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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Article
UCP 600 sub-articles 6 (d) (ii), 6 (a) and 7 (a)
When a credit stipulated that documents were to be sent in two lots, must both lots be received at the place for presentation, in this case the counters of the issuing bank, on or before the expiry date or the latest date for presentation?
Query [TA 785rev]
We kindly request your official opinion for the following query related to a documentary credit issued subject to UCP 600.
Under a documentary credit that was available with the issuing bank and expiring at its counters, documents were to be sent to it in two lots - the first lot by special courier service and the second by registered airmail. The issuing bank received the first lot, containing one original of all the required documents, within the presentation period stipulated in the documentary credit. However, the second lot, containing the remaining documents, i.e., both originals and copies, was received after the documentary credit expired. In such a case, is the issuing bank obliged to honour the presentation based upon the content of the first mailing?
Is ICC Opinion R 415, regarding documents sent in two consecutive lots, which was decided under a UCP 500 credit, still valid for documentary credits subject to UCP 600?
Analysis
UCP 600 sub-article 6 (d) (ii) includes: "The place of the bank with which the credit is available is the place for presentation."
UCP 600 sub-article 6 (e) states: "Except as provided in sub-article 29 (a), a presentation by or on behalf of the beneficiary must be made on or before the expiry date."
UCP 600 sub-article 7 (a) states: "Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honour ... ".
The credit was available with the issuing bank and expired at its counters. Under these circumstances, the issuing bank must receive all the stipulated documents called for under the credit, in the required number of originals and copies and within the stated expiry date and presentation period, for it to determine whether the presentation is compliant. The issuing bank received only one original of all the stipulated documents in the first lot and, therefore, it was not in a position to determine compliance with the terms and conditions of the credit until the second lot had been received.
When a credit stipulates documents are to be sent in two lots, both lots must be received at the place for presentation, in this case the counters of the issuing bank, on or before the expiry date or the latest date for presentation.
When a credit is available with an issuing bank, such bank should not incorporate a mailing condition that requires the documents to be sent in two mails. If a credit is available with an issuing bank, it is the responsibility of the beneficiary to ensure that the documents are received by that issuing bank within the credit validity and the applicable presentation period.
Conclusion
The issuing bank is not obliged to honour if the second lot is not received within the expiry date of the credit. The presenter was required to ensure that the issuing bank would receive both lots within the expiry date and applicable presentation period.
ICC Opinion R 415 is still valid under UCP 600. However, it does not apply in this case since the credit is available with the issuing bank.
UCP 600 sub-article 14 (a)
If a credit required shipment to be effected from "any Chinese Port", and where the shipment has been effected from Hong Kong, would that comply with the requirement of the credit?
Query [TA 770rev2]
Analysis and conclusion
When a credit indicates that shipment is to be effected from "Any Chinese Port" (or to "Any Chinese Port"), it is recognized that in the context of examination of documents on their face, in accordance with UCP 600 sub-article 14 (a), this would include Hong Kong being shown as the port of loading (or port of discharge).
However, applicants and beneficiaries should be aware that differing customs, systems and regimes operate in Hong Kong and at ports on the Chinese mainland. Therefore, a credit should specifically indicate where shipment is only to be effected from or to a port on the Chinese mainland. This comment is particularly relevant to applicants based on the mainland that may require, or at the very least expect, delivery to occur at a port on the mainland as opposed to Hong Kong. Otherwise, banks will be required to honour or negotiate documents that indicate shipment from or to Hong Kong, even though the expectation under the contract and the credit may have been for the use of a port of loading (or discharge) on the mainland.
UCP 600 sub-articles 14 (a), 16 (c) and 16 (d)
If the documents were received by the issuing bank after the expiry date of the credit, did this relieve it from acting in accordance with the requirements of UCP 600 subarticle 14 (a), and sub-articles 16 (c) and (d), as the presentation was made timely at the confirming bank's counters?
