Article

UCP 600 article 3

Where an L/C called for a certificate of origin from a local chamber of commerce

Query [TA 652rev]

An L/C calls for a certificate of origin from a local chamber of commerce. The product is of foreign origin. Does "local chamber of commerce" mean local where the beneficiary is or local where the product originates?

Analysis

Reference to "local chamber of commerce" provides no specifics as to whether it is local as to the origin of the goods, the location of the beneficiary or the place from which shipment, dispatch or receipt is to be made. A similar circumstance was covered in ICC Opinion R. 392, whereby a credit required a certificate of origin to be legalized by the chamber of commerce in the exporting country. In that case, the use of the words "exporting country" raised the same kind of possibilities concerning the place at which legalization could occur.

Conclusion

The answer to this question lies in the content of an interpretation provided in article 3 of UCP 600. Therein it is stated "Terms such as 'first class', 'well known', 'qualified', 'independent', 'official', 'competent' or 'local' used to describe the issuer of a document allow any issuer except the beneficiary to issue that document." Applying this interpretation in the context of this query, any chamber of commerce may issue the certificate of origin.

UCP 600 sub-articles 14 (d) and 14 (h)

Does a credit containing a reference to a latest shipment date without stipulating the requirement for presentation of a document indicating compliance with this condition automatically constitute a non-documentary condition, and is it necessary to check this data against other stipulated documents in the credit?

Query [TA 644rev]

We wish to seek an official Opinion of the ICC Banking Commission relating to the treatment of non-documentary conditions under UCP 600. It is confirmed that the query below is based on an actual case experienced by a member bank of our national committee on whose behalf this question is submitted.

One of our members has an ongoing credit business in favour of a particular beneficiary where many "export" (inward) credits received include a condition stipulating details of transport to and from and latest shipment date, but without stipulating the requirement for presentation of a document indicating compliance with the condition. In such circumstances, we would be grateful if you would please confirm that for credits subject to UCP 600, such condition(s) should be treated as non-documentary, deemed as not stated and disregarded irrespective of any other documents stipulated in the credit or any data that might appear in such documents when presented.

In view of the policy issues inherent within the above query, our national committee believes that an official Opinion endorsed by the Banking Commission is required. The query was discussed at the meeting of our Banking Committee on 12 October 2007. At this meeting, our national committee members agreed that it is imperative that the Banking Commission provide unambiguous and definitive guidance on this important issue and unanimously support this request.

Analysis

Sub-article 14 (h) states: "If a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it." Sub-article 14 (d) states: "Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit".

Conclusion

From the text of the query, various credits are received that include details relating to shipment of the goods, such as details of transport from and to and the latest shipment date, but do not require the presentation of any document evidencing compliance therewith. The question that has been posed does not refer to the possible implications of handling such credits where shipment of goods is involved but there is no evidence required as to the completion of the respective carriage. These need to be considered by each issuing and nominated bank in accordance with its own internal policies and local regulatory requirements.

Where it has been agreed to handle such a transaction, details such as the places, ports or airports from which the goods are to be shipped from and to and the latest shipment date may be disregarded for the purpose of determining a complying presentation and need not be stated in any other stipulated document presented.

However, the data in the other stipulated documents will still be subject to review under sub-article 14 (d) to ensure that any data is not conflicting with the data in the credit. According to sub-article 14 (h), banks will deem a non-documentary condition as not stated (on the basis that there is no necessity for the beneficiary to provide any evidence of compliance) and will disregard it. Should the beneficiary, nevertheless, elect to insert such data on any other stipulated document, then it must ensure that the data does not conflict with the data in the credit. The view of the Banking Commission is that sub-article 14 (h) is not absolute and is qualified by the content of sub-article 14 (d).

UCP 600 sub-articles 12 (b) and 12 (c)

Whether wording used in a message of a nominated bank indicating that documents were "accepted by us" reflects that the bank has incurred its deferred payment undertaking

Query [TA 655rev]

We shall appreciate your Opinion on the following issue under a credit subject to UCP 600. The credit is available with a nominated bank located in Country X, which transmits its MT 710 to an advising bank in Country T without adding its confirmation. Upon receipt of documents the nominated bank sends a message to the advising bank reading: "Please be informed that the documents are accepted by us for maturity date June 05, 2008 (June 04, 2008 is a holiday in our country). At maturity date we will revert to the matter of payment of proceeds."

When asked for a clarification of the last sentence, upon the beneficiary's request seeking a clearer indication of payment at maturity, the nominated bank replied: "As the credit was not confirmed by us, we are not in a position to guarantee payment at the maturity date."

We shall appreciate receiving your Opinion as to whether the nominated bank is deemed to have incurred its deferred payment undertaking within the context of sub-article 12 (b) of UCP 600 as a result of having sent its first message, which stated that the documents were accepted by it, also giving the maturity date.

