Coastline newsletter / 2013 edition

ISSUE 50 June2013

Overview of the draft Opinions and DOCDEX cases discussed at the April 2013 ICC Banking Commission – Part 2

By Gary Collyer

In this newsletter we conclude the review of the draft opinions TA779-786.

TA.779rev – This request focused on four issues. (1) Whether a delivery term CIF (place) allowed for a line item charge covering “SASO Certification”; (2) An insurance policy was issued in two originals and sent to the issuing bank in separate mails (according to credit terms) and issuing bank refused for absence of one original, and the insurance policy referred to General Insurance Terms and Clause Nos. which were stated to have been received by the policy holder but not presented with the policy; (3) A refusal notice indicating that the documents were being held pending instructions from the presenter and also that the issuing bank was contacting the applicant for a waiver; and (4) whether the issuing bank was entitled to charge a SWIFT fee in respect of messages relating to the payment under the credit.

In respect of (1) the conclusion given indicated no conflict with the content of ISBP, Publication 681, paragraph 61 and the discrepancy not valid.

For (2), the credit required documents to be sent in two mails and sending an original in each mailing would be the expected outcome. There was no requirement for the terms and clauses to be presented unless specifically required by the document.

Under (3) although UCP 600 sub-article 16 (c) (iii) (a-d) requires only one of the options to be stated, the use of two does not in itself create preclusion against the issuer.

In (4), an issuing bank is not entitled to charge a SWIFT charge in respect of the effecting of any payment or the advice of payment to a presenter.

See TA.779rev for the full transcript of the opinion.

TA.780rev – This was a joint submission and referred to the acceptability of an advising bank inserting a condition into its advice of a credit requiring additional documents or conditions to be met as a basis for it agreeing to honour or negotiate, or handle documents, under the credit i.e., where the underlying goods may breach such bank’s policies or be subject to government control and authorization. There was also the issue of whether an advisory group that operates within an ICC national committee may make recommendations to that advising bank for them to remove or change the text.

The analysis and conclusion indicate that a bank may attach its own conditions, i.e., where its ability to perform according to the nomination given by an issuing bank is subject to certain criteria being met or presentation of evidence of compliance with local regulations. An ICC national committee may offer informed and ‘unofficial’ opinions based on a submission made to it by one of its members, but compliance therewith would be subject to the concurrence of the ICC Banking Commission by way of the issuance of a formal opinion.

See TA.780rev for the full transcript of the opinion.

TA.781rev – A credit required the presentation of a truck consignment note. The presented document was issued on the letterhead of a named carrier and signed, but was marked ‘duplicate’. The issuing bank refused the document.

The initiator made certain statements in support of its position to accept the document. However, the ICC Banking Commission determined that the issuing bank was correct to refuse the document.

See TA.781rev for the full transcript of the opinion.

TA.782 – Documents were presented to a confirming bank and found to be discrepant (charter party bill of lading presented). The beneficiary requested that the documents be sent to the issuing bank on approval basis. The documents had initially been received within the expiry date, but were sent to the issuing bank three days after that date and were received seven days later. The issuing bank did not issue a refusal message.

After a number of follow up messages, the issuing bank responded stating that as documents were received after the expiry date, it had no obligation to examine them and that article 16 did not apply.

The ICC Banking Commission noted that the credit expired at the counters of the confirming bank and documents had been received within the expiry date.

As the issuing bank had not issued a refusal notice within 5 banking days following the day of their receipt of the presentation, they were required to honour the drawing.

See TA.782 for the full transcript of the opinion.

TA.783 - This query referred to a requirement in a credit that a certificate of quality be ‘based on EN15376 specifications’.

A certificate of quality was presented and bore the statement “based on EN15376 specifications’. However, the content of the document showed a breakdown of various specifications, one of which – electrical conductivity – showed a result that was greater than the maximum percentage given i.e., 3.1 against “max 2.5”. But, the results also showed that it was under a reference method ‘EN15938’ – a different standard to that which the goods were subject to. However, the issuing bank refused the documents for this reason.

The conclusion stated that as the document bore the required statement it is not for a bank to know the relevance of any other referenced standard and there was no basis for any comparison between the stated specifications. The discrepancy was stated not to be valid.

See TA.783 for the full transcript of the opinion.

TA.784 – This query related to insurance documents and the need to identify whether all originals have been presented given certain circumstances. A draft opinion had been issued but modified during the meeting. The members of the Banking Commission requested that they be given more time to review the revised analysis and conclusion. A revised draft has been sent to national committees with a response expected by 30 June.


TA.785rev – The credit in question expired at the counters of the issuing bank. The credit required the beneficiary to forward documents in two mails. The first mail was received within the credit validity, the second was received after this date. The question asked was whether the issuing bank was obliged to examine the documents based on the first mailing.

The conclusion stated that as the credit expired at the counters of the issuing bank, they should receive all documents within the expiry date and the presentation period.

The conclusion also stated that a request to send documents in two mailings, where the credit is available with the issuing bank, is bad practice. The choice of mailing method should be that of the beneficiary as it is they that must ensure that the documents reach the issuing bank within the required timeframes.

See TA.785rev for the full transcript of the opinion.

TA.786 – National committees also deferred this query pending further review. This issue related to a credit that did not indicate the basis for the weight i.e., gross or net and the invoice was issued based on a commercial weight, even though the other documents indicated both net and gross weights. The question asked was whether, absent a basis for determining the weight to be used for the calculation of the amount due, could a commercial weight be used - a weight that was greater than the net and gross weights. National committees will also be given until 30 June to provide any further comment to this draft opinion.

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