Article

by Haluk Erdemol

At the March ICC Banking Commission meeting in Dubai, it was decided that the UCP Drafting Group would assemble one more time to create and present a document for consideration by the Commission on the subject of on board notations.

The document will consider the details required to appear in these notations according to a given set of circumstances. These will be compiled from all the possible permutations observed so far in the documents designed and issued by the shipping industry. The document will pertain to transport documents to be examined under UCP 600 articles 19, 20, 21 and 22. (It should be noted that the requirements in question are the same under the three articles 20, 21 and 22.)

Basics

The importance of on board notations for a document checker is that he or she must be able to determine that the transport document presented under a credit appears to indicate that the information regarding shipment on board, dispatch or taken in change of the goods has occurred at the port of loading or the place of receipt stated in the credit not later than the latest date of shipment specified in the credit, or no later than the expiry of the credit if no such date is specified. The information in question may appear in the form of pre-printed wording; by a separate, superimposed, extended or added notation; or by a combination of both a pre-printed wording and a separate notation. The collective final appearance of these notations must satisfy the requirement of respective UCP article under which the presented document is to be examined. Such an examination should be based on the credit term called for in the transport document, according to the chosen means of transport specified in the credit. It should also be compatible with the correct use of one of the SWIFT 44 fields - as well as any other credit term - to determine whether presentation of an alternate type of document is allowed.

Document checkers' dilemma

A scan of ICC opinions rendered under UCP 500 reveals that there were a considerable number of queries concerning the permutations of on board notations. It's interesting that queries on this subject continue under UCP 600 as well. Senders of these queries seem to be having difficulty determining whether given wording in a document is in line with the respective UCP rule. This raises the question as to whether the applicable UCP rules are clear enough or sufficient to aid the process of determining compliance.

In my view, the why and wherefore of the confusion for document checkers can be explained by the large variety of on board notations used by the shipping industry, pre-printed or otherwise, that appear in transport documents. This is more important than a supposed failure of the respective UCP rules to provide the necessary support. In the absence of uniformity in the on board notations provided by the shipping industry, and due to the use of fields or boxes in documents designed for "Place of Receipt" and "Pre-carriage" information, correctly or otherwise, it's clear that the UCP cannot cover all permutations appearing in transport documents.

UCP as only source

I believe that once the rationale behind each UCP requirement for an on board notation is understood, any given permutation thereof can easily be determined as to whether it's compliant or discrepant. I cite the following examples under articles 19 and 20 to support my argument:

- Suppose a credit calls for a MMTD by stating a seaport in SWIFT Field 44E. When, say, an FBL (Negotiable FIATA Multimodal Transport Bill of Lading) is presented, one cannot accept it under sub-article 19 (a) (ii) solely because it is a multimodal transport document, i.e., the type of document required by the credit. The presented document, whether an FBL or not, must reflect one of the three shipment terms (dispatched, taken in charge or shipped on board) stated in the said sub-article and corresponding with the initial leg of the transport required by the credit. In my example, the term in question should be "shipped on board". If the pre-printed on board statement included in the presented document does not cover the said term, as in the case of an FBL, then a superimposed or added notation to that effect is required. This added notation must be related to the seaport indicated in SWIFT field 44E and must be dated. This is because the date of issuance of the document would not be related to the "shipped on board" term. Under this example, the same reasoning would also apply to a "received" or "dispatched" term with or without an inland place or another port appearing in the "Place of Receipt" box of the document.

- Suppose under a credit identical to the one above, an ocean B/L or a combined transport B/L is presented with a pre-printed "shipped on board" statement showing an inland place in the "Place of Receipt" box. This document cannot be accepted even if it appears to have satisfied the "shipped on board" requirement in sub-article 19 (a) (ii). The document must also include a separate on board notation to evidence that the preprinted wording relates to the vessel named in connection with the port stated in the credit, not to the means of transport that departs from the place of receipt. Unless this on board notation bears a different date, the date of issuance will be taken to be the date of shipment.

In this regard, some may suppose that the term "on board" applies only to the shipment of goods on a vessel, not on board a truck, train or aircraft. However, the shipping industry also uses the term "on board" for means of transport other than a vessel. Many forms of transport documents are designed to contain pre-printed statements reading: "When the place of receipt of goods is an inland point and is so named herein, any notation on this B/L of on board or words to like effect shall be deemed to mean on board the truck, railcar, aircraft or other inland conveyance performing carriage from the place of receipt to the port of loading" or similar. The facts in this case are also applicable to a transport document to be examined under sub-article 20 (a) (ii)).

- Suppose a credit calls for a B/L by stating a seaport (Port X) in the SWIFT field 44E. The presented B/L or MMTD (the latter is acceptable under the "however named" principle) must show, as per sub-article 20 (a) (ii), that the goods have been shipped on board a named vessel at the port of loading stated in the credit. Let us say that the presented B/L or MMTD contains a pre-printed shipped on board statement with the boxes appearing as follows:

In this presentation, it may appear that the goods have been shipped on board a named vessel as required by the said sub-article. Is this document acceptable? My view is that it is not, because the named vessel does not appear to be the vessel leaving the port of loading stated in the credit. Therefore, an on board notation is required, showing the name of the vessel that leaves the port of loading for the port of discharge, as well as the date of shipment.

- Suppose that under a credit identical to the above, a marine B/L is presented with a pre-printed statement reading: "Shipped on board the named vessel in apparent good order and condition for carriage to the port of discharge ... ".

This B/L can be accepted without any separate on board notation, since it is clear, by the wording of the preprinted statement that the on board notation relates to the vessel in the port of loading stated in the credit, not to the means of transport that departs from X Place. The issuance date will be taken as the date of shipment.

Conclusion

Because of the variety of on board notations and the confusion surrounding their use, there is a need to prepare a document elaborating on this subject, one that provides examples compiled from past ICC opinions and recent examples witnessed by members of the Banking Commission during the presentation of documents. I am pleased that such a paper is being planned by the Commission. It is my strong belief that there exists no permutation of on board notations which cannot be explained with reference to the existing provisions of the UCP.

Haluk Erdemol is a member of the ICC Banking Commission. His e-mail is herdemol@yahoo.com