Article

UCP 600 article 1

Was a clause in a credit containing language indicating that if any terms and conditions in the credit are contradictory to, or inconsistent with, that of UCP 600, "the relative UCP 600 provisions are deemed expressly modified and/or excluded" sufficient to modify or exclude the language of the UCP 600 articles?

Query [TA 704rev]

We received a freely available letter of credit, subject to UCP 600, containing the following condition: "Should any terms or conditions stipulated in this credit be contradictory to or inconsistent with that of the UCP 600, the relative UCP 600 provisions are deemed expressly modified and/or excluded."

We discussed the clause at length with the beneficiary as to the possibility of the clause giving rise to reasons for non-payment and suggested that the clause be deleted. We did not advise the credit and notified the issuing bank accordingly.

Eventually, the beneficiary received the credit directly from the office of the issuing bank and, in June, presented the documents to us. We did not negotiate and merely forwarded same to the issuing bank.

Five days after transmitting the documents, the issuing bank notified us of its acceptance of the documents and the maturity date, and payment was received on the maturity date.

Question: Is the language in the credit, "Should any terms or conditions stipulated in this credit be contradictory to or inconsistent with that of the UCP 600, the relative UCP 600 pro vis ions are deemed expressly modified and/or excluded" sufficient to conform with the last sentence of UCP 600 article 1: ("They are binding on all par ties thereto unless expressly modified or excluded by the credit"), or must the credit explicitly identify which articles of UCP 600 are being modified or excluded?

National committee analysis and conclusion

It is the opinion of the national com mit tee that the language in the credit is NOT sufficient to modify the articles of UCP 600 and that an issuing bank must be explicit in its modification or exclusion of one or more rules, for example by stating which article of UCP 600 is modified or excluded and specifying in what manner it is modified. Is the national committee position correct?

Analysis

Article 1 includes the following sentence: "[T]hey [UCP 600 rules] are binding on all parties thereto unless expressly modified or excluded by the credit."

The condition stated in the credit should be seen as an emphasis of the wording in article 1 and not one that detracts from, or implies a different approach from, the position envisaged by the article. In effect, the wording in the credit was not necessary to emphasize that the terms and conditions of the credit may modify or exclude one or more rules in the UCP.

The issue concerns the word "expressly" and whether or not this requires a bank to specifically indicate, in the credit, where a modification of the rules is being made and the extent to which it is being made. Ultimately, it is the examination of documents against the terms and conditions of the credit that will determine whether or not a presentation is complying. The rules contained in UCP 600 will apply to that credit to the extent that the credit does not contain one or more terms and conditions that modify one or more of those rules.

Modifications to the rules do not necessarily require a bank to specifically state the article that has been modified or the manner in which it has been modified. For example, the insertion of "15" in field 48 (Presentation Period) of an MT700 would modify the rule stated in sub-article 14 (c) that presentation must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment. There is no explanation of the modification, but the insertion of "15" clearly creates a modified rule in respect of the presentation period.

It should be noted that when a rule is to be excluded, for whatever reason, there must be an express indication of this, by saying, for example, "Sub-article 14 (i) is excluded." In most cases when an exclusion occurs, the credit will need to contain a new rule replacing the language or article excluded. In respect of the exclusion of sub-article 14 (i), this would necessitate the credit stating the new conditions relating to the dating of documents.

Final conclusion

The wording in the credit is not recommended for use. The wording in article 1 is suffi cient to explain that the terms and conditions of a credit may modify or exclude a rule. A modification of a rule may be made by the simple insertion of data that creates a situation different from that envisaged by the UCP. It should be recognized that there may be circum stances in which an issuing bank is required to modify a rule, due to the circumstances of a transaction, and this may require the issuing bank to provide more detailed wording to avoid the risk of ambiguity in the credit. In this respect, reference should be made to ISBP Publication No. 681 paragraph 2, which states: "[T]he applicant bears the risk of any ambiguity in its instructions to issue or amend a credit."

