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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 14 (d)
When a certificate otherwise complies with the requirements of the credit, will the inclusion of a disclaimer text as indicated make that document discrepant?
Query [TA 749]
We kindly ask for your official opinion on the following query related to documents presented under a documentary credit issued subject to UCP 600.
It has been noted that some shipping companies, when issuing certificates (e.g., in respect of the classification, seaworthiness and age of the vessel) are, in addition to the certification required by the credit, including "disclaimer texts" on said certificates.
Here are two examples:
Example 1:
"This certificate does not form part of the contract of carriage and no reliance can be placed upon its contents in support of or as evidenced in the bill of lading no. xxxx. The ship owner's obligations are restricted to the duty to exercise due diligence at the beginning of the voyage to make the vessel seaworthy."
Example 2:
"This certificate does not form part of the contract of carriage and no reliance can be placed upon its contents in support of or as evidence in any dispute or claim under the terms of the contract of carriage as evidenced in the bill of lading no xxxx."
We ask you kindly to advise if these texts make the document discrepant under UCP 600.
Analysis
UCP 600 sub-article 14 (d) states: "Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit."
By inserting the "disclaimer text" the issuer separates the content of the certificate from their contract of carriage. Neither this action nor the wording of the disclaimer will create a conflict with the data that is required to appear in the certificate.
Conclusion
Provided a certificate otherwise complies with the requirements of the credit, the inclusion of a disclaimer text as indicated above will not make that document discrepant.
UCP 600 sub-articles 14 (e) and (f)
Where a certificate of origin was presented with the words "We certify that the goods are of French origin" and bore the name of the beneficiary and a signature, but no relationship to the invoiced goods, was this a discrepancy?
Query [TA 747rev]
The documentary credit calls for a "Certificate of Origin". The credit does not stipulate by whom the document is to be issued or its data content. Part of the presentation is a document (with no letterhead/header/footer) that (only) includes the following information:
"We certify that the goods are of French origin.
Company AB
[Signature]"
Company AB is the beneficiary of the documentary credit. The presentation was refused, citing the following discrepancy: "The certificate of origin shows no linkage to the L/C or the transaction."
We ask you to advise if the discrepancy cited by the issuing bank is correct.
The credit did not specify any required data content in respect of the certificate of origin.
UCP 600 sub-article 14 (e) states: "[I]n documents other than the commercial invoice, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit." (emphasis added)
The use of "if stated" in sub-article 14 (e) does not require a description of goods to appear on every stipulated document. However, international standard banking practice for the completion and examination of a certificate of origin, as reflected in ISBP Publication 681, paragraph 183, highlights a specific requirement: "[T]he certificate of origin must appear to relate to the invoiced goods. The goods description in the certificate of origin may be shown in general terms not in conflict with that stated in the credit or by any other reference indicating a relation to the goods in a required document." (emphasis added)
There must be an indication of the goods to which the certificate of origin relates. This can be achieved in a number of ways, including:
- a goods description that corresponds to that stated in the credit;
- a goods description shown "in general terms" not conflicting with the description stated in the credit; or
- by any other reference indicating a relationship to the goods that are described in a stipulated document, such as by reference to the invoice number or data contained in the transport or delivery document presented under the credit, for example a bill of lading number, air waybill number, etc.
The certificate of origin was presented with the words "We certify that the goods are of French origin" and bore the name of the beneficiary and a signature. There was no relationship to the invoiced goods, and therefore the document does not satisfy the requirements of international standard banking practice by fulfilling the function of the document as required by UCP 600 sub-article 14 (f).
The discrepancy is valid.
UCP 600 sub-articles 16 (f) and 16 (c) (iii) (c)
Whether the issuing bank, in endorsing one original bill of lading in favour of the applicant, acted in accordance with the requirements of sub-article 16 (c) (iii); whether the issuing bank, in not returning the documents, as stipulated in its notice, failed to act in accordance with sub-article 16 (c) (iii) (c) and was precluded under sub-article 16 (f) from claiming that the documents were discrepant
Query [TA 744rev]
We have an issue regarding non-payment of our export documents drawn under an L/C.
Documents for USD 48,652.50 were negotiated by our branch on 15 October 2010, but the issuing bank pointed out certain discrepancies. Our branch, in its reply, clarified the position, removed the discrepancies by submitting amended documents within the presentation period, and also informed the issuing bank that since documents were now compliant with the L/C terms they were under an obligation to make payment in terms of their undertaking.
