Parties

Initiator: Bank H

Respondent: Bank K

Summary of representations (relevant to the issues determined)

This is a dispute between the Initiator and Bank K regarding the interpretation of certain Articles of UCP 500. Bank K has opened two documentary credits (DC) for USD 369,000 and USD 387,450 respectively via Bank B in favour of Company W.

- Description of goods: MEN'S PANT

- Quantity: 20,000 PCS and 21,000 PCS respectively

There was a negotiation of bills of exchange by the Initiator against conforming documents, but Bank K refused the documents, stating the following discrepancies:

a) Quantity in packing list and bill of lading not as per L/C terms;

b) Contract no. in commercial invoice missing: (this point later was later withdrawn).

Bank H (Initiator) contends that the discrepancy raised by Bank K is not valid and that the relevant Articles of UCP 500 had been misinterpreted. It is the opinion of Bank H that, according to sub-Article 37(c) of UCP 500, the description of quantity as CTNS is not contradictory with the quantity in PCS and should not constitute an inconsistency.

Bank K (Respondent) maintains that the documents presented were not in compliance with the terms and conditions of the credits and sub-Article 13(a) of UCP in that the quantity shipped as stated on the bills of lading and packing lists was inconsistent with the quantity specified in both letters of credit. Bank K further contends that under sub-Article 37(c) of UCP 500 the description of goods in general terms for documents other than commercial invoices is not applicable to the quantity of the goods in terms of stated number of units.

Determination of the issues

The issue

The issue is whether or not the quantity of goods indicated in packing lists and bills of lading corresponds with the requirements under the DCs.

The facts

- Description of goods on DCs: MEN'S PANT

- Invoices: MEN'S PANT

- Packing lists: MEN'S PANT

- B/Ls: MEN'S PANT

- Quantity mentioned on DCs: 20,000 PCS & 21,000 PCS

- Invoices: 20,000 PCS & 21,000 PCS

- Packing lists: 338 CTNS & 348 CTNS

- B/L: 338 CTNS & 348 CTNS

- The following UCP 500 Articles are relevant:

- Sub-Article 13 (a): Standard for Examination of Documents

- Article 21: Unspecified Issuers or Contents of Documents

- Sub-Article 37(c): Description of goods in commercial invoice and in all other documents

1. Sub-Article 13(a): "Banks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit. Compliance of the stipulated documents on their face with the terms and conditions of the Credit, shall be determined by international standard banking practice as reflected in these Articles. Documents which appear on their face to be inconsistent with one another will be considered as not appearing on their face to be in compliance with the terms and conditions of the Credit." [emphasis added]

2. Article 21: "When documents other than transport documents, insurance documents and commercial Invoices are called for, the Credit should stipulate by whom such documents are to be issued and their wording or data content. If the Credit does not so stipulate, banks will accept such documents as presented, provided that their data content is not inconsistent with any other stipulated document presented."

3. Sub-Article 37 (c): "The description of the goods in the commercial invoice must correspond with the description in the Credit. In all other documents, the goods may be described in general terms not inconsistent with the description of the goods in the Credit." [emphasis added]

Analysis and decision

According to sub-Article 37(c), the description of the goods in the commercial invoice must correspond with the description in the Credit. This is the case here. The commercial invoices evidence 20,000 PCS and 21,000 PCS of MEN'S PANT, which is in strict conformity with the requirements in the credits.

The purpose of the packing list is to show how the goods have been packed. The packing lists show 338 and 348 CTNS of MEN'S PANT, ORIGIN: COUNTRY C, and indicate net weights of 8,000.00 kg and 8,500.00 kg respectively, gross weights of 8,400.00 kg and 8,925.00 kg respectively, and measurements of 45.800 CBM and 48.000 CBM respectively. In addition, the packing lists mention the invoices Nos. WIC12345 and WIC678910, thereby creating a link between the commercial invoices and the packing lists. If a detailed listing of the number and content of each package, carton, etc., was required, then the credit should have asked for it. The letters of credit required packing lists in triplicate without any further details. Article 21 of UCP states that "when documents other than transport documents, insurance documents and commercial invoices are called for, the Credit should stipulate by whom such documents are to be issued and their wording or data content. If the Credit does not so stipulate, banks will accept such documents as presented, provided that their data content is not inconsistent with any other stipulated document presented."

The bills of lading indicate 338 and 348 CTNS of MEN'S PANT, "Shipper's load, count & seal", ORIGIN: COUNTRY C, Gross weights 8,400.00 kg and 8,925.00 kg and measurements of 45.800 and 48.000 CBM, which correspond with the packing lists.

The meaning of "consistency" referred to in sub-Article 13(a) and Article 21 should be interpreted as meaning that the whole of the documents must obviously relate to the same transaction, i.e., there should be a sufficient link between the data content of each document. (This view was expressed by the Banking Commission of ICC in previous queries.) In this case, the same invoice number is referenced on the commercial invoices and packing lists, the same gross weights and total measurements are referenced on the packing lists and bills of lading and the same description of the goods, "MEN'S PANT", is referenced in all of the above three documents. Since the documents are sufficiently linked to each other, one could ask whether they are in contradiction with one another in any way. Obviously, they are not.

Based on the above analysis, there is no inconsistency between the commercial invoices, packing lists and bills of lading under the documentary credits in question. The documents presented by Bank H are therefore in accordance with the terms and conditions of the letters of credit.