It is the recommendation of the ICC Banking Commission that modifications of, or exclusions to, the rules should be kept to a minimum.

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

Whether the address of the applicant, when shown as notify party detail, must be identical to that stated in the credit

Query [TA 696]

A documentary credit for USD 1.6 million and subject to UCP 600 was honoured by one of our members in its capacity as nominated bank, but the documents were rejected by the issuing bank. Fortunately, the issuing bank did agree to pay without admission of fault, but this leaves the underlying disagreement unresolved. This is described below.

1. The address of the applicant quoted in the credit was: "[no.] TRAGARETE ROAD, PORT OF SPAIN, TRINIDAD, W.I."

2. The credit required that the bills of lading be marked: "NOTIFY [applicant name] [no.] TRAGARETE ROAD, PORT OF SPAIN, TRINIDAD, W.I."

3. The bills of lading presented showed the notify party as: "[applicant name] [no.] TRAGARETE ROAD, NEWTOWN, PORT OF SPAIN, TRINIDAD, W.I."

4. The issuing bank refused the presentation for the following reason: "B/L NOTIFY PARTY ADDRESS NOT EXACTLY AS PER L/C - INCLUDES 'NEWTOWN'".

National committee analysis

The answer hinges on the interpretation of sub-articles 14 (d) and 14 (j) of UCP 600. There was agreement that, on the basis of the information given, sub-article 14 (d) was complied with. Similarly, the "same country" requirement in sub-article 14 (j) was complied with. However, a more difficult issue arose in respect of the last sentence of sub-article 14 (j) reading: "However, when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document subject to articles 19,20,21,22,23,24, or 25, they must be as stated in the credit."

In the ensuing debate, it was argued that use of the word "However" indicates reference back to the same country requirement, and the addition of the word "NEWTOWN" was superfluous data which could be ignored in the same way as sub-article 14 (g) allows a document which is not required to be disregarded. Thus, the member was correct in honouring.

Conversely, an argument was put that the last sentence of sub-article 14 (j) must be interpreted literally, and therefore including additional data in the notify address automatically created a discrepancy. Thus, the issuing bank was right in rejecting the documents.

National committee conclusion

Unfortunately, our national committee was split on this issue. The majority regards the documents as being acceptable, but a minority favours the literal compliance interpretation and believes that the documents should be rejected. In these circumstances, the ICC Banking Commission is requested to issue a definitive opinion.

Analysis

The word "[H]owever" in the last sentence of sub-article 14 (j), is used to highlight the fact that there is a different position from that given at the beginning of the sub-article with regard to the address of the applicant when it appears as part of the consignee or notify party details on a transport document.

The first sentence of sub-article 14 (j) allows some latitude when the address of the [beneficiary and/or] applicant appears on documents, i.e., that it may be the same address as that which is stated in the credit or a different address but within the same country. The position in the last sentence is that the address of the applicant must be that which is stated in the credit when it appears, as in this case, as part of the notify party detail. However, this does not mean that it must be identical, but merely that it must not appear to conflict.

From the address shown in the query, there can be no doubt that the address, whilst not exactly that which is stated in the credit, is the same. The addition of the place "Newtown" does not create a different address, merely an expansion of the address stated in the credit. Additionally, there would be no conflict under sub-article 14 (d).

Final conclusion

There is no discrepancy.

UCP 600 sub-article 14 (j); ISBP 681 paragraph 144

Where the credit is silent with regard to the consignee and notify party details and these fields are completed with applicant addresses, must the addresses be the same as that quoted in the credit?

Query [TA 702rev]

We would like to seek an official opinion of the ICC Banking Commission on the following matters regarding consignee and notify party details on transport documents.

We received a documentary credit, subject to UCP 600, bearing the following requirement with respect to the transport document in field 46A:

- Air waybill

- With regard to the consignee and notify party details, the credit was silent.

