Coastline newsletter / 2012 edition

ISSUE 43 Mar2012

Overview of the draft Opinions and DOCDEX CASES discussed at the March 2012 ICC Banking Commission

By Gary Collyer

The ICC Banking Commission met in Doha, Qatar on 27 and 28 March. The draft opinions for review were the final set concluded with the input of the inaugural Group of Experts. This Group had been appointed for a one-year tenure to work on the draft opinions spanning 2 ICC Banking Commission meetings.

A further group of 3 individuals have now been appointed to this role for the draft opinions that are to be considered for approval at the Autumn 2012 and Spring 2013 ICC Banking Commission meetings. They are: Janakiraman Hariramchakraborthy (ANZ, Australia), David Meynell (Deutsche Bank, UK) and Rene Mueller (Credit Suisse, Switzerland). As of the time of writing this newsletter, they already have 11 requests for opinions to be considered.

The number of draft opinions for review for the Doha Meeting was one of the lowest in many years. Only 4 new requests for opinions had been received since the meeting in Beijing (October 2011). In addition, there was one draft opinion (reference TA.752rev) that had been held over from the Beijing meeting for further input by, among others, the working group that had drafted the ICC recommendation paper on Sanctions Clauses.

Before we look at the issues contained in these opinions, and the conclusions that were reached, a further update on the work conducted for the ISBP revision.

The ISBP Drafting Group met for 3 days to review ICC National Committee comments that had been submitted to Draft 3 of the text. The Consulting Group also met in Doha to discuss and agree a common viewpoint on the content of the drafting process to date and also to review a draft document relating to the handling and determination of original and copy documents.

The intention of the Drafting Group is that Draft 4 of the revised text will be distributed to ICC National Committees by the middle or end of May 2012. Draft 4 will include a proposed text relating to how the issue of originals and copies should be addressed under UCP 600. The intention is that this document will supersede the ICC Decision on Original Documents that was issued in July 1999 and which appears as an appendix in the current ISBP.

Due to a lack of constructive input from the majority of those National Committees that had voted for an expanded version of the ISBP, a decision was made that this revision will focus solely on updating the existing text and the addition of new documents.

The Opinions discussed, and agreed, were in the sequence TA755-758.

TA755rev – The first draft opinion related to a drawing where the goods description in the original credit was given in the language of the issuing bank (not English) – individual items were listed. An English translation of these items gives a general description of ‘Furniture’ or ‘wooden furniture’. Amongst the documents presented was a CMR and the entire description of goods given therein was in the language of the beneficiary (not English or that of the issuing bank). The description contained some of the listed items but also a general description that translated in English would read ‘wooden furniture’. The description of the packing, including the weight, agreed between the invoice, packing list and CMR. The CMR also showed under the field ‘Document Annexes’ “Dobavnica, Faktura 100301” in handwriting (the invoice was numbered 100301). The issuing bank identified 3 discrepancies (1) Photocopy of invoice instead of copy is presented; (2) Description of goods stated on CMR not as per L/C and invoice; and (3) Correction on CMR was not authenticated (one figure in the invoice number appears to have been amended or over-written).

Both the issuing bank and advising bank offered their views on the discrepancies.

The conclusion agreed by the ICC Banking Commission was as follows:

For discrepancy (1) under international standard banking practice, a copy is understood to mean a non-original. Unless the credit specified the type of copy that was or was not acceptable any type of copy (non-original) was acceptable, including a photocopy. (2) The credit did not specify the language in which documents were to be issued. Absent such indication, the issuing bank is required to examine the CMR in the language it has been issued. In addition to the text for the goods description, there was other data that created compliance with the invoice data i.e., the details of the packing and the reference to the invoice number. (3) The view was that the invoice number was that stated on the presented invoice and that the text on the CMR had been completed in a bold manner, possibly to emphasise the correct reading of the number.

The conclusion of the ICC Banking Commission was that the discrepancies were not valid.

See opinion TA755rev for the full transcript of the above opinion.

TA756 - This was a query relating to an invoice that showed the full description of goods stated in the credit, which included “Hydraulic Drilling Rig” but also went on to describe the goods as “Second Hand Hydraulic Drilling Rig”.