Query [TA 782]
An issuing bank (IB) in Country L opened a credit, subject to UCP 600, available by payment at sight at the counters of a confirming bank (CB) in Country U. Validity was 31/12/2011 in Country U. The CB added its confirmation and advised the credit through an advising bank (AB) in Country B.
The beneficiary presented documents to the AB, which found a non-disputable discrepancy (charter party bill of lading presented, which was not allowed). As shipment to Country L was urgent, the beneficiary instructed the AB to present the documents urgently "in trust on approval basis" to the CB and, so further, to the IB. The AB, acting as presenting bank, complied with these instructions and forwarded the documents under the L/C with following instructions to the CB: "We herewith authorize you to send documents on approval basis due to the stated discrepancy without verification."
The documents arrived with the CB in Country U before the expiry date. The CB refused the presentation in due time according to sub-article 16 (d) for the reason of "Charter party B/L presented" and forwarded the documents to the IB on 3 January 2012 "on approval basis", referring to the credit. The IB received the documents from the CB on 10 January 2012, but after reminders were sent by the AB, the IB refused only on 24 January 2012 to the CB.
When the AB drew the attention of the CB and the IB to the non-compliance of article 16 by the IB, the CB replied that the documents had been forwarded in trust, on an approval basis. The IB also stated "that the L/C expired prior to receipt of the documents by IB, i.e., 10 January 2012", and that "such documents are outside the scope of UCP 600 and no rejection notice as per article 16 is required."
The AB disagreed with this, stating that its presentation was timely received by the CB, where the credit was available and that "LC expired" could not be a valid discrepancy. The AB, therefore, claims payment from the IB based on the argument that the IB did not timely reject the presentation according to sub-article 16 (d) and, as a consequence, has to pay according to subarticle 16 (f).
Despite continuing disagreement, the documents were returned by the CB to the AB.
Query:
1) Did the fact that the presentation by the CB to the IB took place after the expiry date of the credit discharge the IB from acting according to subarticle 16 (d)?
2) If not, has the AB the right to claim payment from the IB?
The credit was available by payment at the counters of the confirming bank against presentation to it of the documents stipulated therein. Due to an indisputable discrepancy, the confirming bank, at the request of the presenting bank, sent the documents to the issuing bank for approval. It is to be noted that a presentation was made to the confirming bank within the expiry date and thus bound the issuing bank to examine the documents.
When the issuing bank received the referenced documents, it was required to determine whether they complied, according to the requirements of UCP 600 sub-article 14 (a). Having determined that the documents were discrepant, and deciding to refuse them, it was required to send a notice of refusal in accordance with sub-articles 16 (c) and (d).
The issuing bank refused the presentation only 14 calendar days after receipt. The reason given was that the credit had expired prior to its receipt of the documents, that the presentation was outside the scope of UCP 600, and that no notice of refusal according to UCP 600 article 16 is required.
The notice of refusal sent by the issuing bank fails in two respects. First, the reason for refusal "L/C expired" is not correct for the reasons stated above, and second, it had not been sent by the close of the fifth banking day following the day of presentation to the issuing bank.
Query 1
The fact that the documents were received by the issuing bank after the expiry date of the credit does not relieve it from acting in accordance with the requirements of UCP 600 sub-article 14 (a), and sub-articles 16 (c) and (d), as the presentation was made timely at the confirming bank's counters.
Query 2
The issuing bank is required to honour the presentation.
UCP 600 sub-article 22 (a) (i)
Is a CPBL issued and signed by a carrier or a named agent for a named carrier discrepant because such parties are not named in UCP sub-article 22 (a) (i)? If so, why cannot a carrier or its agent be an issuer and signatory of a bill of lading subject to a charter party contract?
Query [TA 775rev]
Charter party bill of lading issued and signed by carrier or an agent for the carrier
We seek the opinion of the ICC Banking Commission on the above subject.
