Article

UCP 600 article 19

When multimodal transport has occurred, is a transport document marked "received for shipment" and dated as of that date acceptable? Was a documentary credit discrepant because of the ambiguity that allowed a document covering at least two different modes of transport and requiring transport between two places that were sea(ports)?

Query [TA 629]

We kindly ask your official Opinion on the following question. An L/C, issued subject to UCP 600, contained the following requirements:

Under documents required:

Full set of at least 3/3 original clean on board marine bill(s) of lading endorsed to order of bank XX showing freight prepaid notify buyers.

Field 44E: Port of loading/airport of departure

Umea, Sweden

Field 44F: Port of discharge/airport of destination

Port Jebel Ali, Dubai by vessel

Under additional conditions:

Multimodal transport document is acceptable

The bill of lading presented was issued as follows:

Place of receipt: Umea, Sweden Ocean vessel: "vessel XX" Port of Loading: Hamburg Port of discharge: Port Jebel Ali, Dubai by vessel.

The bill of lading mentioned that goods were "received for shipment" and did not contain any on board notation.

The issuing bank refused the documents based on the following discrepancy: "B/L doesn't show port of loading as required under L/C field 44E."

The presenter argued that:

- Since the L/C allowed for the presentation of a multimodal transport document, if such is presented it should be examined in accordance with UCP 600 article 19, i.e., no on board notation is required.

- The L/C wording is ambiguous, as it both allows for a document covering at least two different modes of transport AND requires transport between two (sea) ports. (Also refer to ISBP 2007 revision, ICC Publication 681, paragraph 68, which reads that: " ... In such circumstances, the transport document must not indicate that shipment or dispatch has been effected by only one mode of transport ...").

The issuing bank replied that:

- The presented B/L shows the port of loading as Hamburg, which is not stipulated in the credit.

- The fact that a "multimodal transport document is acceptable" does not make the L/C ambiguous, as it is possible to indicate a place of receipt of goods different from the port of loading stipulated as "Umea, Sweden". Hamburg is a German port which doesn't fall in the geographical area of Sweden. Please refer to paragraph No.100 of the ISBP (2007 revision).

- In the L/C we requested a marine B/L and utilized SWIFT field 44E, which is related to port of loading. Field 44a however - which is related to place of receipt of goods - is not indicated in the L/C. Umea, Sweden was used as a place of receipt of goods, while it is requested to be the port of loading (within the geographical area of Sweden). In this case, the matter could have been solved if Umea, Sweden had been indicated as a port of loading and Hamburg was used as a port of transhipment.

- The application of which article to apply is determined by the transport document itself (i.e., the bill of lading), and this is why the term "however named" is used in all articles related to transport documents in UCP 600.

- We also base our refusal on two ICC Opinions published in "The ICC Banking Commission Collected Opinions 1995-2001" inquiry Ref. nos. (228 and 229) ref. nos. (164 and 165), pages nos. (285-288). Please refer to these cases.

We would appreciate your official Opinion on this matter.

Analysis

From the text of the query, the structure of the documentary credit was primarily based upon the expectation of the presentation of a bill of lading covering shipment from Umea to Jebel Ali by vessel. A full description of the requirements for the creation of a bill of lading evidencing such a shipment was provided.

If a bill of lading subject to UCP 600 article 20 had been presented, Umea would be required to appear as the port of loading and Jebel Ali as the port of discharge. This bill of lading would also need to evidence that the goods had been shipped on board a named vessel, by pre-printed wording to that effect or an on board notation indicating the date on which the goods had been shipped on board.

Reference within the query to "Hamburg is a German port which doesn't fall in the geographical area of Sweden. Please refer to paragraph No. 100 of the ISBP (2007 revision)" has no relevance to the determination of the port of loading, as the documentary credit was specific as to the port of loading, i.e., Umea, Sweden, if the goods were to be shipped by sea from Umea and a bill of lading was to be presented. The addition of "Sweden" is not an indication of an allowance for a geographical range or area of ports.

