Article

DOCDEX Decision No. 329

ISBP 745 paragraph 25; UCP 600 sub-article 14 (d)

Was the missing L/C number and date on an invoice a discrepancy in terms of UCP 600 and international standard banking practice? Is the mis-typing "H" from the vessel name only in the invoice to be considered a discrepancy under UCP 600 and international standard banking practice?

Parties

Initiators:

Company R (beneficiary)

Bank B (negotiating bank)

Respondent:

Bank S

Background

Documentary credit n. 1 subject to UCP latest version (UCP 600), issued on 7 March 2013 in favour of the first Initiator

• Date and place of expiry: 21 May 2013 in Country C

• Amount: USD 4067500 +/- 10 pct (later increased to USD 4113000)

• Available with any bank by negotiation

• Draft: at sight (later amended to 150 days after sight)

• Documents in summary: 7 separate sets of documents to be presented with the following documents for each set: invoice 3 original + 2 copies, full set B/L + 3 copies, packing list 3 original + 2 copies, two different beneficiary's certificates

• Confirmation: without

Documentary credit n. 2 subject to UCP latest version (UCP 600), issued on 15 March 2013 in favour of the first Initiator

• Date and place of expiry: 21 May 2013 in Country C

• Amount: USD 2945250 +/- 10 pct. (later increased to USD 2979900)

• Available with any bank by negotiation

• Draft: at sight (later amended to 150 days after sight)

• Documents in summary: 10 separate sets of documents to be presented with the following documents for each set: invoice 3 original + 2 copies, full set B/L + 3 copies, packing list 3 original + 2 copies, two different beneficiary's certificates.

• Confirmation: "without"

Both credits 1 and 2 contain two specific stipulations in field 47A as follows:

a. "All required documents must indicate our L/C number and date."

b. "Any minor typing mistake which will not affect quality, quantity, price, value and expiry date and shipment date, shall be acceptable".

Summary of the case

Documentary credit n. 1

• After the presentation on time of the prescribed seven sets of documents, the issuing bank refused the documents on 27 May 2013 with a MT 734 stating: "INVOICE n. ABC 123 NOT INDICATE LC NUMBER AND DATE. HOLDING DOCS AS PER ART. 16C-III B OF UCP 600".

• The negotiating bank contends that

a) missing L/C date and number is a typing error, while the L/C number and date are correctly shown on other six invoices and 128 other documents (including copies) of the presentation;

b) the lack of a credit number and date is covered by the special condition in the credit wording "typing mistake which will not affect quality, quantity [...] shall be acceptable",

c) ISBP Para 25 indicates that a misspelling or typing error does not make a document discrepant and

d) Banking Commission Opinions R289 and R635 state that a credit number on a document is only to assist in tracing documents should they go astray, and even the misquoting of a credit number is not grounds for refusal of documents.

• On 29 May 2013, the issuing bank replied, stating that the question was not related to a typing error but was a true discrepancy due to the failure of an explicit and specific requirement of the credit in MT700, field 47A (Additional Conditions) irrespective of the use of such data.

• On the same 29 May 2013, the issuing bank returned the documents to the negotiating bank.

Documentary credit n. 2

• After the presentation on time of the prescribed 10 sets of documents, the issuing bank refused the documents on 24 May 2013 with a MT 734 stating: "INVOICE N. DEF 456 INDICATED DIFFERENT NAME OF VESSEL FROM THAT OF BILL OF LADING (SDD i/o SDHD). HOLDING DOCS AS PER ART. 16C-III B OF UCP 600".

• The negotiating bank contends that a) the other documents in the same set of the invoice DEF 456, including B/L and shipping advice, indicated the vessel's correct name; b) all other nine sets of the document (totalling 115 documents, including copies) indicated the vessel's correct name; c) the missing "H" was a typing error and ISBP para 25A applies, as does the specific stipulation in the credit which makes acceptable a "typing mistake which will not affect quality, quantity [...]"; d) the Banking Commission Opinion R698 states that "a typographical error, when read in context with the other presented documents, does not create a discrepancy."

• On 29 May 2013, the issuing bank replied, stating that it was not possible to consider the failure of "H" as a typographical error because the "error" leads to another name which may belong to another vessel.

• On the same 29 May 2013, the issuing bank returned the documents to the negotiating bank.

Issues to be determined

1. Were the missing L/C number and date on invoice no ABC 123 - while they were correctly typed in all other documents of the same presentation - a discrepancy in terms of UCP 600 and international standard banking practice?

2. In the circumstances outlined above, was the mis-typing "H" from the vessel name only in the invoice n. DEF 456 - while it was correctly typed in all other documents of the same presentation - considered a discrepancy under UCP 600 and international standard banking practice?

Analysis

In both credits, certain data, as required by the credit, are not shown in the documents: the L/C number and date in the first credit; a part of the vessel name in the second. ISBP 681 paragraph 25 applies only to "misspelling" or "typing errors" and not to missing data. The examples in ISBP 681 paragraph 25 are clear on what is intended for "misspelling" or "typing error". This position is not different in ISBP 745.

Issue 1

ICC Opinion R289 states: "Regarding the question of the L/C number missing from the Rail Waybill, it has been the previous Opinion of the ICC that the requirement is only to assist in tracing documents should they go astray. Since the documents were received by the issuing bank, the absence of the reference number, which in itself neither adds nor detract from the purpose of the document, would seem an irrelevance, and not valid grounds for rejection." This Opinion further states: "Regarding the L/C number, however, the ICC has on numerous occasions stated that it disapproves of the practice, especially where transport documents are concerned, and now again reiterates this view."

ICC Opinion R578 states: "It should be pointed out that the request for insertion of L/C numbers is usually at the instigation of the issuing bank to facilitate the collation of documents when one or more go astray. The ICC has commented in the past that a refusal based on the absence of an L/C number on a document, where requested in the L/C, is not grounds for refusal."

The same position is stated in ICC Opinion R635: "As referred to in ICC Opinion 289, a requirement for the insertion of a credit number on a document is only to assist in tracing documents should they go astray. Since the documents were received by the issuing bank and the issuing bank is applying the presented bill of lading under the correct credit number, it would seem to be an irrelevance, and not valid grounds for refusal."

More recently, this position has been reiterated in ICC Opinion TA 774, which re-emphasized the findings of Opinion R578.

In these Opinions, the ICC Banking Commission has stated that a missing L/C number in documents is not a reason to dishonour an otherwise complying presentation. As stated in these Opinions, the L/C number is used primarily to facilitate the issuing bank in applying the documents to the correct credit. The only exception would be if there were a need for the L/C number to appear on the documents as a requirement of national or customs regulations, which does not appear to be the case in the present circumstances.

Based on the statements in the referenced Opinions, the misquoting or absence of the L/C number and date are not grounds for a discrepancy, even if they were required by the credit. Provided that the issuing bank can relate the presentation of documents to the applicable credit, this is sufficient.

Issue 2

10 sets of documents were presented, with 10 bills of lading, 10 invoices and 10 shipping advices, all of them showing the correct vessel name "MV SDHD" apart from one invoice in which the "H" is missing.

The presentation of documents, collectively, refers to shipment on one vessel as indicated in the bills of lading.

UCP 600 sub-article 14 (d) states: "Data in a document, when read in context with the credit, the document itself, and international standard practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit."

The absence of "H" in one invoice is not considered to be a conflict. There is sufficient evidence in the documents as a whole to reflect compliance with the credit.

Conclusion

The discrepancies under issues 1 and 2 are not valid. The issuing bank must honour.

Statement of the Chair

This Decision is rendered unanimously.