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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Article
UCP 600 sub-article 20 (a) (v)
Whether wording on a negotiable B/L indicating: "Where the bill of lading is non-negotiable, the Carrier may give delivery of the Goods to the named consignee upon reasonable proof of identity and without requiring surrender of an original bill of lading" constituted a discrepancy or only terms and conditions of carriage
Query [TA 675rev]
We kindly ask your official opinion on the following question from one of our members. "We are seeking the Banking Commission's official opinion regarding a dispute between the issuing bank and ourselves, as nominated bank, regarding an alleged discrepancy concerning a delivery clause in a bill of lading presented under a documentary credit subject to UCP 600. The documentary credit requires:
++FULL SET ORIGINAL CLEAN ON BOARD, MARINE BILLS OF LADING MARKED FREIGHT PREPAID AND MADE OUT TO ORDER
AND BLANK ENDORSED, MARKED NOTIFY [COMPANY S, COUNTRY I] STATING THE NAME, TELEPHONE AND FAX NUMBERS OF CARRIER'S AGENT IN [CITY K]. B/L'S TO EVIDENCE SHIPMENT IN 20' CLOSED CONTAINERS.
++FORWARDERS BILLS OF LADING NOT ACCEPTABLE
++ BILLS OF LADING TO STATE QUOTE 14 DAYS CONTAINER-DETENTION FREE PERIOD AT DESTINATION UNQUOTE.
++ONE SET OF BILLS OF LADING NOT TO COVER MORE THAN 10 CONTAINERS.
++BILLS OF LADING THAT ON THEIR FACE INDICATE THAT GOODS MAY BE RELEASED WITHOUT PRESENTATION OF AN ORIGINAL BILL OF LADING ARE NOT ACCEPTABLE." [Emphasis added]
Several partial shipments took place, and bills of lading were presented. These do not include a separate delivery clause, but did include general pre-printed wording as indicated below. The following wording is indicated just above the carrier's signature:
"SHIPPED, as far as ascertained reasonable means of checking, in apparent good order and condition unless otherwise stated herein, the total number or quantity of Containers or other packages or units indicated in the box entitled 'Carrier's Receipt' for carriage always subject to all Terms and Conditions hereof (INCLUDING ALL THOSE TERMS AND CONDITIONS ON THE REVERSE HEREOF AND THOSE TERMS AND CONDITIONS CONTAINED IN THE CARRIER'S APPLICABLE TARIFF) from the Place of Receipt or the Port of Loading, whichever is applicable, to the Port of Discharge or Place of Delivery, whichever is applicable. When the Place of Receipt box has been completed, any notation on this Bill of Lading of 'on board', 'loaded on board' or words to like effect, shall be deemed to be on board the means of transportation performing the carriage from the Place of Receipt to the Port of Loading. Where the bill of lading is non-negotiable, the Carrier may give delivery of the Goods to the named consignee upon reasonable proof of identity and without requiring surrender of an original bill of lading. Where the bill of lading is negotiable, the Merchant is obliged to surrender one original, duly endorsed, in exchange for the Goods. [Emphasis added] The Carrier accepts a duty of reasonable care to check that any such document which the Merchant surrenders as a bill of lading is genuine and original. If the Carrier complies with this duty, it will be entitled to deliver the Goods against what it reasonably believes to be a genuine and original bill of lading, such delivery discharging the Carrier's delivery obligations. In accepting this bill of lading, any local customs or privileges to the contrary notwithstanding, the Merchant agrees to be bound by all Terms and Conditions stated herein whether written, printed, stamped or incorporated on the face or the reverse side hereof, as fully as if they were all signed by the Merchant. IN WITNESS WHEREOF the number of original Bills of Lading stated on this side have been signed and wherever one original Bill of Lading has been surrendered any others shall be void."
The issuing bank refused the bills of lading due to the following discrepancy: "B/L indicates that goods may be released without presentation of an original B/L."
In our view, this requirement is for a negotiable bill of lading, and we maintain that only the pre-printed wording concerning negotiable bills of lading is acceptable. It is clearly indicated that as far as negotiable bills of lading are concerned, the merchant is obliged to surrender one original, duly endorsed, in exchange for the goods.
The phrase in the pre-printed wording concerning non-negotiable bills of lading may be deemed as not stated and disregarded.
We think that the reasons for refusal compared to the presented documents are far too doubtful and speculative. We believe it is imperative that the Banking Commission provide definitive guidance on this issue.
We would be grateful if you make a statement for documentary credits subject to UCP 600 whether said bill of lading is discrepant or not.