Despite the structure of the documentary credit focusing on the presentation of a bill of lading, it does allow for the presentation of a document that would be subject to review under UCP 600 subarticle 19, i.e., a multimodal transport document. No further instructions, it would seem, were included with regard to the creation of the multimodal transport document, and therefore it follows that the multimodal transport document would be required to be completed in line with the requirements specified for a bill of lading, i.e., full set of at least 3/3 clean multimodal transport documents endorsed to order of bank XX showing freight prepaid notify buyers.

The text of the query states that the presenter argued that the documentary credit was ambiguous by allowing a document covering at least two different modes of transport and requiring transport between two (sea)ports. Unfortunately, the manner of drafting the documentary credit in question is not uncommon, in that it lacks precise details of the shipment routing in the event of the alternative transport document, a multimodal transport document, being presented. In such circumstances, it can only be the issuing bank (and ultimately, the applicant) that bears the risk of such ambiguity, provided the document covers the routing stated in the documentary credit.

Where a multimodal transport document is required or allowed, a shipment from a port to a port is not envisaged. It therefore follows that, in this event, either the goods will depart Umea by means other than by sea, or will arrive at Jebel Ali by means other than by sea, or that goods will be shipped from Umea by sea to another port, then from that port to another port by a means other than sea and from that port to Jebel Ali (highly unlikely, but nevertheless possible). From the text of the query, it would appear that the goods were transported from Umea to Hamburg (mode of transport not specified and presumably no evidence that it was by sea only, but information on the modes used is not required by UCP), and then from Hamburg to Jebel Ali by vessel.

It should be noted that it is the content of the document that determines the applicable article of UCP 600 and not the title. This is the rationale behind the provision "however named" that appears within each of the transport articles.

Within the query, reference to is made to two ICC Opinions, R.228 and R.229, upon which it is stated the issuing bank based its refusal. It should be noted that ICC Opinion R.458 replaced R.229 and, given the similarity of issues between R.228 and R.229, such superseding would apply to both.

Conclusion

Based on the structure of the documentary credit and the fact that a document was presented to cover a multimodal transport between Umea and Jebel Ali, the multimodal transport document complies. The fact that Umea is not shown as the port of loading but as place of receipt reflects the nature of the multimodal transport that occurred. Hamburg, being shown as the port of loading, correctly reflects the transport from that port to Jebel Ali. Due to the fact that a multimodal transport has occurred, the transport document marked "received for shipment" and dated as of that date is acceptable.

UCP 600 article 3 and UCP 500 sub-article 20 (d)

When a signature, mark, stamp or label is placed on a document, is the L/C complying even if the document states "legalized" instead of "certified"?

Query [TA 640]

We received the following query from a bank in Country N: "On a regular basis we receive L/C's prescribing, amongst other conditions, 'commercial invoice to be certified by chamber of commerce and legalized by xxxx embassy/consulate.'

UCP 600 article 3 (4th paragraph) and UCP 500 sub-article 20 (d) prescribes: 'A requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or label on the document which appears to satisfy that requirement.'

In daily practice, we receive many commercial invoices (and other documents) which are legalized (seen for the signature only) instead of certified by the chamber of commerce (as prescribed in the relative L/C).

In our opinion, the document is discrepant for the following two reasons: first, the L/C prescribes 'commercial invoice to be certified by chamber of commerce' and the wording of the applicable UCP article reads 'to satisfy that requirement' (being - in our opinion - the requirement that the document is certified).

Second, we believe that the certification of a document means that the full content of the document, including its signature, is certified, and the legalization of a document means only that the signature is verified to be legally binding and valid. Do you endorse our opinion?"

We have discussed the query and we have a difference of opinion, as follows: first, several members of our committee fully endorse the opinion of the bank in County N, and they also believe the document is discrepant. Second, other members believe as follows: "A requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or label on such document that on its face appears to satisfy the above condition. The essence of the article is not that the wording 'certified, or legalized, or visaed, or similar' (as mentioned in the L/C) is to appear in the document, but there be some form of signature, mark, stamp or label that should appear."