The confirming bank had refused the documents on the basis that the documents evidenced goods not as described in the credit. The presenter disagreed but requested that the confirming bank contact the issuing bank for a waiver. The issuing bank also refused the documents for the same reason.

The analysis stated that sub-article 18 (c) requires the invoice to bear a description that corresponds to that in the credit. The addition of “second hand’ is not part of the goods description that appears in the credit. These words indicate a different category or classification of the goods that is not apparent from the description in the credit.

The conclusion stated that the discrepancy was valid.

See opinion TA756 for the full transcript of the above opinion.

TA757rev – This request referred to a credit that contained a payment instruction for a final amount to be paid as follows: USD XXX payable at sight against shipping documents and USD165,000 to be paid on receipt of original certificate issued by the applicant confirming the successful testing, commissioning and launching of XXX.

This was later amended to read “An amount of USD165,000 to be paid at sight under the L/C on receipt of original certificate issued by the applicant confirming the successful testing, commissioning and launching of XXX or maximum within 10 months from the date of the last dispatch. The final invoice of beneficiary shall describe this amended clause.”

The final drawing (last dispatch), in respect of shipments made, contained a number of discrepancies and the nominated bank authorised release of the documents against payment of a lesser amount on the condition that the issuing bank confirmed that the remaining USD165,000 would be paid according to the conditions of the amendment.

The issuing bank paid the lower amount but did not give the confirmation as requested by the nominated bank. A written claim for USD165,000 was made to the issuing bank 10 months after the date of the last dispatch. The issuing bank refused claiming that presentation of the applicant’s acceptance certificate was mandatory for all drawings.

The analysis stated that the amendment not only provided for alternative means by which the USD165,000 would be paid, but that due to the wording of the amendment, the claim could have been made at any time after the date of the last dispatch owing to the use of the word “within”. There was no requirement that the certificate of the applicant be presented in all cases and the conclusion states that the discrepancies noted by the issuing bank were not valid.

See opinion TA757rev for the full transcript of the above opinion.

TA758rev – This request demonstrates how the use of different terminology, even if not intended for use in the same context, can cause disputes between banks.

The bill of lading showed a shipped on board date of 14 September 2011 and the packing list stated “shipping date 13.09.2011”. The issuing bank refused the documents due to the packing list showing an inconsistent shipping date to the bills of lading.

The argument of the nominated bank was that the wording might have different meanings depending on the context in which it is used in each document.

The analysis and conclusion of the ICC Banking Commission agreed with the nominated bank. In this case, the use of shipping date, in the packing list, could refer to the movement of the goods out of the warehouse of the beneficiary for the delivery to the carrier or their agent and should not be seen as an indication of the date of shipment (as is the case with the date appearing in a shipped on board notation on a bill of lading).

See opinion TA758rev for the full transcript of the above opinion.

TA752rev – This query was held over from the October 2011 ICC Banking Commission meeting. This query relates to the situation where a confirming bank has decided that due to economic sanctions they believe that their undertaking to honour or negotiate has been rescinded by the content of the relative sanctions order.

A revised draft had been delivered to ICC national committees for their comments. Only 11 countries commented on this query (out of 22 that provided comments to all the draft opinions). Most were in general agreement, with some additional proposals for further text to be added.

The audience in Doha were presented with a revised text, via a powerpoint presentation and the decision was made to allow them to review the full text before any decision on approval will be made. The revised text has been re-distributed and national committees have been given until the middle of May to provide any comments. Based on the level and form of any comments received, the Officers of the ICC Banking Commission will decide whether to approve the draft opinion at that time.


There was only 1 DOCDEX case reviewed by the experts in the period following the October 2011 ICC Banking Commission.

Case 315

This case referred to a transaction subject to UCP 222 (yes, 222!). The initiator was an individual who was the holder of 11 promissory notes issued as a result of settlement under a credit and totalling USD27million.

A court had already ruled against the initiator and the initiator had looked to the DOCDEX process to invalidate the court decision and render a view that the UCP would require settlement to be made.

The panel of experts were unable to give such an answer within the confines of the UCP and the DOCDEX rules.


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