention of the conditions under which the documents are to be presented. For example, "documents must be presented within 21 days after the date of the FCR" or "documents must be presented within 21 days after the date of shipment as shown on the photocopy bill of lading".

Opinion R648 refers to the application of UCP 600 article 33. The question that was posed was: "It is our understanding that the day of presentation is to be a banking day, even if documents are received by a bank's mail receiving unit which may be open on a non-banking day."

The analysis and conclusion offered by the Banking Commission stated: "The day of presentation may or may not be a banking day. The applicable rule here is contained in article 33, which states "A bank has no obligation to accept a presentation outside of its banking hours." This allows a bank to decline any presentation made outside of its stated banking hours - whether it is a banking day for the purposes of an act subject to the rules to be performed or on a day that the bank's mail receiving unit is open, but a non-banking day for the purposes of UCP 600.

For the purposes of this query, whether or not a presentation is allowed to be made outside the banking hours of the trade department of a bank is for that bank to decide. Article 33 allows a nominated bank or issuing bank to decide whether or not it will accept a presentation made by a presenter outside of its banking hours. The reference to "banking hours" means those hours applicable locally to the nominated bank or to the issuing bank, depending on to which bank the presentation is to be made. A bank that receives documents on a day when the mail receiving unit is working, but the trade department is not, may decide to acknowledge receipt of the documents, but on the basis that the documents are considered to have been received for the next working day of the trade department. It should be noted that the conclusion to ICC Opinion R 265 concerning the presentation date under UCP 500, states: "Article 45 of UCP 500, in effect, allows a bank to refuse the presentation of documents after the close of their business hours. By accepting a presentation of documents outside the bank's normal banking hours would mean that, in this case, Saturday would count as the day of receipt of the documents for the purposes of sub-article 13 (b).” The same premise would apply under UCP 600 article 33."

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