Meanwhile, it came to our knowledge that the issuing bank had allowed delivery of the goods to the applicant by endorsing an original bill of lading in its favour. This was brought to the notice of the said bank. Our branch also informed them that when the goods had been released, there remained no justification for pointing out discrepancies in the documents, because taking delivery of goods by the applicant means an implied acceptance of those documents.
It was also brought to their notice that after release of the goods, discrepancies in documents become meaningless. However, we are distressed to point out that instead of commenting regarding the release of goods, the said bank sent us a message insisting on its earlier stance that discrepancies had not been accepted and documents were being returned unpaid. It is interesting to point out that prior to sending their refusal message, they had already endorsed the B/L to the order of the applicant.
The documents (which included, at the time of presentation, a full set of 3/3 original bills of lading) are still held with the issuing bank.
We have a copy of the original bill of lading bearing the endorsement stamp and the signature of the issuing bank as evidence of the release of goods to the applicant.
We fail to understand the attitude of the issuing bank, and the way it has handled the documents in an unprofessional manner is highly irregular. It is refusing payment when goods have already been released, and the bank has been instrumental in the release of goods by endorsing the bill of lading.
We informed them that when endorsing the bill of lading to the order of the applicant, they also had a duty of care to our bank and, as a matter of best practice, should have obtained acceptance from the applicant for any discrepancies in the documents. Since they have endorsed the bill of lading to the order of the applicant, we hold them directly liable for making payment.
In reply, the said bank intimated to us that the applicant informed them that the goods were not as per the L/C, and that payment could not be effected. We advised them that issues relating to the quality of the goods should be resolved between the buyer and seller outside the L/C; therefore, there was no reason for non-payment. We also asked them to advise who authorized them to endorse the bill of lading without obtaining payment from the applicant.
Our SWIFT message was sent to the issuing bank on 8 December 2010, asking them to release payment, to which they replied that the transaction involved commercial fraud and, according to their country's law, when the buyer has evidence of fraud it is allowed to postpone payment until the dispute is settled.
We advised them that an allegation of fraud should be supported by a court order, and that their argument was not valid and could not be accepted unless a court order was produced. However, they did not agree with us and stated in their reply that, according to their law, even if there is no court order stopping payment, the buyer has the right to stop payment as long as he has evidence of the commercial fraud of the seller.
We are distressed to point out that the issuing bank has grossly mishandled our documents. They were not authorized to endorse the bill of lading in favour of the applicant without obtaining payment. Once they had done so, they are now bound to make payment, leaving aside the dispute between buyer and seller. This clearly proves their criminal connivance with the applicant in that, on the one hand, they have allowed the delivery of goods to it and, on the other, they are refusing payment on one pretext or another.
We request an opinion from ICC whether our stance is correct.
The basis of the discrepancies and whether or not the issuing bank sent a further refusal message in relation to the amended documents is not the subject of this query.
According to the text of the query, the nominated bank received information, by way of a photocopy of an original bill of lading, that the issuing bank had assisted the release of the goods to the applicant by endorsing one original bill of lading in its favour. In view of this information, it would not be possible for the issuing bank to return a full set of original bills of lading following the apparent release of one of them to the applicant.
The nominated bank has not received back the documents, which were said to be returned by the issuing bank. In this context, the issuing bank is required to return the documents in the same form and number of originals and copies as received from the nominated bank (see ICC Opinion R.214). If the issuing bank returns the documents and endorses the bills of lading in blank or to the order of the shipper, this would still be considered as a return of the documents in the same form.
If the issuing bank is unable to return all the documents in the form and substance as received from the nominated bank, the issuing bank is precluded under sub-article 16 (f) from claiming that the documents did not constitute a complying presentation.
By apparently endorsing one original bill of lading in favour of the applicant, the issuing bank has not acted in accordance with the requirements of UCP 600 sub-article 16 (c) (iii).
As the issuing bank did not return the documents, as stipulated in its notice, it failed to act in accordance with sub-article 16 (c) (iii) (c) and is precluded under sub-article 16 (f ) from claiming that the documents are discrepant.
The issuing bank is required to honour its undertaking.
The issues of potential fraud and the necessity of obtaining a court order to stop payment are subject to the applicable law and are outside the scope of the UCP.
UCP 600 sub-article 20 (a) (i)
Where the carrier was stated to be a branch of another carrier in another country, did the fact that it was a branch in a country different from the parent company mean that it was signed in accordance with UCP 600 sub-article 20 (a) (i)?
Query [TA 748]
We kindly ask for your official opinion on the following query related to a bill of lading presented under a documentary credit issued subject to UCP 600.
