QUERY

A documentary credit (SWIFT MT700) included the following transport information:

44E: Port of Loading/Airport of Departure

ANY PORT IN EUROPE

44F: Port of Discharge/Airport of Destination

H PORT, COUNTRY V

46A: Documents Required

FULL (3/3) SET OF ORIGINAL CLEAN 'SHIPPED ON BOARD' OCEAN BILL OF LADING, MADE OUT TO THE ORDER OF [ISSUING BANK], MARKED 'FREIGHT PREPAID' AND NOTIFY APPLICANT WITH FULL NAME AND ADDRESS. B/L MUST SHOW NAME, ADDRESS, TEL NO., FAX NO OF SHIPPING AGENT IN [COUNTRY V]. B/L SHOWS SHIPPING AGENT LOCATED IN COUNTRY DIFFERENT FROM [COUNTRY V] UNACCEPTABLE.

The presented bill of lading included the following information:

[Field] Pre-carriage by VESSEL 'W'

[Field] Place of receipt PORT H, COUNTRY F (EUROPEAN PORT)'

[Field] Ocean Vessel VESSEL 'O'

[Field] Port of loading PORT H, COUNTRY F (EUROPEAN PORT)'

[Field] Port of discharge H PORT, COUNTRY V

[Field] Place of delivery H PORT, COUNTRY V

[Body] SHIPPED ON BOARD MV [VESSEL W] 04.05.2016 FROM PORT H, COUNTRY F

The nominated bank found the documents (including the bill of lading) to be complying, and negotiated accordingly.

After receipt of the documents, the issuing bank refused the presentation citing the following discrepancy:

'B/L ON BOARD NOTATION SHOW[S] PRE-CARRIAGE I/O OCEAN VESSEL'

The nominated bank disputed the refusal claiming that the bill of lading was fully complying in respect of UCP 600 sub-article 20 (a) (iii), ISBP 745 paragraphs E6 (c) and (e) as well as the ICC document No.470/1128rev final - 22 April 2010 (Recommendations of the Banking Commission in respect of the requirements for an On Board Notation).

The issuing bank maintained its refusal arguing (amongst others) that:

"ISBP 745, Section E, does not refer to bills of lading that indicate the same port in the place of receipt and port of loading fields, with different vessels shown in the pre-carriage and ocean vessel (or vessel) fields. This is because such issuance represents poor practice by the carrier or its agent and the ISBP should not provide validation of such issuance by offering an acceptable solution.

As indicated in the examples shown in Opinions R350 and R352, on its face (and by a literal reading of the completed fields on your bill of lading) the bill of lading is indicating that it is vessel [O]that will depart from [Port H, Country F] to the port of discharge and that vessel [W] is merely a feeder vessel operating within the boundaries of [Port H]. Therefore, it would infer that the on board notation should be for vessel [O]".

The nominated bank argued that ICC Opinions R350 and R352 is issued subject to UCP 500, and given the changes made to the on board notation provisions in article 23 during the UCP 500 revision, those do not apply to UCP 600 article 20. Further, the distinction made between "feeder vessel operating within the boundaries of [Port H, Country F]" and "[the] vessel that will depart from [Port H] to the port of discharge" is not valid under current rules and practice.

In essence, the bill of lading includes a dated on board notation on a named vessel from the port of loading stated in the credit; hence, it complies with the provisions of UCP 600 article 20.

We ask kindly your official Opinion as to:

1. Whether or not ICC Opinions R350 and R352 apply under UCP 600.

2. Whether or not the refusal quoted by the issuing bank is valid under UCP 600.

ANALYSIS

Sub-article 20 (a) (ii) requires that a bill of lading indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit, by pre-printed wording or a dated on board notation. The rule in sub-article 20 (a) (iii) i.e., "If the bill of lading does not indicate the port of loading stated in the credit as the port of loading, or if it contains the indication "intended" or similar qualification in relation to the port of loading, an on board notation indicating the port of loading as stated in the credit, the date of shipment and the name of the vessel is required. This provision applies even when loading on board or shipment on a named vessel is indicated by pre-printed wording on the bill of lading", was not drafted with the intention of covering a situation where a bill of lading indicates that shipment is being effected on two vessels apparently leaving from the same port.

As mentioned in ICC Opinion R350, which referred to the handling of transactions made subject to UCP 500, the principles of which will still be valid under UCP 600, the UCP draws no distinction between feeder vessels and ocean vessels. UCP 500, and now UCP 600, only requires evidence of the name of the vessel that is leaving the port of loading stated in the credit (either a port specifically named in the credit or a port within a geographical area named in the credit), for the port of discharge.

Example 3 in R350 refers to a bill of lading with the same structure as outlined in the above query. The conclusion for example 3 stated that the bill of lading "would require the insertion of an on board notation (even if the bill of lading is pre-printed "shipped on board") which clearly states the date the goods were loaded on board, the name of the ocean vessel and the port of loading (Hong Kong)."

CONCLUSION

1. ICC Opinions R350 and R352 still apply under UCP 600.

2. Yes, the refusal is valid. The bill of lading requires a dated on board notation indicating vessel O and Port H.