Parties

Initiator: Bank A

Respondent: Bank C

Background and transaction

The Respondent issued on 29 March 2003 a documentary credit available by negotiation covering the shipment of greasy Irish fleece wool for an amount of USD 235,000. The Initiator acted as advising bank. The credit was subject to UCP 500.

Issue(s)

Upon the presentation of the documents by the Initiator on 21 November 2003, the Respondent issued a SWIFT message identifying three discrepancies.

In its Answer, the Respondent indicates that the advice of refusal was issued on 28 November 2003. However, the copies of documents filed by the Respondent and the Initiator with ICC show an advice of refusal dated 2 December 2003. The issue of belatedness is not raised at any time by the Initiator in its correspondence with the Respondent or in its Request. The Panel of Experts will therefore assume that the timeliness of the advice of refusal is not in dispute.

Further, of the three discrepancies originally raised by the Respondent, only one is the subject of the Request with no reference in either the Request or the Answer to the other two. The Respondent appears to have attempted to raise a fourth discrepancy on 12 December 2003, but the Initiator has objected to this on the ground of sub-Article 14(d)(ii) of the UCP 500. This seems to have been accepted by the Respondent, and no reference is made to this fourth discrepancy in either the Request or the Answer.

The panel, therefore, will render its decision on the sole discrepancy indicated in the Request.

Initiator's claim

The Initiator considers that the differences outlined by the Respondent between the shipping marks as appearing on the documentary credit and the shipping marks appearing on the documents presented under the credit do not warrant the rejection of the documents.

Respondent's reply

1) The Respondent finds that the shipping marks as appearing on the documents differ in four respects from those required in the documentary credit, to wit:

2) The parentheses "(FOR 46 MTS)" and "(FOR 54 MTS)" are missing from all shipping marks printed on the documents;

3) Instead of a hyphen, the documents reproduce a slash mark in the shipping marks;

4) In the second set, instead of starting the numbering of the bales from No.1, the tendered documents start from No.182; and

The invoices show a printing of the wording of the shipping marks in two lines instead of four lines as appearing in the documentary credit.

Documents submitted by the parties

A. Documents submitted by the Initiator:

(i) copy of the documentary credit,

(ii) copy of amendments to the credit,

(iii) bill of exchange,

(iv) invoice (1st set).

(v) bill of lading (1st set),

(vi) certificate of insurance (1st set),

(vii) packing list (1st set),

(viii) health certificate (1st set),

(ix) certificate of quality (1st set),

(x) test report (1st set),

(xi) certificate of dispatch (1st set),

(xii) DHL receipt (1st set),

(xiii) seller's statement (1st set),

(xiv) documents (iv) to (xii) above in 2nd set,

(xv) respondent's advice of refusal of documents dated 2 December 2003,

(xvi) exchange of correspondence between Initiator and Respondent as to the discrepancies,

(xvii) copies of e-mails exchanged between various departments of the Initiator discussing, among other things, the stance to adopt, and

(xviii) request of the Initiator dated 19 February 2004.

B. Documents submitted by the Respondent:

(i) Answer of the Respondent dated 12 March 2004,

(ii) copy of the documentary credit,

(iii) copy of amendments to the credit,

(iv) invoice (1st set),

(v) bill of lading (1st set).

(vi) certificate of insurance (1st set),

(vii) packing list (1st set),

(viii) health certificate (1st set),

(ix) certificate of quality (1st set),

(x) test report (1st set),

(xi) certificate of dispatch (1st set),

(xii) seller's statement (1st set),

(xiii) documents (iv) to (xii) above in 2nd set,

(xiv) respondent's advice of refusal of documents dated 2 December 2003, and

(xv) exchange of correspondence between Initiator and Respondent as to the discrepancies.

Analysis

The differences in the shipping marks identified by the Respondent between the documentary credit and the presented documents are outlined in the Answer under four categories. The Request and the Answer agree that these are the only issues in dispute. The Panel of Experts will analyze hereafter each of those four categories and rule whether it constitutes a discrepancy in accordance with UCP 500.

1) The parentheses "(FOR 46 MTS)" and "(FOR 54 MTS)" are missing from all shipping marks on the documents.

The Panel of Experts considers that the parentheses "(FOR 46 MTS)" and "(FOR 54 MTS)"" should not be regarded as a part of the shipping marks. Rather, they are destined for a mere identification purpose prompted by the requirement in the documentary credit of two separate sets of documents. Field 45A of the credit should be read as requiring the quoted shipping marks for the first set (numbered "1."), such set to apply to a quantity of 46 MTS. Similarly, the second set (numbered "2." in field 45A of the credit) requires the quoted shipping marks to apply to a quantity of 54 MTS.

The Panel of Experts unanimously considers that the absence of the parentheses from all shipping marks on the documents is not a discrepancy.

2) Instead of a hyphen, the documents reproduce a slash mark.

The only purpose of the requirement in the shipping mark of a hyphen is to indicate that each of the two sets of documents should list bales numbered consecutively from 1 onwards. When examining the presented documents, the Panel notes that they all list a consecutive numbering onwards. The fact that the separation between the starting number and the end number is printed as a slash mark as opposed to a hyphen does not change the consecutive onward numbering in conformity with the credit.

The Panel of Experts unanimously considers that the use of a slash mark instead of a hyphen is not a discrepancy.

3) In the second set, instead of starting the numbering of the bales from No.1, the tendered documents start from 182.

The documentary credit requires that the numbering of the bales in the second set start from 1 onward. All the documents presented under the second set list a numbering from 182 to 431, in continuation of the numbering of the bales in the first set which ends at 181. While it could be argued that the numbering of the bales in the second set fulfils the identification purpose (i.e., the distinction of the bales from those included in the first set), it remains that the numbering of the second set does not match the mode of numbering required in the credit. It is beyond the scope of the Panel of Experts' task, or indeed the UCP, to enquire as to the reason for which the credit requires that the second set provides for a numbering that starts from 1, with a view of assessing whether the difference in numbering in the presented documents is material.

The Panel of Experts unanimously considers that this is indeed a discrepancy that justifies the rejection of the documents.

4) The invoices show the printing of the shipping marks in two lines instead of four lines as appearing in the documentary credit.

Absent an express requirement in the documentary credit for the shipping mark to be typed in all documents in four lines, the invoices cannot be rejected because the shipping marks are typed therein in two lines apart from any other difference in the wording of the shipping marks.

The Panel of Experts unanimously considers that the printing of the shipping marks in two lines instead of four is not a discrepancy.

Conclusion

The Panel of Experts unanimously considers that the documents are discrepant and should be rejected because the numbering of the bales in the second set of documents starts from 182 instead of 1 as required in the documentary credit.