These members conclude: "In case a L/C prescribes that a certain document must be certified legalized, visaed, or similar by a specific party, and such document shows some form of signature, mark, stamp or label placed on the document by that specific party, such document is credit complying, even in case the document, for instance, states 'legalized' instead of 'certified.'"

Please let us know which of the two opinions you endorse.

Analysis and conclusion

The term of the credit to which you refer, i.e., commercial invoice to be certified by chamber of commerce and legalized by xxxx embassy/ consulate, contains two distinct requirements (1) that the invoice be certified by a chamber of commerce and (2) that the document then be legalized by an embassy or consulate.

The wording that appears in UCP 600 article 3 (4th paragraph) and UCP 500 sub-article 20 (d), for which the text in article 3 has been quoted in the query, reflects the interpretation of the words "certified" and "legalized" where the credit does not provide specific requirements to evidence compliance with a request for certification and/or legalization.

If a commercial invoice, in the form requested in the query, does not contain evidence of certification by a chamber of commerce and legalization by an embassy or consulate, then it is clearly discrepant. It is true that often the terms "certified" and "legalized" are used interchangeably in the context of an action by a chamber of commerce and an embassy or consulate. However, this does not detract from the fact that under the query being discussed, the requirement was for certification and legalization by the respective bodies.

For certification by a chamber of commerce, the requirement under UCP 500 and 600 is that the document must evidence a signature, mark, stamp or label that appears to satisfy the requirement in the credit of certification by a chamber of commerce. Absent any wording in the credit as to the form of certification, a bank is not required to determine the scope of such certification, i.e., whether it be in respect of a signature thereon or the data content of the document.

Legalization of documents entails a process whereby documents issued in one country ("Source Country") need to be used in another country ("Destination Country") and must be "authenticated" or "legalized" before they can be recognized as valid in the destination country. Legalization generally occurs on the strength of certification by a chamber of commerce and usually extends to the verification of the signature of the chamber of commerce. Again, legalization may be evidenced by a signature, mark, stamp or label that appears to satisfy the requirement in the credit of legalization by the named embassy or consulate.

There is no requirement that the words "certified", "legalized" or "visaed", etc. appear on the commercial invoice. A chamber of commerce will generally add its stamp and signature to the document. The stamp and any wording linked to the signature may not be in a language understood by the issuing bank, e.g., if it is in the language of the country of the beneficiary. Similarly, the language used in any legalization statement or stamp is generally that of the importing country. It is for these reasons that the UCP provides for banks to accept any form of signature, stamp, mark or label that appears to satisfy a requirement for certification or legalization.

Of the opinions given by the national committee in the query, the second opinion is the correct application of the wording in UCP 600 article 3 (4th paragraph) and UCP 500 sub-article 20 (d).

UCP 600 articles 22(a) and 20(a) (ii), Articles 33 and 20

Whether a B/L marked "Congenbill" can always be considered as a charter party B/L; whether a bank can decide if a presentation is allowed to be made outside the banking hours of its trade department; when a place of receipt or taking in charge is the same as the port of loading and the bill of lading does not evidence any means of pre-carriage, will an on board notation be required?

Query [TA 635rev]

On behalf of our national committee I would appreciate receiving your Opinions concerning the following three queries coming from our members. They consist of cases on which full agreement by Commission members of our national committee was not obtained. All cases concern credits subject to UCP 600.

Query 1

It is widely known that a B/L marked in print "Congenbill 1978 (or 1994)" is designed for charter party B/Ls. Can said marking alone be considered "an indication" under sub-article 22 (a) that the presented B/L is a charter party B/L?

Query 2

Under article 2, from definitions of "Banking Day" and "Presentation", we understand that presentation is an act to be performed on a day when a bank is regularly open. We also note from sub-article 14 (b) that the examination period commences on the day following the "day of presentation" as opposed to UCP 500's "day of receipt of documents". Therefore, it is our understanding that the day of presentation is to be a banking day, even if documents are received by a bank's mail receiving unit which may be open on a non-banking day. Are we correct?

