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( Source of the document: ICC Digital Library )
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?
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.
The courier receipt is acceptable.
UCP 600 sub-article 19 (a) (ii)
Whether a dated on board notation is required when a MMTD evidences the first leg of the carriage as a sea shipment from the port stated in the credit, i.e., whether there is a need for evidence of the date the goods were shipped on board by means of pre-printed wording or an added notation
Query [TA 666rev]
We refer to the approved ICC Opinion TA 650rev, which states in its conclusion that a dated on board notation is required when a MMTD evidences the first leg of the carriage as a sea shipment from the port stated in the credit, i.e., there is a need for evidence of the date the goods were shipped on board by means of pre-printed wording or an added notation.
Since the pre-printed wording of the transport document mentioned in the above-mentioned query was not given, we shall appreciate a clarification as to whether the above-mentioned statement is applicable also for the four cases containing pre-printed wording with the respective fields of the MMTDs as shown below: (In all cases, the credits require shipment from X port to the inland place M).
"Taken in charge in apparently good condition herein at the place of receipt for transport and delivery as mentioned above, unless otherwise stated. The MTO/Carrier in accordance with the provisions contained in the MTD undertakes to perform or to procure the performance of the multimodal transport from the place at which the goods are taken in charge, to the place designated for delivery and assumes responsibility for such transport."
....... (Surrender clause) ............
"Taken in charge in apparent good order and condition, unless otherwise noted herein, at the place of receipt for transport and delivery as mentioned above" ... (Surrender clause)
"Received in apparent good order and condition except as otherwise noted the total number of containers or other packages or units enumerated below for transportation from the place of receipt or port of loading whichever applicable to the place of delivery or port of discharge whichever applicable subject to terms hereof." ... (Surrender clause)
In all the cases that have been quoted, the credit required shipment from a port to an inland destination. The conclusion to ICC Opinion TA 650rev stated: "A dated on board notation is clearly required when the credit so requests. It is also required when the document evidences the first leg of the carriage as a sea shipment from the place stated in the credit."
To this extent, sub-article 19 (a) (ii) states: " ... indicate that the goods have been dispatched, taken in charge or shipped on board at the place stated in the credit ... ", thereby providing the various options depending on the type of transport document presented.
The query refers to different forms of transport documents but the same conclusion will apply notwithstanding the type or title of document presented.
The transport document requires a dated on board notation.
The transport document requires a dated on board notation showing the name of the vessel that sailed from X Port and port of loading "X Port".
UCP 600 sub-articles 12 (b), 7 (c) and 14 (a)
Does a pre-paying nominated bank have an independent reimbursement claim against an issuing bank in accordance with sub-article 7 (c) of UCP 600 as a consequence of the authorization given to a nominated bank under sub-article 12 (b) - even if a court order issued against the issuing bank prohibits payment to the beneficiary?
Query [TA 672rev]
On behalf of a bank in Country A, our ICC national committee is seeking an opinion of the Banking Commission on the following dispute under UCP 600 between a confirming bank and an issuing bank. The issue concerns pre-payment of a confirming bank against credit-conforming documents under a deferred payment credit and nonreimbursement at maturity by the issuing bank due to a court order, but in violation of sub-article 12 (b) and consequently sub-article 7 (c).
Kind of transaction:
Irrevocable confirmed, deferred payment letter of credit ("L/C")
Issuing bank: IB
Nominated confirming bank: CB
Applicant: Subsidiary of a multinational Beneficiary: Trader
Payment terms: Available by 90 days deferred payment at the counters of CB
Confirmation instructions: CONFIRM
Underlying transaction: Delivery of steel L/C subject to: UCP 600
The CB purchased the deferred payment undertaking resulting from documents presented in full conformity with the terms and conditions of the L/C and effected payment to the beneficiary on a without recourse basis.
The IB confirmed, by authenticated SWIFT, the acceptance of documents and the remittance of funds with a value maturity date. One day before the maturity date, the IB informed the CB in two subsequent authenticated SWIFT messages as follows:
"Please be informed that as per court order payment of this credit has been stopped."
