Article

UCP 600 sub-article 31 (a) and article 1

Whether a qualification as to the number of shipments to be made can be stated anywhere on the credit and not just in fields 43P or 47A.

Query [TA 671]

One of the members of our ICC national committee has submitted the following query (as negotiating and confirming bank) regarding the interpretation of the terms of the letter of credit.

On 19 March 2008, the issuing bank issued a credit stipulating:

In the SWIFT message MT 700:

Field 43P Partial shipments allowed for two lots Field 45A Description of goods: ... total quantity 3385 cbm will be shipped in two lots. Each of 1.692 cbm.

and

Field 47A additional conditions point 9) Shipment of the quantity of this L/C is to be effected in two lots.

On 27 March 2008, the credit terms were amended as follows:

Field 43P to read "allowed without mentioning two lots"

Field 45A amend total quantity to read 3385 and whole quantity to be shipped in two lots without mentioning the quantity of each lot of the two lots.

Field 47A: completely delete clause 9.

The first shipment for 1,629,138 cbm was shipped on 19 March 2008. The documents were sent on 8 April 2008, and the documents were accepted. The second shipment for 720,070 cbm was shipped on 10 April 2008. The documents were sent on 24 April 2008, and the documents were accepted.

The final shipment for 217,473 cbm was shipped on 14 May 2008. The documents were sent on 30 May 2008. The documents were refused by the issuing bank on 3 June 2008, due to shipment in three lots.

In a message on 4 June 2008 to the issuing bank, the confirming bank argued that since the credit was amended under Field 43P and Field 47A point no. 9, part shipments are allowed.

On 5 June 2008, the issuing bank reverted and stated that the documents were discrepant and that its amendment did not mean acceptance of more than two lots, as the description of the goods read: "total quantity to read 3 385 cbm and whole quantity is to be shipped in two lots" without mentioning the quantity of each lot of the two shipments.

The confirming bank would like to have your opinion on whether it was correct for the issuing bank to maintain its position and that the mentioning of two lots in the goods description in fact overruled the information given in Field 43P and emphasized by the deletion of the additional conditions mentioned in Field 47A point no. 9: "shipment of the quantity of this credit is to be effected in two lots".

Analysis

Sub-article 31 (a) provides the rule for partial drawings or shipments - they are allowed.

Article 1 states that the rules of UCP 600 are binding on all parties thereto unless expressly modified or excluded by the credit.

If partial shipments are to be allowed, the credit could remain silent on this issue, and the rule in subarticle 31 (a) will automatically apply. A credit stating that partial shipments are allowed permits any number of shipments to be made. For the credit in question, the issuing bank has modified the rule by the reference to shipment in two lots. The credit, as issued, required two shipments of an equal quantity of goods.

By an amendment, the reference to "in two lots" was deleted from field 43P and field 47A clause 9. However, field 45A still required shipment to be effected in two lots but without the restriction that shipments of an equal quantity be made. Qualification as to the number of shipments to be made can be stated anywhere on the credit and not just in field 43P or 47A.

In effect, the second drawing was discrepant for the reason that the balance of the goods was not shipped at that time. The query reflects that the documents were accepted. It is not clear whether the acceptance was by waiver of the applicant of the discrepancy that not all the goods had been shipped or error on the part of the issuing bank in not observing the discrepancy.

Conclusion

The issuing bank was entitled to refuse the documents presented as a third drawing.

ISBP 681 paragraph 9

Were the authentications of corrections on an invoice, a bill of lading and an insurance document sufficient?

Query [TA 664rev]

One of the special conditions of the credit stated: "All corrections must be authenticated by the issuer of the respective document." Since we, as the nominated bank, received contestations from the issuing bank on the following issues we shall appreciate your opinion as to whether these contestations were justified. UCP's signing requirements were satisfied.

- The credit called for an invoice legalized by the chamber of commerce. The presented invoice showed some corrections bearing authentication by the chamber of commerce. Relying on ISBP 681 paragraph 9, we accepted the document as complying, but the issuing bank stated that the corrections should have been authenticated by the beneficiary, since the special condition overruled ISBP paragraph 9.

- The B/L showed a correction authenticated by the agent of the carrier who signed the document. But the issuing bank stated that the correction should have been authenticated by the carrier whose name appears on the heading, because the issuer of the document was the carrier, not the agent.

- Similar to the case with the B/L, as above, the issuing bank stated that the correction on the insurance policy should have been authenticated by the insurance company whose name appears on the heading, not by the agent who signed it, since the issuer was the insurance company.

