'6.12. Under the Contract, the purchase price was payable in three instalments, starting with a payment to be made by the Client [Respondent 1] by means of bank transfer. There followed two payments secured by letters of credit. There were specific documentary conditions for the last and third payment … which required … an invoice and a final certificate of acceptance signed by the Client and the Contractor, and permitted the presentation of an SGS Certificate as payment-triggering document ... The letters of credit were issued … in favour of [Respondent 1] as first beneficiary and [Claimant] as second beneficiary.

6.13. The letter of credit for the third instalment (the "Second Letter of Credit") was dated 17 February … and was extended twice, first to 1 August … and then to 10 September ... Various delays were caused by improper and insufficient preparation of the installation site by the Second Respondent and the late arrival of supplies of the Second Respondent.

6.14. According to [Claimant], the Respondents orally promised to make the outstanding payment, but at the last minute refused to sign the Certificate of Acceptance. This refusal was unjustified and unlawful, considering that [Claimant] had performed its obligations under the Contract. [Claimant] missed the deadline of 10 September … and then it was too late to ask for the outstanding payment under the Second Letter of Credit, and too late also to obtain an SGS Certificate.

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6.50. In the First and Third Respondents' submission, the Equipment is defective, and no payment is due because no acceptance test has been carried out, the plant being incapable of passing such a test.

6.51. In the First and Third Respondents' submission, the Claimant failed to request, carry out and pass an acceptance test. Further, the Claimant has failed to give notice of and establish any fault on part of [Respondent 1] that prevented the plant from passing an acceptance test.

6.52. The plant was in any event incapable of passing the Acceptance Test.

6.53. As regards the Protocol signed by the Parties on 1 July …, it contained only an assertion by the Claimant that the plant would be ready to start operation by 9 July … and hence is no proof of completion of the Claimant's undertakings.

6.54. The Claimant has failed to produce an SGS Certificate in order to trigger payment of the Second Letter of Credit, in the absence of a Certificate of Acceptance.

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7.4. According to the Terms of Payment contained in Clause 5 of the Contract:

The payment [of the final instalment] will be effected by the Client [i.e. [Respondent 1]] by an irrevocable documentary Letter of Credit, confirmed by the first-rate European bank. The L/C will in any case be opened within 10 days before the execution of supervision of the equipment at the end-user's facilities[.]

The payment from the Letter of Credit will be released against presentation of the originals of the following documents:

• invoice - 1 fold

• Final certificate of acceptance signed by both parties, confirming the fulfilment of 'the Technical Assistance' by the Contractor [i.e. [Claimant]].

• In case the final certificate of acceptance is not signed through the Client's fault within 4 months after latest shipment date, the payment as per the L/C will be effected against presentation of SGS certificate concerning non-fulfilment of Client's obligations. [SGS - Société Générale de Surveillance (verification, testing, certification company) ...]

• The Letter of Credit is valid for 150 days[.]

7.5. According to Clause 5.3 of the Contract, the Letters of Credit referred to in the preceding section, including the Second Letter of Credit, are subject to the "Uniform Customs and Practice for Documentary Credits" (Publication No. 500, 1993 revision), also known as the "UCP 500".

7.6. Pursuant to Article 5(B) of the UCP 500, "[a]ll instructions for the issuance of a Credit and the Credit itself and, where applicable, all instructions for an amendment thereto and the amendment itself, must state precisely the document(s) against which payment, acceptance or negotiation is to be made." (tribunal's emphasis) To trigger the payment of a sum under a letter of credit, it is therefore crucial for the beneficiary of the credit to comply with the terms of the letter of credit. The importance of determining in the letter of credit the documentation which is required to be presented to the paying bank with a view to releasing the credit concerned is underlined by an ICC commentary accompanying the original publication of the UCP 500: Pursuant to Article 5 of the UCP 500, the letter of credit should be issued in a complete and precise manner and not contain any "excessive detail" and the Applicant is invited to "state precisely" the stipulated documentation (C. del Busto (ed.), The New Standard Documentary Credit Forms for the UCP 500, ICC Publication No. 516, ICC Publishing, 1993, at p. 27). More particularly, the determination of the stipulated documentation "is essentially an area which calls for the exercise of common sense by banks and Applicants working together to avoid a Documentary Credit which is a nuisance to all concerned; or a Documentary Credit which is useless to the Beneficiary because it demands documents which cannot be obtained; or detail which cannot be provided in one or more of the stipulated documents" (C. del Busto (ed.), op. cit., at pp. 3(4). The ICC commentary further advises that "[t]he Applicant should make sure that the Beneficiary is willing and able to provide the documents intended to be stipulated and that he can provide them in the form and with the details so stipulated" (ibid.).