"According to the order dated May 14, 2008 issued by the Court of First Instance in the preliminary cautionary measures the planned payment is stopped. Because of this judicial order we cannot effect the above mentioned payment. You are requested to inform immediately the beneficiary in order to contact urgently the applicant."
These messages were followed by a telefax copy of the court order and a SWIFT request to inform the IB whether the CB had already (pre) paid to the beneficiary, which was confirmed by the CB.
On 21 May 2008, the following SWIFT message was sent by CB to IB (extract), which remained unanswered up to the date of writing: "We wish to draw your attention to the following facts:
1. The Court Order dd. May 14, 2008 of the Court of First Instance is addressed to your bank, in order to proceed with the suspension of payment according to the instructions of applicant of L/C. This court order forbids your payment to be effected to the beneficiary.
2. According to Art. 7c of the UCP 600 of ICC a) your bank is obliged to reimburse the nominated bank, i.e. CB, at maturity b) your undertaking to reimburse us is independent of your undertaking to the beneficiary
3. According to Art. 12b of the UCP 600, you authorized us to prepay or purchase a deferred payment undertaking incurred by us
4. As you are aware we prepaid the deferred payment undertaking to the beneficiary.
As a matter of fact we, CB, are the owner of the receivables and entitled to receive the counter- value without any further delay. Summarizing the above, we regard you as a highly reputable bank with an excellent standing and experience in the international business, including documentary credits, and thus anticipate your assistance in solving the pending problem by appealing against the court order and to immediately remit funds in favour of our bank."
Information with regard to the underlying transaction:
The applicant's reason for obtaining the court order was due to quality claims. The beneficiary's offer to reduce the purchase price was waived. The applicant wanted to unwind the whole transaction. By the way, steel prices were rising during the period from the time of concluding the contract/fixing the purchase price and the maturity date.
It is the opinion of the banks in Country A that a pre-paying nominated bank has an independent reimbursement claim against the issuing bank in accordance with sub-article 7 (c) of UCP 600 as a consequence of the authorization given to the nominated bank under sub-article 12 (b). Therefore, the issuing bank will be obliged to honour the nominated bank's reimbursement claim immediately upon maturity, even if a court order issued against the issuing bank prohibits payment to the beneficiary under the letter of credit/payment with regard to the letter of credit/ recovering of funds from applicant.
What is the position of ICC concerning the issuing bank's attitude?
Have any member banks already faced such a problem since the implementation of UCP 600 (which puts special emphasis on implementing clauses governing prepayment with respect to purchase of deferred payment undertakings incurred)?
Sub-article 12 (b) states: "By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank."
Sub-article 7 (c) includes: "Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity."
The confirming bank determined that its documents complied, based upon its examination according to the requirements of sub-article 14 (a). It should be noted that whilst the court order forbids the issuing bank from making payment to the beneficiary, payment had already been made, and it was the reimbursement from the issuing bank that was due to the confirming bank.
By issuing a credit available with a nominated bank by deferred payment, the issuing bank is authorizing (according to sub-article 12 (b)) that bank to incur its deferred payment undertaking and to effect prepayment or purchase thereunder, provided a complying presentation is made. The issuing bank accepted the documents and confirmed the due date.
Clearly, an issuing bank cannot ignore a court injunction, and its defence for not reimbursing will be based upon the terms of the injunction. However, the basis for the injunction being issued seems to be related to the quality of the goods, and therefore a nominated bank that acted in good faith should be protected. Such issues should not affect the right of the nominated bank to receive reimbursement from the issuing bank. In this respect, reference should also be made to UCP 600 articles 4 and 5.
The general principle, as stated in the conclusion to ICC Opinion R 519, is that local law will prevail over the transaction.
However, the credit was subject to UCP 600 and apparently contained no exclusion to the rule appearing in subarticle 12 (b). Due to the content of sub-article 12 (b) and sub-article 7 (c), the issuing bank should seek to resist such an injunction in order to preserve the integrity of its credit and the UCP. It must be expected that the issuing bank will seek to have the injunction removed by referring the court to the appropriate articles of UCP 600 and the terms and conditions of the credit. The issuing bank would also be well advised to inform its applicant(s) of the content and effect of sub-article 12 (b) for this and any future transactions. It is the responsibility of the applicant to cover any issues concerning quality of goods in the documents called for and the data content required to appear on those documents, and not to seek redress that affects the right of a nominated bank to receive reimbursement in respect of a complying presentation.