Analysis

ISBP 681 paragraph 9 reads: "Corrections and alterations of information or data in documents, other than documents created by the beneficiary, must appear to be authenticated by the party who issued the document or by a party authorized by the issuer to do so. Corrections and alterations in documents which have been legalized, visaed, certified or similar, must appear to be authenticated by the party who legalized, visaed, certified, etc., the document. The authentication must show by whom the authentication has been made and include the signature or initials of that party. If the authentication appears to have been made by a party other than the issuer of the document, the authentication must clearly show in which capacity that party has authenticated the correction or alteration."

The context in which "All corrections must be authenticated by the issuer of the respective document" is written, should be understood to apply to the entity that issued, or completed and signed the document. It therefore follows that the "issuer" (as referred to in the special condition) may or may not be the entity that is named on the heading of the document. It could be the company or person that is completing and signing the document on behalf of the named entity.

For bills of lading and insurance documents, it is common practice that they be completed and signed by the agent of the carrier or agent of the insurance company.

It should be noted that the paragraphs of ISBP apply to the extent that the credit does not modify or exclude their application.

Conclusion

Let us take each document in turn: Invoice - the special condition would require the beneficiary and the chamber of commerce to authenticate any correction or alteration. This is in addition to the requirements expressed in ISBP 681 paragraph 9.

Bill of lading - the special condition would allow for the correction or alteration to be completed by the named carrier or the entity that completed and signed the bill of lading on be half of the carrier, i.e., their agent.

Insurance policy - the special condition would allow for the correction or alteration to be completed by the named insurance company or the entity that completed and signed the insurance policy on behalf of the insurance company, i.e., their agent (or proxy).

UCP 600 articles 22 and 20; sub-articles 22 (a) and 20 (a) (iv)

Whether three documents should be treated as charter party bills of lading

Query [TA 662rev]

Article 22 of UCP 600 begins with the wording: "A bill of lading, however named, containing an indication that it is subject to a charter party (charter party bill of lading) must appear to". [emphasis added].

My questions are as follows:

1. A credit calls for a marine bill of lading, and the document presented appears to comply with the requirements of the credit and article 20 of UCP 600 except that the document contains preprinted wording "Issued pursuant to charter party dated..." without specifying any date in the blank space. The document also contains the terms and conditions of carriage that we see on a normal bill of lading, on the reverse of the document and was titled "Bill of Lading". Should this document be treated as a charter party bill of lading?

2. A credit calls for a marine bill of lading, and the document presented appears to comply with the requirements of the credit and article 20 of UCP 600 except the document contains a stamp "Freight payable as per charter party". The document also contains the terms and conditions of carriage that we see on a normal bill of lading, on the reverse of the document. Should this document be treated as a charter party bill of lading?

3. The document contains the title "Charter Party Bill of Lading", and there is no other reference to a charter party on the bill of lading. The document otherwise complies with the requirements of the credit and article 20 of UCP 600 and also contains the terms and conditions of carriage that we see on a normal bill of lading on the reverse of the document for a marine bill of lading. Should this document be treated as a charter party bill of lading? If so, what meaning can be attributed to the words "however named" in article 22?

All 3 documents were signed by an agent as agent for the named carrier.

My comments, for your information, are as follows:

1. Just because the document has pre-printed wording "Issued pursuant to charter party Dated...", I would not treat this document as a charter party bill of lading unless the sentence is completed with the date.

2. I would not treat the documents referred to in questions 2 and 3 above to be charter party bills of lading.

Analysis

In addition to the wording that appears in sub-article 22 (a) and shown at the beginning of this query, sub-article 20 (a) (vi) states, in relation to bills of lading, "contain no indication that it is subject to a charter party".

The requirement in sub-article 20 (a) (vi) is for the document examiner to be able to determine whether or not the bill of lading has been issued with a view that it be used in conjunction with a charter party.

Conclusion

1. The document contains the following wording: "Issued pursuant to charter party dated...". For the purposes of sub-articles 20 (a) (vi) and 22 (a), this represents an indication that it is issued subject to a charter party.

2. Although the content of the bill of lading complies with the requirements of article 20, the inclusion of "freight payable as per charter party" is an indication that the bill of lading was issued subject to a charter party. This document would be considered to be a charter party bill of lading for the purposes of examination under UCP.

3. The document is entitled "Charter Party Bill of Lading". For the purposes of sub-article 20 (a) (vi) and 22 (a), this represents an indication that it is issued subject to a charter party.

