QUERY

The query has been referred by the nominated bank in the credit. The credit provided an option to the nominated bank that they ‘May Add’ confirmation to the credit. The credit had, among various other documents, called for clean shipped on board marine/ocean bills of lading.

On 26 June 2015, the beneficiary made one presentation for the full value of the credit. The presentation was made in two sets of documents comprising a full set of original bills of lading. On examination of the documents, the nominated bank found that the presented bills of lading bore the following remarks made by the Master of the vessel under the ‘description of cargo’ section:

MASTERS REMARKS

1. CONTAINERS STORED IN AN OPEN AREA

2. CONTAINERS EXPOSED TO WEATHER BEFORE SHIPMENT

3. CONTAINERS LOADED FROM OPEN STORAGE

4. CONTAINERS WET/MOIST BEFORE SHIPMENT

5. CONTAINERS LOADED DURING RAIN

6. CONTAINERS COVERED WITH DIRT /DUST PRIOR TO SHIPMENT

7. CONTAINERS ARE SECOND HAND, SOME OF THEM SLIGHTLY DENTED PRIOR TO SHIPMENT

8. SURFACES OF THE CONTAINERS ARE RUST STAINED, WITH SCRATCHES BEFORE SHIPMENT

9. THE MARKS OF SOME CONTAINERS ARE NOT CLEAR / MISSING

The nominated bank found the presentation to be otherwise credit compliant and, therefore, determined the maturity date as 21 December 2015. Accordingly, on 30 June 2015, the first mailing of the documents was sent to the issuing bank by courier and received by the issuing bank on 3 July 2015. A second mailing was sent on 1 July 2015.

UCP 600 article 27 states that a clean bill of lading is one that does not contain a clause or notation expressly declaring a defective condition of the goods or their packaging. The problem we are faced with is that the master’s remarks do not seem to expressly declare a defective condition of the goods or their packaging. ISBP 745 paragraph F18 (b) states that clauses about packaging such as “may not be sufficient for the sea journey” and similar words do not make the document discrepant.

Is this a discrepancy in that the bill of lading is not a clean bill of lading as called for by the credit?

ANALYSIS

The reference in the query to ISBP 745 paragraph F18 (b) is incorrect as it relates to non-negotiable sea waybills. The correct reference should be to ISBP 745 paragraph E20.

The beneficiary made a single presentation for the full value of the credit. On examination of the presentation, the nominated bank found the same to be in conformity with the credit but noted the nine remarks made by the master of the vessel on the bills of lading in respect of the nature and condition of the containers prior to, and at the time of, shipment.

All of the master’s remarks on the bills of lading are confined to the exterior condition and appearance of the containers and the atmospheric/weather conditions at the time of loading the containers on to the vessel. None of these remarks make any direct adverse observations declaring any defective condition of the goods and/or packaging. Containers are not to be considered packing in the meaning of UCP 600 article 27.

Lacking information to the contrary within the query, the bills of lading are in conformity with the provisions of UCP 600 article 27 and ISBP 745 paragraph E20.

CONCLUSION

The bills of lading presented are clean and are therefore not discrepant.