We cannot comment with regard to any other member banks, but at the time of issuance of this Opinion no similar issues had been raised with the Banking Commission.
UCP 600 sub-article 20 (a) (ii)
If there is a place of receipt shown on the bill of lading and it is different from the port of loading stated in the credit, is there a need for a separate on board notation? If the place of receipt is the same as that of the port of loading stated in the credit, can the on board notation only be dated?
Query [TA 665rev]
We refer to the statement in the fourth paragraph of page 91 of the Commentary on UCP 600 reading: "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, as was the case in UCP 500, 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."
In cases where the B/L contains pre-printed wording reading "Shipped on board in apparent good order and condition for carriage to the port of discharge ... " with the fields for the name of the vessel and port of loading completed in accordance with the credit terms, with a place of receipt not mentioned in the credit and without any detail of a pre-carriage, we have observed that the above-mentioned statement in the Commentary is interpreted by document checkers differently as follows:
a) Where there is no reference to any precarriage (feeder vessel, rail or truck), there is no need for a separate on board notation showing the port of loading and the name of the vessel, because it is evident that the preprinted shipped on board statement clearly applies to the vessel and port of loading named in the respective fields of the B/L and not to any means of pre-carriage, since none is mentioned.
b) A separate dated on board notation showing the port of loading and the name of the vessel is required in order to see the evidence that the pre-printed shipped on board statement indeed applies to the vessel and the port of loading named in the document, regardless of the fact that there is no reference to any details of pre-carriage.
We shall appreciate your opinion as to which interpretation is correct.
Sub-article 20 (a) (ii) includes the following wording: " ... indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by: ..." 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, 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 included the following wording: "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, they are to be deemed one and the same place and therefore an on board notation, as described above, will not be required.
It should be noted that the Commentary on UCP 600 is not an official publication of the ICC Banking Commission.
If there is a place of receipt shown on the bill of lading and it is different from the port of loading stated in the credit, then b) above will apply to the extent that it is not evident from the bill of lading that the shipped on board statement applies to the named vessel and the port of loading stated in the credit. The requirements of sub-article 20 (a) (ii) are not conditioned on both the pre-carriage and place of receipt fields being completed on the bill of lading. If the place of receipt is the same as that of the port of loading stated in the credit, then any on board notation need only be dated.
UCP 600 miscellaneous
Where a credit required a document to be issued in more than one language
Query [TA 686rev]
We advised an L/C issued by a Country C Bank to a beneficiary in Country D. Under "Documents Required" the L/C states: "+copy of label printed both in English and Chinese". The L/C was issued in English.
When examining the document, we noted that one of the boxes on the document stated: "under 2 kg per piece". This was in accordance with other documents, the document itself and the credit as far as the English text goes. We are unable to read Chinese.
When presented to the issuing bank, the documents were refused, stating the following discrepancy: "Wrong translation in copy label about size". After consulting a Chinese-speaking person, we were informed that the Chinese text reads "above 2 kg per piece".
We would appreciate having the opinion of the Banking Commission.
The letter of credit was issued in English and required as one of the stipulated documents "copy of label printed both in English and Chinese". English was the acceptable language to both the issuing bank and the nominated bank. Chinese, whilst an acceptable and understood language of the issuer, would not be a language that was acceptable or understood by the nominated bank if required to be adopted in the determination of compliance of a document.
By requiring the copy of the label to be in both languages, the principal language for the examination of documents by the nominated bank and issuing bank would be English, in line with the language of the credit. The nominated bank would be entitled to accept the Chinese version on an "as presented" basis without regard to its proper and consistent translation.
Where a credit requires a document to be issued in more than one language, the nominated bank would be advised to inform the issuing bank of the language that can be examined for compliance.
There is no discrepancy.