Parties

Initiator : Company S, Country J

Respondent : Bank C, Country I

Summary of Initiator's case

1. On 7 February 2001, the Respondent issued a documentary credit for the amount of Japanese Yen 207,900,000 in favour of the Initiator (the "credit"). The credit is subject to the UCP 500.

2. A number of amendments were subsequently made to the credit. The last amendment that addresses the document currently under dispute, i.e. amendment no. 9 dated 22 October 2001, states: "Field 46A point no. 3 please amend the following: 'One original airway bill/air consignment note issued by Company E or its successor, if any, addressed to Bank C, Country I - 123 456 for account of applicant indicating letter of credit number and marked freight payable at destination. Airway bill/air consignment notes must indicate flight number and date.' All other terms and conditions remain unchanged"

3. On 1 August 2001, the Initiator presented the required documents under the credit. This included an air waybill dated 31 July 2002, issued by Company U as agent of Airline A, carrier, and as successor of Company E (the "air waybill").

4. On 9 August 2002, the Respondent issued a refusal notice under the credit which included:

"As per field 46A Documents Required, point no. 3 airway bills/air consignment notes were to be issued by Company E. However, the same has been issued by Company U. The discrepancy is not acceptable to the drawee; therefore, we are rejecting the documents. We are holding the documents at your risk and responsibility pending disposal instructions. The applicant has been intimated of the same."

Respondent's answer

The Respondent did not submit an Answer (as defined in the ICC DOCDEX Rules (the "Rules")) to the International Centre for Expertise by the deadline stipulated in Article 5.2 of the Rules.

Issue to be determined

Whether the air waybill presented by the Initiator under the credit is discrepant.

Analysis and conclusion

Sub-Article 13 (a) of the UCP 500 states: "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."

Since the credit (as amended and, in particular by virtue of amendment no. 9) expressly permits the relevant air waybill to be issued by either Company E or its successor, while the air waybill was issued by Company U as successor to Company E, the Panel of Experts have come to the unanimous conclusion that the air waybill, on its face, complies with the terms and conditions of the credit. Accordingly, the Respondent is obliged to honour its payment obligations under the credit.