Parties

Initiator: Confirming Bank A

Respondent: Issuing Bank B

Issue

A documentary credit issued by the respondent and confirmed by the initiator upon request of the respondent included in field 45A (Description of Goods and/or Services) the trade term "EX-WORKS U.S.A." This was later amended to read "EX-WORKS". The invoice presented * which after an amendment of the credit was the only document required under the credit * read in connection with the price indicated in it the remark, "EX-WARE HOUSE MERSIN FREE ZONE", and had been rejected by the respondent as it did not read "EX-WORKS". Also, the invoice sent in replacement and showing the remark "EX-WORKS MERSIN FREE ZONE-TURKEY" had been rejected for the same reason.

The question under dispute now is: are the remarks "EX-WARE HOUSE MERSIN FREE ZONE" REPLACING "EX-WORKS MERSIN FREE ZONE-TURKEY" in an invoice to be seen as in conformity with credit terms when the documentary credit requires only the remark "EX-WORKS" in field 45A (Description of Goods and/or Services) of the SWIFT issue of a documentary credit?

There is also another dispute regarding a claim of the issuing bank approaching the applicant for a waiver and the subsequent applicants' reaction which the experts feel cannot be part of their expertise. Furthermore, it should be noted that the experts could not consider the documents which were written in the Turkish language and had not been translated into the English language.

Analysis

The trade term "EX-WORKS U.S.A." has been quoted within the credit in field 45A (Description of Goods and/or Services), and therefore it is to be treated as part of the goods description governed by sub-Article 37(c) which reads in its first sentence: "The description of the goods in the commercial invoice must correspond with the description in the Credit." This also falls in line with the Opinion of the Banking Commission published in ICC publication no. 469, case R166, and the analysis in query TA 81 published in Documentary Credits Insight Vol. 4. No 3/Summer 1998 in connection with sub-Article 37(c).

"EX-WORKS U.S.A." means inter alia that the price quoted is for delivery of goods at the disposal of the buyer at the named place of availability of the goods within the U.S.A. Reference may be made to Incoterms 1990 in this respect.

As part of the goods description, an invoice showing "EX-WARE HOUSE MERSIN FREE ZONE" under a credit stating "EX-WORKS" is to be considered as discrepant. The replaced invoice, however, showing "EX-WORKS MERSIN FREE ZONE-TURKEY", is to be seen in the light of an addition to the requested trade term "EX-WORKS" * an addition which was neither required nor forbidden in the credit and a situation which is not covered by UCP 500.

Therefore, for this specific case the following should be taken into account. The credit in question was first issued to cover a transport from Sacramento-U.S.A. by vessel to Mersin Free Zone-Turkey, which was to be effected latest July 20,1998 and requested the trade term "Ex-Works U.S.A.". There was also a 21-day period for presentation of the required documents (invoice and fax information of certain shipment details). It was then amended, deleting evidence of shipment from U.S.A. and deleting the named place "U.S.A." in the trade term; however, leaving requirements where and when at the latest the goods have to be transported (requirements which may be treated as non-documentary conditions as per sub-Article 13(c)) and the 21-day period (a period which * due to the non existence of a transport document * is not applicable). From this it may be concluded that goods had already arrived at the place where they had to be transported from the very beginning. The new trade term did not mention a specific named place for ex-works. The named place in the invoice was a place which had been mentioned in the credit, and therefore the addition "MERSIN FREE ZONE-TURKEY" does not seem unreasonable in the context of the credit.

Conclusion

The invoice showing "EX-WARE HOUSE MERSIN FREE ZONE" under the credit stating "EX-WORKS" is to be considered as discrepant, but the remark "EX-WORKS MERSIN FREE ZONE-TURKEY" in this specific case in the replaced invoice should not be considered as discrepant. Therefore, the respondent should pay at maturity. Please note that this decision was a unanimous decision of the three experts.