Analysis
By a letter dated 23 October 2008, addressed to the members and observers of the ICC Commission on Banking Technique and Practice, the ICC Commission on Commercial Law and Practice, the ICC Commission on Transport and Logistics and ICC National Committees and Groups, the Secretary General of the ICC made it clear that no opinion could be given in relation to the issues surrounding bills of lading that contain delivery clauses.
However, this query relates specifically to a question as to whether a condition in a credit stating "bills of lading that on their face indicate that goods may be released without presentation of an original bill of lading are not acceptable" would be applicable for a bill of lading issued in negotiable form where the wording of the bill of lading refers to the applicability of a delivery clause in circumstances in which it is issued in a non-negotiable or negotiable form.
There was no separate delivery clause stated on the bill of lading. The bill of lading does, however, contain the following wording: "Where the bill of lading is non-negotiable, the Carrier may give delivery of the Goods to the named consignee upon reasonable proof of identity and without requiring surrender of an original bill of lading. Where the bill of lading is negotiable, the Merchant is obliged to surrender one original, duly endorsed, in exchange for the Goods."
The wording appearing on this particular bill of lading, and as quoted under "Query" commencing with "[W] here the bill of lading is non-negotiable, the carrier ... ", is considered to be terms and conditions of carriage and will not be examined according to sub-article 20 (a) (v).
It should be noted that in accordance with the terms and conditons of the credit, the bill of lading has been issued in a negotiable form.
Conclusion
There is no discrepancy for this specific bill of lading.
When reference to a clause on the reverse side of a bill of lading appears, is a bank required to read the terms and conditions of carriage which appear on the reverse of the transport document in order to understand the information contained in the received for shipment or shipped on board area?
Query [TA 680rev]
This is a reference to a clause on the back of the bill of lading (terms and conditions). [Company C] Container Shipping Lines issues bills of lading with a pre-printed clause in the "Received for Shipment" area with the following statement regarding the requirement to surrender an original: "One original bill of lading should be surrendered, except clause 22 paragraph 6, in exchange for delivery of the shipment. Signed by the consignee or duly endorsed by the holder in due course."
The reverse of the bill of lading does not contain clause 22 paragraph 6. When such language or reference appears, is a bank required to read the terms and conditions of carriage which appear on the reverse of the transport document in order to understand the information contained in the received for shipment or shipped on board area?
National committee analysis
ICC Opinion R 575, which was submitted in respect of a UCP 500 sub-article 23 (a) (v) query, states in the Analysis and Conclusion: "Reference to specific clauses, by number or otherwise, within the terms and conditions listed on the reverse, does not compel the bank to review such clauses to establish compliance of the document with the credit terms and conditions."
National committee conclusion
UCP 600 sub-article 20 (a) (v) explicitly states: "Contents of terms and conditions of carriage will not be examined." Reference to specific clauses, by number or otherwise, within the terms and conditions listed on the reverse, does not compel the bank to review such clauses to establish compliance of the document with the credit terms and conditions.
Analysis and final conclusion
The answer to the question is no. The bill of lading referred to clause 22, paragraph 6, which should have appeared in the terms and conditions of carriage. UCP 600 subarticle 20 (a) (v) states that the contents of the terms and conditions of carriage will not be examined.
The fact that clause 22 paragraph 6 did not appear within this bill of lading does not impact the conclusion given. The response given in Official Opinion R 575 would also apply to this query.
UCP 600 sub-articles 22 (b) and 14 (d)
Whether a requirement for the presentation of the "respective" charter party modifies or excludes sub-article 22 (b), which says that a bank will not examine a charter party contract, even if required as a stipulated document under the credit
Query [TA 683]
One of our members has submitted the following query regarding application of sub-article 22 (b) of UCP 600. Our analysis and conclusion are given thereafter for your perusal.
Sub-article 22 (b) of UCP 600 states: "A bank will not examine charter party contracts, even if they are required to be presented by the terms of the credit."
There has been a case in which the credit called for presentation of a CP B/L and the respective charter party contract. Our document checker observed, upon presentation of these two separate documents, that the date appearing at the top of the CP contract and the general information for the voyage details, vessel and owner names appearing at the very beginning of the CP contract did not match with those stated in the CP B/L presented.
a) Can such simple observation constitute a discrepancy?
b) Should the expression "respective" be seen as a credit term compelling a checker in making sure that both documents are related to each other, at least by comparing the major details?
National committee analysis and conclusion
The issues surrounding the query to be determined are whether the two documents presented under the credit, namely the CP B/L and the respective CP contract can be seen as containing conflicting data for the purposes of subarticle 14 (d) and whether a simple observation of the major details can be considered to be "examining" the CP contract for the purposes of sub-article 22 (b).