UCP 600 sub-article 22 (a) (i) states that a charter party bill of lading (CPBL) must appear to be signed by any of the following parties:
a) the master;
b) the owner;
c) the charterer; or
d) a named agent for any of the above
Not included in the list of signatories is a carrier or a named agent for a carrier. While such CPBLs (issued and signed by a carrier and/or issued and signed by a named agent for a named carrier) were seldom seen in the past, recently they have been spotted with increasing frequency.
The immediate and obvious response to such a CPBL is one of "discrepancy", as the signatory is not any one of the parties listed in sub-article 22 (a) (i). However, those opposing the discrepancy argue that:
• UCP's mere silence in this matter is not enough justification for dishonour.
• UCP does not specifically prohibit such a CPBL.
• Articles 19, 20 and 21 give the impression that the carrier and/or its agent’s B/L is somehow "superior" to the CPBL since, unless otherwise expressed, a CPBL is not good tender.
Based on conventional L/C practices and the UCP, banks are to examine only the face of documents and not go beyond, beneath, over or further than the documents' data content. Would this not necessarily mean that banks need not (and most really do not) have intimate knowledge of vessel chartering and related arrangements and structures?
In short, we would like to clarify: Is a CPBL issued and signed by a carrier or a named agent for a named carrier discrepant because such parties are not named in the abovequoted sub-article?
If so, we would like to know why a carrier or its agent cannot be an issuer and signatory of a bill of lading that is subject to a charter party contract.
When a credit simply allows for or requires the presentation of a charter party bill of lading (CPBL), a CPBL issued and signed by a carrier or its agent is discrepant under UCP 600 sub-article 22 (a) (i).
The reason for excluding such CPBLs from this sub-article was to avoid document examiners' having to determine which one, of a possible number of different entities ranging from the owner to charterers and sub-charterers, might be the contractual carrier under the contract of carriage as evidenced by or contained in the CPBL. The reasoning underlying the current terms of the sub-article is consistent with the principle that document examiners must examine a presentation to determine, on the basis of the documents alone, whether or not the documents (in this case a CPBL) appear on their face to constitute a complying presentation, without examining the terms of the contract of carriage for that CPBL.
However, when a credit expressly allows for or requires the presentation of a CPBL issued and signed by the carrier or its agent, then the CPBL referenced in the query would not be discrepant; the express terms of the credit will prevail over the default position set out in UCP 600 sub-article 22 (a) (i). In this situation, a document examiner need only determine whether the CPBL presented appears on its face to be issued and signed by or on behalf of an entity described as the carrier.
Question 1
UCP 600 sub-article 22 (a) (i) does not permit a CPBL to be signed by a carrier or its agent.
Question 2
A CPBL signed by a carrier or its agent is discrepant unless the credit expressly requires such a CPBL, for the reasons stated in the Analysis.
ISBP 681 paragraph 23
Was the confirmation invalid if a shipping mark contained symbols or wording that was not in English as opposed to symbols or lettering shown in Spanish? When the confirming bank refused documents on the basis that the documents did not comply with a condition attached to its confirmation, was it entitled to claim reimbursement if it did not waive the condition and take up the documents, or if it did not act in its role as nominated bank?
Query [TA 776rev]
We would like to seek an official opinion of the ICC Banking Commission on the following questions related to shipping marks appearing in the documents presented under a documentary credit issued subject to UCP 600.
The documentary credit was issued by Bank I in a Central American country and confirmed by Bank C in Country T.
Relevant information of confirmation advice and L/C:
1. The confirmation advice stated: "Our confirmation will be null and void if any wording, except description of goods indicated on the L/C appearing on any presented document, is not in English."
2. The L/C was issued in English except for the applicant's name and address and the description of goods that were in Spanish. There was no special requirement regarding the language in which the documents were to be issued.