UCP 600 sub-article 20 (a) (i)

If a transport document states "freight forwarder bills of lading are not acceptable" or "house bills of lading not acceptable", can the freight forwarder or agent sign the bill of lading according to the requirements expressed in subarticle 20 (a) (i)?

Query [TA 669rev]

ICC Opinion TA 572 - Issue No. 1 (October 2004) describes the situation in which the documentary credit states that "Transport document issued by Freight Forwarder not acceptable". The conclusion of the Opinion was that "... the bank would be obliged to accept a bill of lading that was signed 'as carrier' irrespective of any knowledge it may have as to the capacity of the issuer" - i.e., even when the transport document was entitled "FBL BIFA Negotiable FIATA Multimodal Transport Bill of Lading".

a. The above Opinion was given subject to UCP 500, and we ask you kindly to inform us if the same position would apply under UCP 600.

b. Also kindly advise if the conclusion above would be the same had the documentary credit stated that "House bill of lading not acceptable" or similar.

Analysis

One of the reasons behind conditions such as "freight forwarder bills of lading are not acceptable" or "house bills of lading not acceptable" is to require the issuance of a bill of lading by the carrier, albeit that the freight forwarder or agent could sign the bill of lading according to the requirements expressed in sub-article 20 (a) (i). If a freight forwarder or agent signs as carrier, the bill of lading becomes a carrier document.

Conclusion

(a) The same position applies under UCP 600.

(b) If the credit states "house bill of lading not acceptable" or similar, the same position will apply.

UCP 600 sub-article 20 (a) (ii) and (iii)

Whether a bill of lading will be discrepant unless it is evident that the shipped on board statement applies to the named vessel and the port of loading stated in the credit

Query [TA 667rev]

A documentary credit issued subject to UCP 600 calls for a bill of lading showing shipment from "Hamburg Port" to "Hong Kong Port". The bill of lading presented included the following information:

Place of Receipt: "Hannover by truck"

Ocean Vessel: "Vessel XX"

Port of Loading: "Hamburg"

Port of Discharge: "Hong Kong"

Place of Delivery:

The bill of lading did not include a separate on board notation - but did include pre-printed wording indicating that goods were "shipped on board" as well as a "date of issue". Kindly advise if the above is in compliance with UCP 600 sub-articles 20 (a) (ii) and (iii)

Analysis

Sub-article 20 (a) (ii) includes wording saying: " ... indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:...." and sub-article 20 (a) (iii) says: " ... indicate shipment from the port of loading to the port of discharge stated in the credit".

Although the wording that appeared in UCP 500 sub-article 23 (a) (ii) - i.e., regarding the need for an on board notation - including the port of loading and name of the vessel on which the goods had been loaded, where the bill of lading indicated a place of receipt or taking in charge different from the port of loading - has not been incorporated into article 20 of UCP 600, the requirements for such an on board notation remain unchanged under UCP 600.

The issues in this query have already been addressed in ICC Opinion TA 635rev (query 3) which was approved at the October 2007 meeting of the Banking Commission. The conclusion given in that Opinion noted: "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 subarticle 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 (preprinted 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 precarriage 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."

Conclusion

The bill of lading will be discrepant unless it is evident that the shipped on board statement applies to the named vessel and the port of loading stated in the credit.

UCP 600 sub-article 17 (a)

When a courier receipt was requested and was received but not signed, was the document discrepant when there was no signature space included on the document?

Query [TA 668rev]

A documentary credit issued subject to UCP 600 calls for "Beneficiary's certificate along with relevant courier receipt certifying that one set of nonnegotiable documents have been sent to the applicant within 3 working days after shipment date".

After presenting the documents to the issuing bank, the nominated bank received a notice of refusal from the issuing bank indicating the following discrepancy: "The presented courier receipt was not signed."

The courier receipt was not signed. It did, however, include a bar code, and there was no signature space included on the document. Is the refusal of the issuing bank correct?

Analysis

By requiring a courier receipt and not a copy of a courier receipt, an original courier receipt was required according to sub-article 17 (a). As mentioned in ICC Opinion TA 654rev, which was approved at the April 2008 Banking Commission meeting, an original courier receipt should be signed. However, the document in question has no signature space. The structure of a courier receipt is not governed by the UCP; this is for each courier company to determine. The ICC Banking Commission cannot dictate that a signature is required when the courier company's document does not require such evidence.

Conclusion

The courier receipt is acceptable.