The applicant was stated in field 50 of the credit as follows:

- Company X

- Head office

- (address)

- Praha, Czech Republic

We received documents including an air waybill issued as follows: Consignee: Company X, Brno branch, (address), Brno, Czech Republic Notify: Company X, logistics department, (address different from applicant's stated in field 50 of the credit), Praha, Czech Republic.

We negotiated the documents, which we held to be in accordance with the terms and conditions of the credit. Nevertheless, we received the issuing bank's refusal notice stating: "Air Waybill: Address of applicant as consignee and notify party not the same as the applicant's address stated in the credit (breach of sub-article 14 (j) of UCP 600)".

We responded that the credit was absolutely silent about the consignee and notify party; hence, consignee and notify party fields could be completed in any manner. We also referred to paragraph 144 of ISBP (ICC document No. 681) with respect to the notify party details.

The issuing bank replied that it refused the documents on the basis of UCP 600 and that it considered UCP 600 sub-article 14 (j) to take precedence over paragraph 144 of the ISBP. The issuing bank also stated in its reply that sub-article 14 (j) applies generally, i.e, it states "... when the address and contact details of the applicant appear as part of the consignee or notify party details ... they must be as stated in the credit", adding that this requirement was not qualified by saying "If the credit requires goods to be consigned to and/or notify applicant" or similar.

We seek your opinion on the following four questions:

1. Is the discrepancy raised by the issuing bank valid with respect to the consignee, although the credit gave no indication how the consignee details were to be completed?

2. Is the discrepancy valid also with respect to the notify party despite the express wording of paragraph 144 of ISBP?

If the answer to 1 or 2 is yes:

3. Would the answer be different, if the address(es) were exactly the same but mere additional details (such as P.O. Box, phone number, fax, etc.), not stated in the credit, were added?

If the answer to 1 is yes:

4. Notwithstanding the answer to No. 1 being yes, do we understand the UCP requirements correctly? We deem any party (except for the situation described in No. 1) appearing as consignee to be acceptable, provided the credit is silent on the consignee details. In such cases is a transport document consigned to a party not mentioned in the credit at all, or consigned to the beneficiaries themselves, (which may make sense, for example, in case of a back-to-back transaction), acceptable?

Analysis

In circumstances in which a credit is silent with regard to the consignee and/or notify party details, it is correct (subject to the comments below) to say that these may be completed with the details of any consignee or notify party. With regard to a notify party, ISBP publication 681 paragraph 144 states: "If a credit does not state a notify party, the respective field on the air transport document may be left blank or completed in any manner."

Despite the general position given above, sub-article 14 (j) includes the following: "However, when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document subject to articles 19, 20, 21, 22, 23, 24 or 25, they must be as stated in the credit."

It should be noted that the above wording applies when the address and contact details of the applicant appear in the consignee and/or notify party fields of a transport document.

In circumstances in which the credit is silent as to the consignee and any required notify party, the content of sub-article 14 (j) would prevail when the consignee and notify party are stated to be the applicant. In this event, the address and any contact details must be those stated in the credit.

If a credit does not provide any contact details of the applicant, such details may be added to the consignee and/or notify party details that are shown on the trans port document.

To say, as referred to in sub-article 14 (j), that the address should be that stated in the credit does not imply that it need be exactly the same, merely that it not give a different location.

Conclusion

1. The discrepancy is valid.

2. The discrepancy is valid.

3. The addition of contact details not given in the credit would not be a reason for refusal.

4. Absent any requirements in the credit, the transport document may show any party as the consignee or notify party, subject to the requirements of sub-article 14 (j) being met if the applicant is stated to be the consignee and/or the notify party.

UCP 600 sub-article 19 (a) (ii)

Whether there is a requirement in the UCP or international standard banking practice for the country name to appear in addition to the stated city shown as the place of receipt, port of loading, port of discharge or place of delivery. Effect of a shipped on board notation dated after the latest shipment date where the goods were received within such date.