3. The L/C stated: Upon receipt of original shipping documents in full compliance with the terms and conditions, you are authorized to claim reimbursement from Bank R (the reimbursing bank, i.e., the confirming bank's head office in New York).
Documents presentation:
1. Documents were presented to the confirming bank through us.
2. The confirming bank refused payment as follows: "Shipping marks bearing wording ... not in English." (The L/C was silent with regard to shipping marks, which appeared in the documents in Spanish.)
3. We rejected this refusal as follows: "Shipping mark is not any wording. It is just a symbol used to identify the goods during import and export, so that it will be easily recognizable. Since the documents presented constitute a complying presentation, please effect payment immediately. "
4. The confirming bank refused again as follows: "The discrepancy is valid. Pls refer to paragraph 23 of ISBP, a nominated bank (including the confirming bank) may, in its conformation advice, restrict the number of acceptable language[s] as a condition of its engagement and confirmation in the L/C."
In our opinion, as stated in our rejection of the refusal, a shipping mark is just a symbol used for identification purposes only; it does not constitute any wording of documents, and therefore the point is not related to paragraph 23 of ISBP.
Much to our regret we were not able to convince the confirming bank. It insisted on sending the documents to the issuing bank for approval to obtain its authorization to claim reimbursement from the reimbursing bank. However, it could not determine any discrepancy subject to the L/C terms. Nevertheless, the issuing bank authorized the confirming bank to claim reimbursement, and payment has been received.
We would like to seek your opinion on the following two questions:
1. Is the discrepancy raised by the confirming bank valid with respect to the shipping mark?
2. Is the confirming bank in a position to claim reimbursement from the reimbursing bank if the confirming bank determines that the presentation does not comply with its own requirements, but does comply with the L/C terms?
The confirming bank qualified its confirmation undertaking by stating: "Our confirmation will be null and void if any wording, except description of goods indicated on the L/C, appearing on any presented document is not in English." In the context of this query, the confirmation is only to be considered invalid if the shipping mark contained wording that was not in English as opposed to symbols or lettering shown in Spanish.
Even though the shipping mark is not in English, there is no requirement in the credit for documents to show shipping marks. There is also no restriction concerning the language in which documents are to be issued. Therefore, documents showing shipping marks in Spanish do not constitute a discrepancy under the credit.
In view of the condition that the confirming bank applied to its confirmation in respect of an acceptable language, it had no obligation to honour or negotiate. Although it had no such obligation, and the documents were otherwise compliant with the terms and conditions of the credit, the bank could have agreed to act in its role as nominated bank by forwarding the documents to the issuing bank and claiming reimbursement, and effecting settlement to the beneficiary upon receipt of funds or to make settlement to the beneficiary on a with recourse basis.
The issuing bank still had an obligation to honour a presentation that complied with the terms and conditions of its credit.
The discrepancy is not valid under the terms of the credit, and the issuing bank would be required to honour the presentation. The use of any Spanish language in the wording of the shipping mark would cause the confirmation of the confirming bank to cease in respect of that drawing.
Given that the confirming bank refused documents on the basis that the documents did not comply with a condition attached to its confirmation, it was not entitled to claim reimbursement unless it subsequently waived that condition and agreed to take up the documents, or was willing to act in its role as nominated bank, as outlined in the Analysis. Overturned UCP 600 Opinions
Overturned UCP 600 Opinions
DCInsight readers should note that the agreed text of ISBP publication 745 contains two practices that differ from previously agreed positions that have been published as ICC Opinions. These are Opinions R 751 (TA 735rev) and R 766 (TA 709rev). These Opinions appear in the ICC booklet ICC Banking Commission Opinions 2009-2011, publication No. 732.
Opinion R 751 is superseded by the practices described in paragraphs D1 (c) and E1 (a) of the new ISBP 745. For R 766, this Opinion is superseded by the practice described in paragraph K10 (c). These two Opinions are to be considered withdrawn with immediate effect.