Analysis

The fact that the nominated bank states that the documents are "accepted by us" merely implies that it declares that the documents represent a complying presentation.

Conclusion

The wording used in the first message of the nominated bank does not reflect that it has incurred its deferred payment undertaking. It should be noted from sub-article 12 (c) that the receipt or examination and forwarding of documents by a nominated bank that is not a confirming bank does not make that nominated bank liable to honour or negotiate, nor does it constitute honour or negotiation.

Banks are advised to consider carefully the choice of words they use to convey their position regarding documents and their role in the settlement thereof, so as to avoid situations such as that outlined in this query.

UCP 600 sub-articles 18 (c) and 14 (d)

Whether there was a conflict with only one pro forma invoice number being quoted on documents other than the commercial invoice; whether a notify party field with just the name of the applicant created a discrepancy; whether a courier company receipt not bearing the date of pick-up nor the initial/signature of the courier company was a discrepancy

Query [TA 654rev]

We shall appreciate your Opinion on the following issue under a credit subject to UCP 600: Description of goods: 1000 meters fabric as per proforma invoices no. 2008/1 dated 01.01.2008 and no. 2008/2 dated 01.01.2008

Partial shipment is allowed.

Required documents:

1. Commercial invoice

2. International Consignment note CMR showing goods consigned to the applicant marked freight prepaid and notify applicant

3. Packing list

4. Beneficiary's certificate along with relevant original/ copy/photocopy of courier receipt certifying that one set of non-negotiable documents has been sent to the applicant within three working days after shipment date.

The beneficiary made a partial shipment and presented documents through the advising bank, to the issuing bank, which raised the following discrepancies:

1. Commercial invoice shows two pro forma invoice numbers and dates whereas other documents show number and date of one pro forma invoice only.

2. CMR shows only the name of the applicant in the notify party field and omits to show its address as mentioned in field 50 of MT700. 3. DHL receipt does not bear the date of pick-up and the initial/signature of the courier company. Are the above-mentioned discrepancies justified?

Analysis

Discrepancy 1

Sub-article 18 (c) requires that the commercial invoice contain a description of the goods that corresponds with that appearing in the credit.

Sub-article 14 (d) states: "Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit."

The invoice reflected the description of goods as required by sub-article 18 (c).

The other stipulated documents referenced only one of the pro forma invoice numbers, reflecting the partial shipment that had been made. The data was not identical in the other stipulated documents, but in the context of the requirement of sub-article 18 (c) and the fact that the goods description, i.e., "fabric" was identical on the two pro forma invoices, there is no conflict with only one pro forma invoice number being quoted on documents other than the commercial invoice. From a beneficiary's perspective, it would have been more appropriate for it to have made clear in the invoice that the shipment in question related to only one of the pro forma invoices, thus avoiding situations as encountered here.

Discrepancy 2

It must be presumed that the consignee field on the CMR was completed with the name and address of the applicant. The completion of the notify party field with just the name of the applicant does not create a discrepancy. There is a clear relationship between the name of the applicant shown in the notify party field and the name and address shown in the consignee field.

Discrepancy 3

The credit required one set of non-negotiable copies of the documents to be sent to the applicant within three days after the date of shipment. Whilst this information was to be inserted onto the beneficiary certificate, proof of compliance would be evidenced by the date of pick up shown on the courier receipt. The date of pick up was not evidenced. The credit required the presentation of a courier receipt (original, copy or photocopy). If the courier receipt included a space for signature of the courier company, then this should have been signed. The comments in relation to signing of the courier receipt apply on the basis that the presented receipt was an original and not a copy. If a copy courier receipt is required or allowed, it need not be signed.

Conclusion

Discrepancy 1:

There is no discrepancy.

Discrepancy 2:

There is no discrepancy.

Discrepancy 3:

The discrepancy is valid.

UCP 600 articles 19-23, sub-articles 14 (f) and 14 (l); ISBP 681 paragraphs 72, 95 and 138

When a credit requires or allows the presentation of a "house" bill of lading or air waybill, what are the requirements for signing and compliance with the terms and conditions of the credit and the respective transport article, particularly as regards freight forwarders?

Query [TA 651rev]

Our national commercial L/C committee had an extended discussion on the topic of L/Cs that require a "house bill of lading" or conversely call for an "ocean B/L consigned to XX and notify YY" and then later indicates that a "house B/L acceptable". The discussions centered on the appropriate document examination methods for L/Cs that contain these clauses.

Our general consensus is that "house" is synonymous with forwarder and, as such, any L/C containing either of the above clauses is asking a nominated bank to examine the data content of the house B/L in accordance with the mandates prescribed in UCP 600 sub-article 14 (f).

