Parties

Initiator: Company U, Country M

Respondent: Bank B, Country S

Factual summary

The Respondent issued a letter of credit subject to UCP 500 in favour of the Initiator, available at sight against surrender of the following documents at the counters of the Respondent (abbreviated quotation):

1. COMMERCIAL INVOICE AND PACKING LIST EACH IN TRIPLICATE MADE OUT TO ...

2. SEPERATE INVOICE FOR THREE UNITS, ...

3. FULL SET OF CLEAN "ON BOARD" OCEAN BILL OF LADING ...

4. STATEMENT OF SHIPPER SIGNED BY THE MANAGING DIRECTOR OR PRESIDENT OF ____, STATING THAT ALL MERCHANDISE ARE SHIPPED IN ACCORDANCE WITH AGREEMENT

5. STATEMENT OF SHIPPER STATING THAT ALL UNITS, PACKAGING AND ACCESSORIES, ETC. ARE MARKED ACCORDING TO ...

6. COPY OF INSPECTION CERTIFICATE

7. COPY OF ... INSTRUCTIONS BY TELEX OR FAX ...

8. CERTIFICATE OF BENEFICIARY STATING THAT ... WILL EXONERATE , INDEMNIFY AND HOLD HARMLESS ...

9. CERTIFICATE OF BENEFICARY STATING THAT ALL MERCHANDISE SHIPPED UNDER THIS L/C ARE ... APPROVED, AND ...

10. STATEMENT OF SHIPPER STATING THAT INTERMODAL CERTIFICATION FOR SHIPMENTS WEIGHING 29,000 LBS OR OVER HAS BEEN TENDERED ...

11. CERTIFICATE OF BENEFICIARY STATING THAT ALL MERCHANDISE SHIPPED UNDER THIS LETTER OF CREDIT ARE APPROVED BY ... ".

Subsequently, sets of documents relating to 19 shipments were presented through the Initiator's bank, taken up and paid by the Respondent. The Respondent rejected, however, the documents for the shipments 20 and 21, presented to it, in accordance with Article 14 UCP 500 for the following reasons (after withdrawal of other reasons):

"Doc. 4, 5 & 10 are combined,

"Doc. 8, 9 & 11 are combined."

Each set of documents included one document headed "Statement of Shipper" and one document headed "Certificate of Beneficiary" containing (under the words: "We hereby certify that") the statements called for under Nos. 4, 5 and 10 or Nos. 8, 9 and 11 of the credit, respectively and the "Statement of Shipper" appearing to be signed by the Managing Director of the shipper.

Summary of case stated by the Initiator:

The Initiator formally requests a DOCDEX Decision.

The Initiator claims that the Respondent is in violation of the spirit of the UCP 500 since (1) the individual numbering of the documents in the credit does not represent the requirement of presentation of separate documents; and (2) the credit does not call for separate "Statement of Shipper" and "Certificate of Beneficiary" documents, but under item 2 specifically calls for "separate invoice"; and (3) the Respondent by having taken up 19 previous sets of documents under the credit, each of which contained the same combined statement of shipper and combined certificate of beneficiary, has impliedly accepted that such documents were acceptable; and (4) the Supreme Court of Country H held that, unless there is evidence that the said combined certificate does not contain what the two separate certificates ought to have contained, the single certificate complied with the credit (Netherlands Trading Society v. Wayne and Haylitt Company, Chan soon Fatt and others - 1952).

Summary of case stated by the Respondent:

The Respondent also formally requests a DOCDEX Decision.

The Respondent claims that as issuing bank it is not required to accept the combination in one document of individual independent documents stipulated in the letter of credit because (1) it is not bound by having taken up such combined documents in connection with earlier presentations under the same credit; and (2) the wording of the credit expressly demands the presentation of, itemizes and specifies the content of "eleven" documents, and (3) strict observance of form requires the presentation of all the individual documents precisely described in the credit, where the content of each document is precisely stipulated in such credit; and (4) Article 2 UCP 500 clearly provides that the issuing bank is to make payment against stipulated document(s); and (5) combination of documents is not allowed in Article 20 UCP 500 which enumerates the only acceptable deviations from the observance of the form.

Determination of the issue and reasons

Sub-Article 13(a) UCP 500 requires banks to examine all documents stipulated in the credit with reasonable care to ascertain whether or not they appear, on their face, to be compliant. The UCP 500 (including Articles 2 and 20 thereof) neither forbid nor allow the presentation of two or more stipulated documents in a combined form. The only exception from the rule that all stipulated documents must be presented completely, stated in UCP 500, is to be found in Article 38, and applies only if the credit does not specifically stipulate that the attestation or certification of weight must be by means of a separate document.

Thus the completeness of all documents as presented (and whether combination of documents is permitted) under the present credit must be decided on the basis of the terms and conditions of such credit:

The present credit lists the required documents under numbers 1 to 11 and stipulates therein altogether 12 documents (some of them in more than one copy), because item 1 stipulates "commercial invoice" and "packing list", impliedly forbidding any combination of these documents by requiring presentation of "each in triplicate". Under item 2 the present credit stipulates a "separate" invoice for free units, thus making it clear that the free units may not be invoiced on the commercial invoice required under item 1 thereof; under items 4, 5 and 10 and items 8, 9 and 11, the present credit does not expressly call for separate documents.

It follows therefrom that the present credit neither expressly requires three separate documents containing three different statements of shipper and three separate documents containing three different statements of the beneficiary, nor implies by its numbering of the documentary requirements that 11 separate documents are the complete set of all stipulated documents (disregarding any copies).

To the extent that item 4 stipulates certain specific signatories this does not necessarily imply a separate document with the respective statement of shipper, because the statements of shipper required under items 5 and 10 are not stipulated to be be signed by any other specific signatories. Accordingly, all three statements of shipper may, as they were, be signed by one of the specific signatories stipulated in item 4, and therefore the terms of the credit do not require the presentation of any separate statement of shipper.

Further, items 4, 5 and 10 stipulate statements of shipper and items 8, 9 and 11 stipulate certificates of beneficiary, each with different wording and data content, but do not require different titles of documents or documents which usually would not be combined in one document. Therefore, the present credit does also not imply by the stipulation of the contents of these documents that each such statement of shipper and/or certificate of beneficiary, respectively, must be contained in an individual document.

Since it is the responsibility of the issuing bank to state the terms and conditions of the credit clearly and precisely, the Respondent`s failure to do so in the present credit as far as all documentary requirements are concerned allows the reasonable interpretation of the documentary requirements of the present credit - possibly against the unexpressed intention of the Respondent - to the effect that the combined statements in question appear to be in compliance with the terms and conditions of the present credit.

Finally, the UCP 500 are silent on the question of whether or not by having taken up previously a set of documents with a specific discrepancy, an issuing bank is prejudiced to take up a further presentation of documents with the same specific discrepancy under the same credit.

Decision

Examination of any set of documents presented under a letter of credit includes the examination of the completeness of all documents stipulated in the credit. The terms and conditions of the present credit are such that the number of required documents (disregarding any copies) cannot be ascertained. Therefore, the presentation of 3 statements of shipper in 1 (combined) document and of 3 certificates of beneficiary in 1 (combined) document is compliant.