According to the facts provided, a simple observation of a conflicting date or of any of the major details appearing at the very beginning of the CP contract would not seem to be "examining the CP contract" for the purposes of sub-article 22 (b), whilst further reading into its terms and conditions would seem to be "examining" the same.
Therefore, in these circumstances, a document checker, prompted by the credit term "respective", cannot turn a blind eye and will be in his/her right to raise at least one of the issues among the conflicting data as an anomaly to be raised as a discrepancy not abiding by sub-article 22 (b). It could be further stated that the absence of the expression "respective" would make no difference in reaching an identical conclusion, since the intention, i.e., the implied coherence between the two documents would not be any different as a result of including the word "respective".
The analysis and conclusion of the national committee is not agreed to. Subarticle 22 (b) draws no distinction between how a requirement for a charter party contract may be described in a credit. The rule is that a bank will not examine a charter party contract, even if required as a stipulated document under the credit.
Final conclusion
There are no grounds for refusal of the documents under UCP or the terms of the credit. A requirement for the presentation of the "respective" charter party contract does not modify or exclude sub-article 22 (b).
UCP 600 sub-article 28 (a)
Whether an insurance document signed by a broker is acceptable
Query [TA 673rev]
We would like to seek an official opinion from the Banking Commission on the acceptability of insurance documents signed by brokers.
It seems that more and more insurance documents are now signed by brokers. Sub-article 28 (a) of UCP 600 requires that an insurance document must appear to be issued and signed by an insurance company, an underwriter or its agents or proxies, and that any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter. With the exception of a few issuing banks, most refuse documents signed by brokers, as brokers are not named in UCP 600 as one of the authorized parties to sign an insurance document. The banks that accept an insurance document signed by a broker consider that a broker is also an agent or proxy, or that the "broker" whose signature appears on the document is an employee of the insurance company, holding the official designation of "broker" within the company.
In order to avoid any further dispute and to have an international standard practice, we seek an official opinion from the Banking Commission as to whether an insurance document issued or signed by a broker is acceptable under international standard banking practice.
Sub-article 28 (a) states: "An insurance document, such as an insurance policy, an insurance certificate or a declaration under an open cover, must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies. Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter."
An insurance document may be issued and/or signed by a broker provided it indicates that it is acting in the capacity of agent or proxy for an insurance company or underwriter. When an individual is an employee of an insurance company and has a title of "broker", he must sign for or on behalf of the insurance company.
Whether the document otherwise complies with the credit and article 28 will depend upon the manner of its completion.
UCP 600 sub-articles 20 (a) (v) and 20 (a) (i)
Whether it was necessary to examine the terms and conditions of carriage to determine the name of the carrier and whether the method of signing the B/L constituted a discrepancy
Query [TA 678rev]
We have a question regarding the identification of the carrier. [Company C] Shipping Container Lines (Country X) Co. Ltd, issues bills of lading on their letterhead as follows:
[Company C] Shipping Container Lines (Country X) Co. Ltd and signs them in the following manner:
"Sign:
[Company C] Shipping Container Lines (Country Y) Co., Ltd (As Agents for the Carrier)
Per:________John Smith___________
[Company C] Shipping Container Lines (Country X) Co. Ltd."
The identity of the carrier is not otherwise stated on this side of the document. On the reverse side of the bill of lading, the first line under definition identifies [Company C] Shipping Container Lines (Country X) Co. Ltd as the "carrier".
Is the identity of the carrier to be presumed to be [Company C] Shipping Container Lines (Country X) Co. Ltd? Or must it be further expressly identified on this side of the document?
Based on the information provided, the identity of the party signing the document and the identity of the carrier are not clear. The document is discrepant.
Sub-article 20 (a) (v) states that banks will not examine the contents of the terms and conditions of carriage, and this will include an examination of those terms and conditions to determine the name of the carrier. It should be noted that the structure of the signing of the bill of lading leaves some doubt as to the capacity in which it has been signed.
The bill of lading shows:
Sign:
"[Company C] Shipping Container Lines (Country Y) Co., Ltd (As Agents for the Carrier)
[Company C] Shipping Container Lines (Country X) Co., Ltd."
Given the indication that the Country Y office is acting as agents for the carrier, it would be expected that it would sign the bill of lading and not the Country X office.
The analysis and conclusion of the national committee is agreed with in conjunction with the analysis shown above. The bill of lading does not indicate the name of the carrier in a manner that is required by sub-article 20 (a) (i).