Query 3

Where a credit calls for a B/L evidencing shipment from port to port, paragraphs 91 and 92 of ISBP 681 state that the presented B/L must cover sea shipment only, so that article 20 could be applicable. In case the B/L shows an inland place of receipt before the port of loading stated in the credit, then due to two different modes of transport, the document should be seen as a CTD and be rejected for the reason that it is not the document required by the credit, even if the B/L shows a separate on board notation indicating the port of loading as stated in the credit, the date of shipment and the name of the vessel. Are we correct?

Analysis and conclusion

Query 1: A "congenbill" usually bears the heading "Bill of Lading to be used with Charter Parties". The presentation of this form of document without amendment to the stated terminology would be considered to be an "indication that it [the bill of lading] is subject to a charter party". However, where a "congenbill" is presented without reference to "to be used with Charter Parties", it would not, in itself, be an indication that it is subject to a charter party and would be acceptable.

Query 2: The day of presentation may or may not be a banking day. The applicable rule here is contained in article 33, which states "A bank has no obligation to accept a presentation outside of its banking hours." This allows a bank to decline any presentation made outside of its stated banking hours - whether a banking day for the purposes of an act subject to the rules to be performed or on a day that the bank's mail receiving unit is open, but a non-banking day for the purposes of UCP 600.

For the purposes of this query, whether or not a presentation is allowed to be made outside the banking hours of the trade department of a bank is for that bank to decide. Article 33 allows a nominated bank or issuing bank to decide whether or not it will accept a presentation made by a presenter outside of its banking hours. The reference to "banking hours" means those hours applicable locally to the nominated bank or to the issuing bank, depending on to which bank the presentation is to be made. A bank that receives documents on a day when the mail receiving unit is working, but the trade department is not, may decide to acknowledge receipt of the documents, but on the basis that the documents are considered to have been received for the next working day of the trade department.

It should be noted that the conclusion to ICC Opinion R. 265 concerning the presentation date under UCP 500, states: "Article 45 of UCP 500, in effect, allows a bank to refuse the presentation of documents after the close of their business hours. By accepting a presentation of documents outside the bank's normal banking hours would mean that, in this case, Saturday would count as the day of receipt of the documents for the purposes of sub-article 13(b)." The same premise would apply under UCP 600 article 33.

Query 3: A bill of lading is a generic term for a transport document that includes, but is not necessarily limited to, transport by sea from a port of loading to a port of discharge. It is recognized, however, that there will still be occasions when the shipping company or its agent will include reference to a place of receipt or taking in charge that is different from the port of loading. To cover this eventuality, the content of sub-article 20(a)(ii) reads: "indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by ... ". The emphasis in this condition is that the document checker must be able to determine that the bill of lading appears to indicate that the shipped on board statement (pre-printed wording or by a separate notation) relates to loading on board the named vessel at the port of loading stated in the credit and not to any pre-carriage of the goods between a place of receipt or taking in charge and the port of loading. Unless it is evident from the bill of lading that the shipped on board statement applies to the vessel and the port of loading, the bill of lading will require an on board notation showing the port of loading and the name of the vessel, even if the goods are loaded on the vessel named in the bill of lading.

When a place of receipt or taking in charge is the same as the port of loading, e.g., place of receipt Hong Kong CY and port of loading Hong Kong, and the bill of lading does not evidence any means of pre-carriage, i.e., only shows the name of the vessel, the ports are to be deemed one and the same place, and therefore an on board notation, as described above, will not be required.

For the purposes of this query, the document will not be considered as a combined transport document and will not be rejected for that reason, provided it contains an on board notation as specified above, or if the place of receipt is the same as the port of loading (in which case no on board notation is required) and it otherwise complies with the terms and conditions of the credit and article 20.