Parties

Initiator: Bank O (Advising and Negotiating Bank)

Respondent: Bank K (Issuing Bank)

Issue

Whether the issuing bank (Respondent) had a right to refuse documents for the following reasons stated by the issuing bank:

1. AWB forged. According to our (the Respondent's) file acquired from delivery agents in Country A, the consignee of original 2 (for consignee) accompanied by goods is applicant (G and T Co, Ltd), whereas the consignee of original 3 (for shipper) which you (the Initiator) presented is our bank.

2. Carrier's name on AWB not identified. In the upper column, "Company P as the carrier", whereas, in the lower column, "Company P as agents for the carrier, Company B" contradicts each other.

Documentation

Request from Bank O (The Initiator) of 11 June 2003 to ICC International Centre for Expertise, Paris, requesting a DOCDEX Decision, including inter alia:

- a statement that a copy of the Request and all documentation was sent to the Respondents, and

- the Initiator's Summary of the Dispute

- Answer from Bank K (Respondent) of 2 July 2003 confirming that a copy of the answer including documents annexed thereto, has been sent to the initiator

- Copy of documentary credit no. ABC1234, dated 02.09.02

- Copy schedule dated 05.09.02 from Bank O, forwarding documents negotiated to Bank K

- Copies of all documents, including the AWB presented

- Copy of SWIFT message from Bank K to Bank O of 18.9.2002

- Copy of SWIFT message from Bank K to Bank O of 19.9.2002

- Copy of SWIFT message from Bank O to Bank K of 20.9.2002

- Copy of SWIFT message from Bank K to Bank O of 30.9.2002

- Copy of SWIFT message from Bank O to Bank K of 14.10.2002

- Copy of SWIFT message from Bank K to Bank O of 14.01.03

- Copy of SWIFT message from Bank K to Bank O of 31.03.03

Arguments

The credit in question was issued subject to UCP 500 and was available for negotiation by any bank. The Initiator was therefore entitled to negotiate complying documents presented on or before the date of expiry.

Documents were presented to the Initiator on 05.09.2002 and delivered to the issuing bank on 09.09.02.

If documents presented are in compliance with the credit and the UCP 500 and not inconsistent with each other, the issuing bank must pay (sub-Article 13(a), (sub-Article 9(a)).

Sub-Article 14(b) further underlines the obligation of the issuing bank to examine documents received under its documentary credit.

After having examined the documents, the issuing bank (the Respondent) sent a notice of refusal in accordance with the stipulations of Article 14 with the following wording:

- "AWB forged.. According to our file acquired from delivery agents in Country A, the consignee of original 2 (for consignee) accompanied by goods is applicant (G and T Co, Ltd), whereas the consignee of original 3 (for shipper) which you presented is our bank."

- "Carrier's name on AWB not identified. In the upper column, 'Company P as the carrier'", whereas, in the lower column, 'Company P as agents for the carrier, Company B' contradicts each other."

Analysis

Sub-Article 9(a) of UCP 500 states inter alia: "An irrevocable Credit constitutes a definite undertaking of the Issuing Bank, provided that the stipulated documents are presented to the Nominated Bank or to the Issuing Bank and that the terms and conditions of the Credit are complied with ...".

Article 15 states: "Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document(s), or for the general and/or particular conditions stipulated in the document(s) or superimposed thereon; nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any document(s), or for the good faith or acts and/or omissions, solvency, performance or standing of the consignors, the carriers, the forwarders, the consignees or the insurers of the goods, or any other person whomsoever."

The Experts further relied on sub-Article 13(a), according to which "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 ...". It is obvious from the Article that banks are solely obliged to examine documents required and presented under the credit.

UCP 500 has no stipulation regarding fraud and forgery, which is to be solved by the relevant courts.

Based on these Articles and the principles of UCP 500 that a documentary credit is an instrument for payment, the Experts agreed that the "claim of forged documents is presented" was not a valid discrepancy for the issuing bank to refuse payment. The issuing bank was required to review the documents based upon the information that appeared on their face and not on any information that was received from another source or document. It would be for the courts to stop payment based on a finding of forgery or fraud.

It is obvious from the copy of the presented AWB that the issuer (upper right-hand) has the words "as the carrier" printed. It is also obvious that the same issuer of the AWB has typed and signed it (and issued) the document "as agent for the carrier".

Sub-Article 13(a) states inter alia: " ... 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...".

It is accepted international banking practice that inconsistency in the same documents also falls into this category.

The Experts discussed whether a statement made in direct connection with the issuance of the documents (the signing) and being a part of it should override a statement made elsewhere in the document - in another font or type. The Experts agreed that it would be easy for the issuer to make an authenticated correction as used elsewhere on the AWB, to enable its printed form to be used without inconsistency relating to the identity and capacity of the issuer.

Decision

1. The question "AWB forged"

The Respondent's (issuing bank's) contention that the air waybill (AWB) was forged, which has not been proven, is not a valid argument for refusal of the documents negotiated by the Initiator (negotiating bank) because the UCP obligation to only examine documents requested in the credit was fulfilled.

2. Contradicting statement of the status of the issuer of the AWB

As it is obvious that the AWB showed two different carriers and neither gave clear evidence of the capacity of the issuer of the document ("carrier" or "agent of a carrier") and the issuer of the AWB did not make any correction thereto, the AWB does not conform to the credit and the Respondent was correct in refusing the AWB for this reason.

The appointed Experts reached a unanimous Decision regarding the question of the alleged fraudulent AWB.

The appointed Experts reached a majority Decision regarding the question of the inconsistency of the carrier under the AWB.