Parties

Initiator: Bank I

Respondent: Bank R

Initiator's summary of case

The initiator requested an opinion on Article 21 and Article 23 under UCP 500 to determine whether, under particular circumstances of a documentary credit, it was justified to reject documents because of discrepancies noted by the respondent based on an inconsistency between the documents and the wording of the letter of credit. The specific issues pointed out by the initiator were:

1. The Third Party packing list and certificate of quality presented.

2. Certificate of quality presented instead of beneficiary's certificate.

3. Bill of lading showing movement as LCL/LCL (less than container load = pier to pier) but showing place of delivery as Kaohsiung Port CY (container yard) as well.

Respondent's summary of case

No answer was received from the respondent.

Issues and reasons

The Experts' Panel understands that the only documents in dispute are the ones mentioned as paragraphs 4, and 5 in the Credit, under Documents Required, and the bill of lading (their texts included below).

1. "Third party packing list and certificate of quality presented" L/C called - under above-mentioned paragraph 4. - for a "Packing List in 4 copies to indicate the measurement and gross weight of each bundle" but it did not stipulate by whom such a document was to be issued, and a document, dated July 21, 1997, and named "Packing List" - with the requested information and issued by a third party - was accepted by the initiator as per UCP 500, Article 21.

Specific aspects of the "Certificate of Quality" - covering requirements on a "certificate" called for in this case - are analyzed in the following paragraphs.

2. "Certificate of quality presented instead of beneficiary's certificate" L/C called - under above-mentioned paragraph 5 - for "One original copy of Certificate specifying the following information: Nation and year of product, brand of manufactory, model code and no. of each motor for all motors", but it did not stipulate by whom this document was to be issued nor its specific name. The respondent's claim, perhaps, means that the certificate presented should not have been titled "certificate of quality" but "beneficiary's certificate", or just "certificate" and should have been issued by the beneficiary.

3. "Bill of Lading showing movement as LCL/LCL (less than container load = pier to pier) but showing place of delivery as Kaohsiung Port CY (container yard) as well" The L/C specifically called for 2/3 set of clean on board ocean bills of lading made out to the order of the respondent; marked "freight prepaid"; notifying applicant; indicating the related credit number and the delivery from a European Port to a Taiwanese Port.

The bill of lading presented (dated August 6, 1997) was accepted by the initiator as conforming to the L/C and, in particular, to UCP 500 sub-Article 23(a)(iii)(a).

Additionally, but not as terms specifically called for in this L/C, in the B/L the "Place of Delivery" (Kaohsiung Port CY) appears to the respondent to be inconsistent with the "LCL/LCL" movement of the cargo.

Decisions

1. Unanimous decision: A packing list produced by a company other than the beneficiary named in the credit - and in the absence of any requirement in the credit for the document to be issued by the beneficiary - would not be considered a discrepancy.

2 Unanimous decision: We consider the initiator correctly accepted the "certificate of quality", issued by a party other than the beneficiary, as conforming to the requirements of the credit and UCP 500, Article 21.

3. Unanimous decision: Banks shall examine a bill of lading, on its face, to determine whether it complies with the terms and conditions of the credit, but in the absence of any specific requirement for the goods to be delivered in a certain way, banks shall not look into or arbitrate on the effects of the delivery and may not consider related inconsistencies as a discrepancy.

If the parties were concerned that there was a possibility of an LCL shipment taking place, suitable provision or terminology should have been incorporated within the terms and conditions of the credit.