In the latter example, which allowed either an "ocean" or a "house" B/L, if a forwarder B/L (signed and acting only as a forwarder) was presented, would the same hold true and would it not be examined in accordance with UCP 600 articles 19-23? If the house B/L presented contradicted the consignee or notify party or other information that was specifically requested in the L/C's "ocean bill of lading" requirements, can this be cited as a discrepancy?

Analysis

The first sub-article of UCP 600 articles 19-23 refers to a document "however named". Therefore, even when, for example, a credit called for an ocean bill of lading, a house bill of lading could be issued on the letterhead of a freight forwarder and be accepted provided that it otherwise complies with the content of the respective transport article and any other applicable articles of UCP 600. In this respect, refer to sub-article 14 (l), which states: "A transport document may be issued by any party other than a carrier, owner, master or charterer provided that the transport document meets the requirements of articles 19, 20, 21, 22, 23 or 24 of these rules."

A house bill of lading would be examined under article 20 and not under subarticle 14 (f ).

Paragraphs 72, 95, 138 of ISBP publication 681 refer to the specific instance of when a credit states "freight forwarder B/L is acceptable", "house air waybill acceptable" or similar phrases. The international standard banking practice where such terms are used only relates to the manner in which the document is to be signed. These paragraphs state that "If a credit states ["Freight forwarders [name of document] is acceptable", "House air waybill is acceptable"] or uses a similar phrase, then the [name of document] may be signed by a freight forwarder in the capacity of a freight forwarder, without the need to identify itself as carrier or agent for the named carrier. In this event, it is not necessary to show the name of the carrier."

Conclusion

When a credit requires or allows the presentation of a "house" bill of lading or air waybill, the document must comply with the terms and conditions of the credit and the requirements of the respective transport article, with the exception that the document may be signed by the freight forwarder in its capacity as freight forwarder and need not show the name of the carrier.

UCP 600 articles 19-25; sub-articles 14 (f) and 14 (h); ISBP 681 paragraph 19

In the context of a forwarding agent's goods receipt, is there a requirement for the document to evidence a place of delivery?

Query [TA 641]

We are beneficiaries (Company A) of a documentary credit advised to us by Bank B. The documentary credit was available with Bank B by payment - subject to UCP 600. The documentary credit has been confirmed by Bank B.

Part of the requirements of the credit were as follows:

Documents required: "Package of consignment notes (originals), or set of bills of lading (originals) or forwarding agent's 'goods receipt' - 1 original"

SWIFT field 44A: Place of receipt: Gdynia, Gdanska or Swinoujscie

Swift field 44B: Place of delivery: Russia

We presented a document issued and signed by "C Shipping" entitled "Goods Receipt". The "goods receipt" included the following contents: "We 'C Shipping', acting as forwarding agents in the port of Gdynia, do hereby certify the receipt of: [Goods description in accordance with the documentary credit] as specified in attached packing specification. We are instructed by the owner of the goods 'Company A' to hold the goods at the disposal of: Company D (the applicant of the documentary credit)." After examination of the presentation, the nominated bank refused the documents, stating the following discrepancy: "Goods receipt does not evidence shipment to Russia."

We disagree with Bank B for the following reasons:

According to ISBP 681 (2007) paragraph 19, a "goods receipt" is not a transport document as reflected in UCP 600 articles 19-25. Hence, the examination of a "goods receipt" is subject to e.g., UCP 600 article 14. Specifically:

Sub-article 14 (f): In this case, it seems clear to us that the document fulfils the "required function", as it shows that goods are "received".

Sub-article 14 (h): This documentary credit offers a choice between "consignment note", "bill of lading" and "goods receipt". The first two are described in the UCP 600 respectively in article 24 and article 20. In these cases, "shipment to Russia" would be relevant; however, not when a "goods receipt" is presented. Therefore, it can be described as a condition without stipulating the document to indicate compliance with the condition. According to sub-article 14 (h), such conditions will be disregarded.

We would appreciate your official Opinion on this matter.

Analysis

A forwarding agent's "goods receipt" is not a transport document covered by the content of UCP 600 articles 19-25. As implied by its title, such a document is a receipt for goods and is not a document intended to evidence shipment having occurred between two places, ports or airports.

The presented document evidenced that the forwarding agent had received the goods as described in the credit at the port of Gdynia at the disposal of the applicant. In the context of a forwarding agent's goods receipt, there is no requirement for the document to evidence a place of delivery, merely the receipt of goods. The inclusion of a place of delivery (or port of discharge) is only relevant in the context of the issuance of consignment notes or bills of lading.

Conclusion

There is no discrepancy.

It should be noted that the credit, in allowing for different forms of delivery, should have provided for the individual requirements when consignment notes, bills of lading or a goods receipt were to be presented.