7.7. Presentation of the stipulated documents is essential in order to trigger the payment under the letter of credit. Consequently, the beneficiary needs to consider carefully the implications of accepting the applicant's documentary requirements. Article 13(A) of the UCP 500 stipulates that "[b]anks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit." According to one commentary, "currently, the notion of reasonable care is usually applied by the courts [or arbitral tribunals], regardless of the legal system or geographic location, in conjunction with the doctrine of 'strict compliance'" (C. del Busto, Documentary Credits: UCP 500 & 400 Compared: An Article-by-Article Detailed Analysis of the New UCP 500 Compared with the UCP 400, ICC Publication No. 511, ICC Publishing, 1993, at p. 39). Another commentary confirms in this context that the international banking standard applicable to determine compliance with the presentation of the stipulated documents under a letter of credit under Article 13(A) of the UCP 500 "emphasizes the need to search for solutions within the four corners of the UCP and by reference to ICC Opinions, rather than by reference to domestic law" (Paget's Law of Banking, at para. 36.2; original footnote omitted). These last few quotations serve merely to underline the seriousness of the stipulations contained in a letter of credit with regard to the documents to be presented for payment. The formulation of the terms of payment with regard to alternative documents (Acceptance Certificate or SGS Certificate) demonstrates that this question was given attention when the Contract was negotiated. In the event, there was no issue at all in respect of any discrepancy of the documents in relation to the letter of credit, because there was a total absence of either of the two kinds of document that, together with an invoice, would have released the third instalment.

7.8. Further, on timing, pursuant to Article 42(B) of the UCP 500, "[e]xcept as provided sub Article 44(A), documents must be presented on or before such expiry date [i.e. the expiry date laid down for the presentation of documents for payment in accordance with Article 42(A)]". Article 44(A) of the UCP 500 makes express provision for the extension of the expiry date for presentation of the documents necessary for triggering the payment under the relevant letter of credit. As the aforementioned ICC commentary expressly cautions in this respect, "the expiry date is the latest date for presentation of documents stipulated in the Credit" and "[t]he lifetime of the Documentary Credit should be as required by the circumstances of the [underlying commercial] transaction" (C. del Busto, op. cit., at p. 16).

7.9. The reasons why no Certificate of Acceptance existed are irrelevant for the purposes of the letter of credit. No relevant SGS Certificate was in existence either. In fact, [Claimant] did not request one from SGS and [Claimant] has not succeeded, to the limited extent it has tried, in showing that the failure to obtain a Certificate of Acceptance was due to [Respondent 1]'s fault, and it is only then that an SGS Certificate could be a substitute for the Certificate of Acceptance for presentation under the letter of credit. Thus, payment under the Second Letter of Credit was not possible, save if it had been varied, which it was not, as far as demonstrated in this arbitration. It follows that the Claimant was not entitled to collect [the outstanding instalment] under the Second Letter of Credit.

7.10. The next question of importance in principle is if the Claimant is entitled to collect the outstanding instalment as a general right under the Contract in this situation where the Client, as defined in the Contract, had fulfilled its obligation to open a letter of credit, but the Contractor, again as defined in the Contract, did not collect payment under the Letter of Credit. The Parties have given limited attention to the proper interpretation of the Contract in this regard. The submissions of the Parties have been driven by the facts as they see them, supported by the written evidence available to them. The tribunal finds that the key submission has been made by the Respondents when underlining that the instalment is not due under the Contract. The tribunal accepts the correctness of the Respondents' submission that the Contract makes the Contractor's entitlement to the instalment subject to the condition that the Contractor must demonstrate that the Equipment fulfils contractual requirements. The Respondents have alleged that the Equipment was defective in a number of ways. The Claimant has the burden of proving that the claimed instalment is now due for payment. What the Claimant has been able to demonstrate in this regard … is not sufficient now to impose on the First Respondent an obligation to pay the claimed [amount]. Neither do the Claimant's submissions and evidence allow any conclusion as to any portion of the purchase price that might be payable, after regard has been had to the degree of contractual fulfilment by the Claimant with respect to the supply of the Equipment and the Technical Assistance. The claim for payment of the outstanding purchase price as formulated against the First Respondent must therefore fail in its entirety at this time.'