Coastline newsletter / 2013 edition

ISSUE 48 Jan2013

Overview of the draft Opinions discussed at the November 2012 ICC Banking Commission – PART 2

By Gary Collyer

In this newsletter we conclude the review of the draft opinions TA765-774.

TA.765rev - This query referred to a refusal of documents where the documents had subsequently been taken up. However, the nominated bank sought advice as to whether the discrepancies were in fact valid.

Amongst other documents, the credit required presentation of "full set "clean on board" air transport documents …." and evidenced the trade term as FOB Singapore. The presented air waybill was not marked “on board” and the invoice showed the trade terms as FCA Singapore. However, the air transport document did show the actual flight details and date. The view of the beneficiary was that FOB was not the appropriate trade term and therefore FCA was quoted.

The issuing bank refused the documents due to the absence of an on board statement and the use of the trade term FCA instead of FOB. The justification of the issuing bank being that banks should strictly follow the terms and conditions of the credit.

The conclusion of the Banking Commission was that the discrepancy concerning absence of an on board statement was not valid but the discrepancy concerning the different trade term was. It was not for banks to determine whether the stated trade term was accurate or appropriate. Banks are only required to examine documents on their face to determine compliance.

See opinion TA.765rev for the full transcript of the above opinion.

TA.766 - This query focused on a common requirement in a letter of credit for a document to be issued by a named company "at load port". The credit required two documents to be issued by a named company at load port. One indicated "This certificate is issued at loading port" whilst the other did not.

Despite having no specific wording indicating issuance at the load port, the document did state "This is to certify that the weight Coal of Indonesian Origin in Bulk (Indonesian Steam (non-coking) Coal) loaded on board the vessel as determined by draft survey at loading port is: XX metric tons." The issuer, by the address shown on the document, was not physically located at the port of loading.

Given the wording used in the certificate, the conclusion stated that for this case the document was acceptable even though it did not specifically state “issued at load port”.

See opinion TA.766 for the full transcript of the above opinion.

TA.767rev - This query also focussed on a dispute. This time as to whether documents were discrepant or not. The credit required, amongst other documents, photocopies of an air waybill together with an insurance document. The airport of departure was stated to be any airport in Sweden and/or European countries and/or China. The air waybill date was to be deemed to be the date of shipment.

Copies of the air waybill showed the airport of departure field quoting Sweden instead of the name of an actual airport in Sweden. This was the first discrepancy that was noted.

The insurance document showed a date of issuance as 17 June 2011 and the air waybill date as 17 June. The air waybill was dated 13 June 2011 and showed the flight number as QR688/17. The second discrepancy was that the insurance document showed the wrong air waybill date.

Although the credit required the presentation of photocopies of an air waybill, and therefore the document would not be subject to examination under article 23, the credit did indicate that the dispatch was to be effected from an airport, amongst other places, in Sweden. The conclusion indicated that the air waybill, in accordance with the terms and conditions of the credit, should have shown the name of an airport in Sweden and therefore the discrepancy was valid.

For the insurance document, the credit had indicated that the date of the air waybill was to be the basis for determining the date of shipment. Therefore, the document should have indicated that cover was effective no later than 13 June 2011. This was the conclusion that was stated in the opinion and this discrepancy was also stated to be valid.

See opinion TA.767rev for the full transcript of the above opinion.

TA.768 - A credit required the documents to be sent to the issuing bank in two lots. The documents were sent in one lot and were received by the issuing bank. The issuing bank refused the documents on the basis that they had been sent in one lot rather than two.

The analysis of the opinion indicated that the sending of the documents has nothing to do with the determination of compliance. Absent any discrepancy being raised in relation to the documents, the documents were compliant in themselves. If a nominated bank chooses to send the documents in one mail, rather than two, and risk them becoming lost in transit, that is a risk that the bank must understand and accept. The fact that the documents were received, requires the issuing bank to honour. There is no discrepancy.

See opinion TA.768 for the full transcript of the above opinion.

TA.769rev - A credit required a commercial invoice to be signed, sworn and detailed. There was no further explanation as to what was to be sworn or the degree of detail that was required.

The beneficiary presented an invoice that had been stamped and signed by the beneficiary. The issuing bank refused the documents due to the fact that the invoice had not been sworn. Absent a discrepancy point, it can be presumed that the invoice was deemed to be detailed.

The term 'sworn' is not defined in the UCP and such wording, when used in a credit, should be expanded upon so as to provide some context in which the beneficiary is required to comply.

Despite the fact that the issuing bank did not provide any information regarding the sworn statement that was required, the conclusion stated that the discrepancy was valid. Where details in a credit are not clear, clarification should be sought from the issuing bank prior to shipment being effected and documents prepared and presented for honour or negotiation.

See opinion TA.753rev for the full transcript of the above opinion.

TA.770 - This query was held over until the next meeting of the Banking Commission in order that an overall ICC position could be obtained. Further consultation is occurring between the Banking, Transport and Commercial Law & Practice Commissions of the ICC to determine a common stance.

TA.771 - This draft opinion was withdrawn by the initiator prior to the commencement of the meeting.

TA.772 - A credit required the presentation of a certificate of origin issued by a chamber of commerce. Such document was presented, however in the field 'Country of Origin' it was stated "see below". In a field immediately below this, titled "Observations" it was stated “Produced by Company ABC, Switzerland".

A bank refused the document on the basis that a country of origin was not stated and that reference to "Produced by …" is not sufficient to certify the origin of the goods. The beneficiary did not agree.

The conclusion stated that there was no clear indication that the origin of the goods was stated and therefore the document was discrepant.

See opinion TA.772 for the full transcript of the above opinion.

TA.773 - This query focussed on the format of a bill of lading. This particular carrier incorporated a specific field or box within their document designated as "Shipped on Board Date". The carrier or their agent would complete this box with the date the goods were shipped on board. It should be noted that the bill of lading was also pre-printed "shipped, as far as ascertained by reasonable means of checking, in apparent good order and condition unless otherwise stated herein." The bill of lading also had a box labelled "Date of Issue".

A bank had refused the document on the grounds that UCP requires an additional stamp or notation to be added. If not, the date of issue would be taken as the date of shipment.

The analysis and conclusion stated that a dated on board notation may be in the form of a stamp appended to the bill of lading; text added to the document at the time of its signing; or by way of insertion of a date in a field or box that is designated to indicate the date the goods were shipped on board." and, as a result, the bank was not entitled to refuse the bill of lading

See opinion TA.773 for the full transcript of the above opinion.

TA.774 - Amongst other documents, a credit required the presentation of an analysis certificate and certificate of conformity that were each to be stamped and signed, together with a beneficiary's certificate supported by a copy of the courier receipt showing that certain documents had been forwarded within 7 working days after the date of the FCR. The credit also required that all documents show the credit number of the issuing bank.

The issuing bank refused the documents on the basis that the analysis and conformity certificates were not stamped and the courier receipt did not bear the credit number.

The nominated bank argued that the two certificates bore the typed names of the issuing organisations and were then signed. As such, they met the requirement of ISBP Publication 681, paragraph 39, whereby signed and stamped is also fulfilled by a signature and the name of the party typed, or stamped or handwritten. The conclusion agreed with the nominated bank and the discrepancy was not valid in respect of the two certificates.

For the courier receipt, the credit specifically stated "supported by a copy of the courier receipt". ICC Opinion R696 had previously declared that a beneficiary's certificate and courier receipt formed part of the same document. The beneficiary's certificate bore the credit number. The conclusion stated that the discrepancy was not valid.

See opinion TA.774 for the full transcript of the above opinion.


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