Parties

Initiator: Bank F

Respondent: Bank I

Issues

1. First issue(s)

Whether the discrepancies stated by the issuing bank (Respondent) are valid discrepancies or not.

Under three letters of credit, the following discrepancies were raised:

- L/C NO. ABC1234

A. Documents showing different goods description from L/C

B. Inspection certificate not dated prior to shipment date

C. AWB showing invoice number which is not found on commercial invoice

- L/C NO. DEF5678

A. Invoice showing different description of merchandise from L/C stipulated

B. Certificate of inspection not dated prior to shipment date as L/C requires

- L/C NO. GHIJ91011

Certificate of inspection not dated prior to shipment date as L/C stipulated

2. Second issue

Is the re-presentation of the documents to be considered a new and independent presentation subject to a new and independent examination as per the Articles of UCP, or is it one and the same so that no examination must be performed anymore?

Documentation

Request from Bank F (The Initiator) of July 24, 2003 to the ICC International Centre for Expertise, Paris, requesting a DOCDEX Decision, including inter alia:

- a statement that a copy of the request and the complete documentation was sent to the Respondent, and

- the Initiator's summary of the dispute

1. File A - L/C NO. ABC1234, containing a copy of the letter of credit, the documents presented, and the correspondence subsequently exchanged;

2. File B - L/C NO DEF5678, containing a copy of the letter of credit, the documents presented, and the correspondence subsequently exchanged;

3. File C - L/C No GHIJ91011, containing a copy of the letter of credit, the documents presented, and the correspondence subsequently exchanged;

4. Letter from Bank I (the Respondent) of August 12, 2003 to ICC International Centre for Expertise, stating inter alia:

- that a copy of the answer pursuant to Article 3 of the DOCDEX rules was sent to the Initiator, and

- that the documents were discrepant.

Summary of the facts

All three letters of credit were issued subject to UCP 500, issued by the Respondent and advised through an advising bank (not the Initiator) in Country T. They were termed to be available by negotiation with any bank. Therefore, the Initiator was authorized to negotiate the documents presented.

The Initiator negotiated the documents which were sent to the Respondent on January 10, 2003, January 17,2003 and January 14, 2003, under the letters of credit L/C NO. ABC1234, L/C NO DEF5678, and L/C No GHIJ91011, respectively. The Respondent, in turn, refused to take up the documents and sent a SWIFT message to this effect to the Initiator on January 23, 2003, January 29, 2003, and January 27, 2003, respectively.

The Respondent claimed that the following discrepancies were revealed:

File A - L/C NO. ABC1234

A. Documents showing different goods description from L/C;

B. Inspection certificate not dated prior to shipment date;

C. AWB showing invoice number which is not found on commercial invoice.

File B - L/C NO DEF5678

A. Invoice showing different description of merchandise from L/C stipulated;

B. Certificate of inspection not dated prior to shipment date as L/C requires.

File C - L/C No GHIJ91011

A. Certificate of inspection not dated prior to shipment date as L/C stipulated.

The refusal notice must be given by telecommunication and not later than the close of the seventh banking day following the day of receipt of the documents, and such notice must state all discrepancies and whether the documents are being held at the disposal of the presenter of whether the documents are being returned to it.

Issues: File A

1) Discrepancy A: documents showing different goods description from L/C

The letter of credit contains the following goods description:

- 4,704 PCS OF ELECTRONIC PRODUCTS COMPRISING VGA CHIP 08/0487/08

- AT USD 35.00/PC

- AS PER CONTRACT NO. XYZ1234

- PRICE TERM: C AND F Place H

The invoice and the packing list show the following goods description:

- DIGITAL ELECTRONIC PRODUCTS COMPRISING VGA CHIP 08/0487/08

- AS PER CONTRACT NO. XYZ1234

- 08/0497/09

invoicing the goods at the correct price and indicating the correct delivery terms, whilst the certificate of inspection shows the designation "PC" in front of the number 08/0497/09.

The invoice and the packing list show the additional word "Digital" and the addition of the number "08/0497/09". The certificate of inspection shows additionally the words "PC" in front of the additional number.

UCP sub-Article 37(c) stipulates that "The description of the goods in the commercial invoice must correspond with the description in the Credit." ISBP paragraph 62 adds to this by stating "There is no requirement for a mirror image." The official Banking Commission Opinion R456 confirms that: "an additional qualification of the goods does not change the nature of the goods. There is no discrepancy."

Only the official Opinion R235 (ICC Banking Commission Collected Opinions - 1995-2001, page 367) concludes in a very specific case "that the addition of the word 'coloured' makes the description of the goods in the Report inconsistent with the description of the goods in the credit".

2) Discrepancy B: inspection certificate not dated prior to shipment date

Arguments: UCP 500 and ISBP are silent as to the meaning of the word "prior". "Prior" has a clear meaning. Each dictionary says in similar words that it means earlier than, or before something else, i.e., before a specific event, or date, as the event in this case is a date. Prior to a certain date excludes, therefore, that certain date.

