Article

by Kim Christensen

The UCP transport provisions have always been the focus of much debate. There may be many reasons for this. One is undoubtedly related to the fact that the transport document acts as evidence that the goods have been passed over to a transport company. Perhaps another is that letter of credit experts and transport experts do not always think alike.

During the drafting of the UCP 600, some effort was made to obtain feedback from the transport industry and, at the late stage of the process, a group of UCP transport experts was consulted to provide final comments on various transport articles. The purpose was to evaluate if the articles were clear and to the point and in line with today's practice. Following are some examples taken from UCP 600 of wording that still causes some problems.

Address and contact details

One of the material changes in UCP 600 is related to the address and contact details of the consignee and applicant. Most of the attention has focused on the fact that these addresses may differ as between the documentary credit and the documents. There is, however, one exception spelled out in the last part of sub-article 14 (j): "... when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document... they must be as stated in the credit."

The question is how to interpret "as stated in the credit". Comparing this to the general rule on how to compare data between the documents and the credit (where data must be "read in context" and "need not be identical to, but must not conflict")1, the language in 14 (j) contains a very rigorous test indeed. Does it mean, for example, that the document would be discrepant if the country code (e.g. "45" for Denmark) was not mentioned as part of the fax number in the bill of lading - if this country code was mentioned in the credit?

Two sources do not provide much clarity. The Commentary on UCP 6002, which represents the views of the UCP 600 Drafting Group, merely suggests that "In this case, the address and contact details (if any) must be the same as those stated in the documentary credit". The Comparison of UCP 600 & UCP 5003, developed by an independent source, the Institute of International Banking Law and Practice, concludes that the contact details must "be as stated in the credit", a standard even more rigorous than that applicable to the description of the goods in the commercial invoice under UCP 600 subarticle 18 (c).

Based on the above, it seems apparent that this new rule demands a high degree of precision, which means that beneficiaries and shipping companies need to be aware of it. The best advice would be to copy/paste the information directly from the credit into any other documents.

Place of receipt/port of loading

This issue has been heavily debated. It arises from the changes made from UCP 500 sub-article 23 (a ) (ii) to UCP 600 sub-article 20 (a) (ii). The first provided precise requirements for the on board notation when a bill of lading presented under a documentary credit contained a place of receipt prior to the port of loading stated in the credit. The rule contained in the latter is less detailed and simply says that: " ... indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit...".

A number of documentary credit experts, transport professionals and beneficiaries interpreted the new wording to mean that the practice had indeed changed, e.g., that in cases where the place of receipt was clearly an inland place, this would not require any additional on board notation (apart from what is already required in UCP 600 sub-articles 20 (a) (ii)+(iii)). The issue has been addressed a number of times, for example in ICC Opinion TA 635rev, which states: "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."

Still, there is a question as to under which circumstances it is "evident from the bill of lading that the shipped on board statement applies to the vessel and the port of loading". This has been the basis for harsh discussions with large shipping lines, which have argued that a "pre-printed" on board notation on their bills of lading refers to the port of loading field, and that the vessel is mentioned together with that.

Listening to the members of the UCP 600 Drafting Group, it seems that no change in practice was intended. On that basis, the best advice one can give beneficiaries and shipping lines is to make sure that when the bill of lading contains a place of receipt prior to the port of loading stated in the credit, a "full" on board notation (including port, vessel and date) is added to the document.

The master signing

New language in UCP 600 concerns the name of the master; i.e., whether or not the name of the master must appear on a transport document subject to articles 19, 20, 21 and 22.

The rule - taken from UCP 600 subarticle 22 (a) (i) (Charter Party Bill of Lading) - includes the following:

- The charter party B/L must be signed by the master or a named agent for or on behalf of the master;

- Any signature by the master must be identified as that of the master;

- Any signature by an agent must indicate whether the agent has signed for or on behalf of (in this case) the master.

In addition, the sub-article states that: "an agent signing for or on behalf of the owner or charterer must indicate the name of the owner or charterer." There is, in other words, no indication from the article that the name of the master need be mentioned in any case. However, when reading ISBP 681 (2007)4 on how the charter party bill of lading must be signed, one finds the following in paragraph 118 (b): "If an agent signs the charter party bill of lading on behalf of the master (captain), charterer or owner, the agent must be identified as agent of the master (captain), charterer or owner. In this event, the name of the master (captain) need not be stated, but the name of the charterer or owner must appear [emphasis added]."

In short, when the charter party bill of lading is signed by the master, the name of the master must be stated, but when an agent is signing for or on behalf of the master, the name of the master need not be stated.

Looking to article 20 covering the bill of lading, it is interesting to make the same analysis. The only names required are those of the carrier and the agent (if any). Nowhere in article 20 is there any indication that the bill of lading must show the name of the master. This is supported by ISBP 681 paragraphs 94 (b) and (c): "b. If the master (captain) signs the bill of lading, the signature of the master (captain) must be identified as 'master' ('captain'). In this event, the name of the master (captain) need not be stated. c. If an agent signs the bill of lading on behalf of the master (captain), the agent must be identified as agent. In this event, the name of the master (captain) need not be stated [emphasis added in both instances]."

Here is my overview of the requirements for showing the name of the master. For the following transport documents, (multimodal transport document (article 19), bill of lading (article 20) and non-negotiable sea waybill (article 21)], the name of the master need not be stated, but the transport document must indicate the name of the name of the carrier. For the charter party bill of lading (article 22), where an agent is signing for or on behalf of the master, the name of the master need not be stated. Where the master is signing, the name of the master must be stated.

Conclusion

Although UCP 600 has already been in force for a year, much of the practice remains to be clarified. In that respect, it is important that when there are disputes about certain practices arising from the new transport articles, the ICC Banking Commission and members of the documentary credit community discuss these thoroughly and preferably reach a common understanding.

Kim Christensen is Vice President, Trade Finance Business & Product Specialist at Nordea in Denmark. His e-mail is kim.christensen@nordea.com

1. Extract from UCP 600 sub-article 14 (d).

2. Commentary on UCP 600 - Article-by-Article Analysis by the UCP 600 Drafting Group. ICC Publication No. 680.

3. The Comparison of UCP 600 & UCP 500 by Professor James E. Byrne, published by The Institute of International Banking Law & Practice, Inc.

4. International Standard Banking Practice for the Examination of Documents under Documentary Credits, 2007 Revision for UCP 600. ICC Publication No. 681.