The bill of lading is issued/ signed as follows: the headline of the bill of lading reads: "Carrier: Company H, Country G"
The bill of lading is signed as follows: "Company H, Country D, Branch of Company H, Country G as Carrier"
We ask you kindly to advise if the bill of lading is signed in accordance with UCP 600 sub-article 20 (a) (i).
A bill of lading to be presented under a documentary credit must be signed in accordance with UCP 600 sub-article 20 (a) (i):
"A bill of lading, however named, must appear to:
i) indicate the name of the carrier and be signed by:
- the carrier or a named agent for or on behalf of the carrier, or
- the master or a named agent for or on behalf of the master.
Any signature by the carrier, master or agent must be identified as that of the carrier, master or agent.
Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master."
"Company H, Country D" is stated to be a branch of "Company H, Country G" and, as such, does not act as an agent. The fact that it is a branch in a country different from the parent company is not relevant. The entity that is the carrier is Company H, Country G, and any of its stated branches may issue bills of lading and sign as carrier.
The bill of lading fulfils the requirements of sub-article 20 (a) (i) by indicating:
(a) the name of the carrier i.e., "Company H, Country G"
(b) that the signature is that of the carrier: "Company H, Country D, Branch of Company H, Country G as Carrier".
The bill of lading is signed in accordance with sub-article 20 (a) (i).
UCP 600 sub-articles 20 (c) (i) and 20 (c) (ii); article 22
Was it permissible for two separate full sets of charter party bills of lading to be presented that collectively evidenced shipment and transhipment of the goods from the port of loading stated in the credit to the port of discharge stated in the credit?
Query [TA 751rev]
We received the following query from one of our member banks.
Topic: Transhipment vs. Charter Party Bill of Lading
A credit was issued and included the following conditions:
43T - Transhipment
ALLOWED
44E - Port of Loading
CITY V
44F - Port of Discharge
CITY Y, COUNTRY T
47A - Additional Conditions
*Charter party bill of lading is acceptable. Transhipment was effected. Two separate sets of charter party bills of lading, evidencing successive shipments on two different vessels, by splitting the shipment route stated in the credit into two segments, were presented. The related fields of these two charter party bills of lading are shown for your review:
Charter Party B/L No:1
Vessel VESSEL A
Port of Loading CITY V, COUNTRY L
Port of Discharge ANTWERP OR ROTTERDAM FOR TRANSHIPMENT ON VESSEL C
Charter Party B/L No: ABC - 01
Vessel VESSEL C
Port of Loading ROTTERDAM
Port of Discharge CITY Y, COUNTRY T
Two full sets of charter party bills of lading were presented at the same time, and each set gave the same details in respect of the consignee, notify party, goods description, weight, etc. Both sets also included the phrase "Freight payable as per charter party dated 11.05.2011".
Although UCP 600 sub-article 20 (c) (i) clearly states that a bill of lading may indicate that the goods will or may be transhipped, provided that the entire carriage is covered by one and the same bill of lading, there is no such concept or rule in UCP 600 article 22 for charter party bills of lading. Therefore, we would like to have an official opinion of the ICC Banking Commission as to:
a) whether these charter party bills of lading are acceptable or not, and
b) if they are not acceptable, on what grounds can they be refused?
UCP 600 article 22 neither contemplates nor prohibits transhipment. It is fair to say that article 22 does not contain rules relating to transhipment due to the rarity of such an event where charter party bills of lading are involved.
The fact that UCP 600 sub-articles 20 (c) (i) and (ii) contain rules regarding the occurrence of transhipment where a bill of lading is the transport document does not mean that those same rules are to be applied to a charter party bill of lading.
By specifically allowing for transhipment to occur, the applicant and issuing bank will be aware that two or more vessels may or will be involved in the carriage of the goods to their destination. On this basis, and the absence of specific rules in article 22, it is the responsibility of the applicant and the issuing bank to ensure that the terms and conditions of the credit indicate precisely how transhipment is to be described or reflected in one or more full sets of charter party bills of lading that may be presented.
In a shipment subject to a charter party, it may not be a requirement that one original charter party bill of lading must be presented to facilitate the unloading of the goods from the arriving vessel, and loading on the following vessel. This aspect of charter party transactions is reflected in this query by the fact that two full sets of charter party bills of lading were presented to the bank.
Absent instructions in the credit as to how transhipment is to be evidenced on a charter party bill of lading, the beneficiary will be at liberty to present a single full set of charter party bills of lading that may or may not indicate the details relating to transhipment or, as in this case, two separate full sets of charter party bills of lading that collectively evidence shipment of the goods from the port of loading stated in the credit to the port of discharge stated in the credit.
The charter party bills of lading are acceptable.