Query [TA 701rev]

We would like to seek an official opinion of the ICC Banking Commission on the following matters regarding multimodal transport documents (namely, multimodal transport bills of lading).

We received a documentary credit, subject to UCP 600, with the following details (respective SWIFT fields):

44A: PRAGUE, CZECH REPUBLIC

44E: HAMBURG, GERMANY

44F: ANY PORT IN CHINA

44C: 090331

46A: FULL SET OF MULTIMODAL TRANSPORT BILLS OF LADING...

The beneficiary presented documents, including a multimodal transport bill of lading with the following data:

Place of receipt: Prague

Port of loading: Hamburg, DE

Port of discharge: Shanghai

Received for shipment...

The multimodal transport document was dated March 31, 2009. In addition, it contained an on-board notation as follows: "Shipped on board vessel (x) in Hamburg on 04/04/2009".

We negotiated the documents, which we held to be in accordance with the terms and conditions of the credit. Nevertheless, we received the issuing bank's refusal notice stating:

"+ Late shipment

+ Transport route not per L/C ("Czech Republic" and "China" not stated, "DE" stated i/o "Germany").

We replied that field 44C must be read as the latest shipment date from the first place of the transport route required by the credit. The credit required a multimodal transport document evidencing transport from Prague, latest March 31, 2009, which was complied with (the transport document was dated March 31, 2009). As to the transport route itself, we held that the fact that a country is stated in the respective transport route field of the credit does not represent an express requirement that the country need also be stated in the transport document itself. It is apparent that the goods were taken in charge (received) and are to be unloaded at the places required by the credit. With respect to usage of "DE" instead of "Germany", we held that, notwithstanding the above, "DE" represents an ISO country code, which must be expected to be known by the banks. Usage of such a code, in our opinion, clearly indicates the country in question. The issuing bank responded that, with respect to the date of shipment, sub-article 19 (a) (ii) of UCP 600 applies: "However, if the transport document indicates, by stamp or notation, a date of dispatch, taking in charge or shipped on board, this date will be deemed to be the date of shipment", and with respect to the transport route that it still considers the discrepancy to be valid.

We again challenged the discrepancies but no further reply was received. We would like to have your opinion as to whether any of the alleged discrepancies are valid.

Analysis

In addition to the extract of sub-article 19 (a) (ii) stated above, the rule also states "indicate that the goods have been dispatched, taken in charge or shipped on board at the place stated in the credit ... " and "The date of issuance of the transport document will be deemed to be the date of dispatch, taking in charge or shipped on board, and the date of shipment."

The wording "However, if the transport document indicates, by stamp or nota tion, a date of dispatch, taking in charge or shipped on board, this date will be deemed to be the date of shipment", as referred to by the issuing bank in its justi fication for the discrepancy, applies only when the notation is in respect of dispatch, taking in charge or shipped on board at the place or port named in the credit for the commencement of the carriage.

In this particular credit, the place for the commencement of carriage was Prague, the multimodal transport document evidenced received for shipment (in Prague) on 31 March 2009. The on board notation was given in respect of loading onto the vessel in Hamburg, an event that occurred after the receipt and carriage of goods from Prague. A multimodal trans port document dated 31 March 2009 evidencing receipt of the goods in Prague for shipment to Shanghai via Hamburg would be acceptable under the credit and sub-article 19 (a) (ii).

There is no requirement in the UCP or international standard banking prac tice for the country name to appear in addition to the stated city shown as the place of receipt, port of loading, port of discharge or place of delivery. Absence of the words "Czech Republic" and "Germany" is not a reason for refusal, notwithstanding the fact that such words are stated in the credit. The requirement for the port of discharge to be "Any Port in China" is satisfied by the named port being one that is located in China; Shanghai is a port in China. Use of the ISO country code DE instead of Germany does not create a conflict of data.

Conclusion

The documents are compliant.