An application of the difference between "prior" and "upon" is given in paragraph 195 of ISBP which states "An insurance document should be issued or endorsed so that the right to receive payment under it passes upon, or prior to, the release of the documents." The same principle applied to the date of issue of the certificate of inspection leads to the certificate being correct if its issuing date is at the latest the date prior to the date of shipment, the date of shipment being excluded.

3) Discrepancy C: AWB showing invoice number which is not found on commercial invoice

Arguments: there is no requirement that invoices must be numbered. The AWB is the only document where this number appears. As no other document indicates such number, there is no inconsistency in the data. ISBP paragraph 24 states that data content must not be inconsistent.

Issues: File B

1) File B, discrepancy A: invoice showing different description of merchandise from L/C stipulated

The letter of credit contains the following goods description:

6,480 PCS OF ELECTRONIC PRODUCTS COMPRISING K9K1G08U M-YCB0 (Company S) AT USD 27.50/PC

- AS PER CONTRACT NO. JKL6789

- PRICE TERM: C AND F Place H

The invoice and the packing list show the following goods description:

- ELECTRONIC PRODUCTS COMPRISING AS PER CONTRACT NO. JKL6789 K9K1GO8U M-YCBO (Company S)

- SM-J47824

(invoicing the goods at the correct price and indicating the correct delivery terms, whilst the certificate of inspection does not show SM-J47824).

Arguments: See File A above.

2) File B, discrepancy B: certificate of inspection not dated prior to shipment date as L/C requires

Arguments: see File A above.

Issues: File C

Discrepancy: certificate of inspection not dated prior to shipment date as L/C stipulated.

Arguments: see File A above.

Issue: re-presentation of documents

File A, B, and C

Is the re-presentation of the documents to be considered a new and independent presentation subject to a new and independent examination as per the Articles of UCP, or is it one and the same so that no examination must be performed anymore and no additional discrepancies may be raised?

Arguments: the Respondent returned the documents to the Initiator upon request of the applicant who refused to give a waiver to the Respondent for the discrepancies in the documents. The Respondent returned the documents without being authorized to do so by the Initiator. The Respondent acted on the request of the applicant and returned documents to the presenter.

Documents returned are out of the control of the returning bank and may be subject to corrections or alterations.

Decisions

1. Discrepancies: File A

Discrepancy A: the addition of the word "Digital" in the documents does, as indicated in Banking Commission Opinion R456, not alter the nature of the goods. There is no requirement in UCP for a mirror image of the description of the goods. Therefore, there is no discrepancy.

The addition of the number "08/0497/09" cannot be considered a discrepancy. This number may solely represent a serial number. Most invoices presented under letters of credit bear type numbers, serial numbers or other information that is not mentioned in a goods description which should be concise. The fact that the certificate of inspection indicates the letters "PC" in front of that number makes it apparent that this number is a number of the PC as opposed to the number of the CHIP indicated in the credit and the invoice.

Discrepancy B: based on common language understanding, "prior" means earlier or before a certain event. That named event was a date (date of shipment), and anything that must happen prior to that date must bear a date which is at least one day before the date of shipment. The discrepancy is valid.

Discrepancy C: as indicated under the Arguments above, there is no requirement for invoices to be numbered. The AWB is the only place where this number appears, and therefore, there is no inconsistent data content among the documents. There is no discrepancy.

2. Discrepancies: File B

Discrepancy A: the addition of the number SM-J47824 cannot be considered a discrepancy. This number may solely represent a serial number. Most invoices presented under letters of credit bear type numbers, serial numbers or other information that is not mentioned in a goods description which should be concise.

Discrepancy B: based on common language understanding, "prior" means earlier or before a certain event. That named event was a date (date of shipment), and anything that must happen prior to that date must bear a date which is at least one day before the date of shipment. The discrepancy is valid.

3. Discrepancies: File C

Based on common language understanding, "prior" means earlier or before a certain event. That named event was a date (date of shipment). and anything that must happen prior to that date must bear a date which is at least one day before the date of shipment. The discrepancy is valid.

4. Re-presentation

The Respondent returned the documents to the Initiator, although the Initiator did not ask for this, and despite the fact that the Respondent stated that the documents are held at the disposal of the Initiator. The sole party to give instructions as to what is to be done with the documents is the Initiator. Re-sending the documents back to the Respondent is not a new presentation of (corrected) documents. The documents are being returned to the place where they should have remained in the first place, as the Initiator did not request that the documents be returned to it.

The sole thing that the Respondent was allowed to do was to ascertain whether the documents have remained unaltered, compared to the presentation examined by it. There is no room for stating an additional discrepancy, as the documents have not been represented but merely been returned to the place where they should have been (kept at the disposal of the Initiator), pending receipt of instructions for their disposal.