Parties

Initiator: Bank O, Country F

Respondent: Bank I, Country K

Background and transaction

An irrevocable documentary credit (initially for USD 100,000, later USD 250,000), available by negotiation with any bank, was issued by the Respondent on 29 January 2002. It was to expire on 28 April 2002 in Country F. This was later extended to 25 April 2003. The documents required under this credit were a signed commercial invoice in triplicate; airway bills consigned to Respondent marked "freight collect" and "notify applicant"; a packing list in triplicate; and a copy of health certificate. The beneficiary was Company T. Partial shipments were allowed. The applicant was Company G, Country K. The description of the goods was "raw fox skin 1,000pcs". There was an amendment which increased this number to "2000" pieces.

On 16 April 2003, the beneficiary presented the documents under the credit to Initiator. Initiator negotiated the documents and sent them to Respondent. Respondent received the documents on 18 April 2003. On 21 April 2003, Respondent sent a message to Initiator to obtain the beneficiary's consent to cancellation of the credit. The beneficiary refused and Respondent was informed. On 29 April 2003, Respondent rejected the documents.

Issues

Respondent alleged that the Initiator did not take reasonable care in examining the documents as required under sub-Article 13(b) of UCP 500. These discrepancies were notified to Initiator within seven banking days.

Respondent's claims

The Respondent rejected the documents and claimed they were discrepant on the following grounds:

(i) name of goods omitted on packing list;

(ii) unit name of goods on packing list differs from airway bill (package, CLL);

(iii) gross weight on the airway bill differs from packing list;

(iv) title of packing list differs from that instructed in credit (packing and weight list).

Initiator's reply

Initiator replied that the documents were compliant and requested Respondent to remit the money, stating:

- The goods were described in general terms on the packing list ("skins FOX"). There was no requirement for identical wording with the other documents, only that there be no inconsistency.

- The packing list states "packages" while the airway bill states "CLL", which is a packing unit. The data content does not need to be identical under paragraph 24 of ISBP, ICC Publication 645. The only requirement is that the documents must not appear to be inconsistent with each other.

- Paragraph 27 of ISBP states that banks do not need to check detailed mathematical calculations. Hence, the Initiator did not need to check the gross weight of the 19 packages which contained the same number of pieces of skins invoiced.

- Under paragraph 43 of ISBP, the credit's stipulation of a packing list may be satisfied by any document whether titled "Packing Note", "Packing and Weight List", etc.

On 22 May 2003, Respondent asked for a discount, claiming a defect in the goods. Under the UCP, banks deal with documents and not with goods. This claim cannot be accepted.

Documents submitted by the parties

Documents submitted by the Initiator

i) L/C No. M1234,

ii) Amendments 1-5,

iii) Bank O dispatch of documents dd. 16.4.2003 and copies of the documents,

iv) Copy of DHL tracking results,

v) Amendment No. 6 dd. 21.4.2003 and rejection dd. 22.4.2003,

vi) Advice refusal dd 29.4.2003 and OKO Bank's reply dd. 30.4.2003,

vii) Bank O SWIFT dd. 5.5.2003,

viii) Bank I SWIFT dd. 9.5.2003,

ix) Bank O SWIFT dd. 12.5.2003,

x) Bank I SWIFT dd. 22.5.2003,

xi) Bank O Bank SWIFT dd. 22.5.2003 and email dd. 23.5.2003 and 28.5.2003,

xii) Bank I SWIFT dd. 10.6.2003 and Bank O reply dd. 11.6.2003,

xiii) OKO Bank letter dd. 12.6.2003 and Bank I undated reply,

xiv) IBK SWIFT dd. 17.6.2003 and Bank O reply dd. 17.6.2003,

xv) IBK SWIFT dd. 27.6.2003 and Bank O reply of the same date,

xvi) IBK SWIFT dd. 11.7.2003 and Bank O reply of the same date,

xvii) Bank O SWIFT dd. 18.7.2003, Bank I and Bank O re-reply of the same date,

xviii) Bank O SWIFT dd. 25.7.2003,

xix) Bank O email dd. 8.8.2003,

xx) Bank O letter to Trade Centre in Country F dd. 1.8.2003,

xxi) Bank O email dd. 26.8.2003,

xxii) Letter from Embassy of Country F to Bank I 12.9.2003,

xxiii) ICC Country F national committee opinion dd. 6.10.2003,

xxiv) Bank I SWIFT dd. 22.10.2003 and Bank O reply of the same date,

xxv) Bank O letter to Bank I dd. 20.10.2003 and Bank I updated reply,

xxvi) Bank I letter to the Ambassador of Country F,

xxvii) Bank I letters to the Ambassador dd. 12.12.2003 and 25.2.2004,

Documents submitted by the Respondent

i) Copy of shipping document,

- bill of exchange (presented to us),

- airway bill of lading (presented to us),

- invoice (presented to us),

- packing list (presented to us),

- veterinary health certificate (presented to us),

ii) original L/C dated 020129 and amendments (outgoing),

iii) the advice of rejection (outgoing),

iv) the counter advice replied to our rejection message (incoming),

v) the advice of rejection - additional message (outgoing),

vi) the counter advice replied to our previous message - reiterated (incoming),

vii) the request of discounting for invoice amount (outgoing),

viii) the counter advice. (incoming),

ix) letter from Bank O, City H 030612,

x) letter from Bank O, City H including ICC Country F's opinion 031006,

xi) letter from Bank O, City H 031020,

xii) letter from the Ambassador of Country F 031128,

xiii) letter from the Ambassador of Country F 031204,

xiv) Bank I letter to the Ambassador of Country F 031212,

xv) letter from the Ambassador of Country F 040127,

xvi) letter from the Ambassador of Country F 040225.

Analysis

A. The credit called for "packing list in triplicate". Sub-Article 37(c) of UCP 500 states that "The description of the goods in the commercial invoice must correspond with the description in the Credit. In all other documents, the goods may be described in general terms not inconsistent with the description of the goods in the Credit." Article 21 states: "When documents other than transport documents, insurance documents and commercial invoices are called for, the Credit should stipulate by whom such documents are to be issued and their wording or data content. If the Credit does not so stipulate, banks will accept such documents as presented, provided that their data content is not inconsistent with any other stipulated document presented." Paragraph 24 of ISBP states: "Documents presented under a credit must not appear to be inconsistent with each other. The requirement is not that the data content be identical, merely that the documents not be inconsistent."

The credit called for a "packing list" without specifying its contents. The packing list shows "Skins Type" and "Fox"; the invoice shows "RAW FOX SKINS", while the credit calls for "RAW FOX SKIN". Under paragraph 24 of ISBP, "the requirement is not that the data content be identical, merely that the documents not be inconsistent". There is no inconsistency in the documents, and omission of the word "raw" in the name of the goods in the packing list is immaterial. Thus the packing list is not discrepant.

B. The packing list uses the term "package" to indicate units. There are 19 units with "skins qty (quantity)" adding up to 1997 fox skins. The airway bill indicates that there were "19 CLL 1997 PCS RAW FOX SKINS". "CLL", as we understand it, is an abbreviation of "colli", which also means a unit. As no data content was specified, the Initiator was entitled under Article 21 to accept a document not inconsistent, on its face, with any other stipulated document(s) like the airway bill. Whether the units stated are "CLL" or "package", they all contain the number "19" and would thus not be inconsistent on their faces. Again, this cannot be regarded as a discrepancy.

C. The gross weight of all the packing lists, when added up, amounted to 1627.7 kg. The airway bill indicated a weight of 1627.0 kg. Was there a discrepancy? On this point the experts expressed different views.

One expert was of the view that the packing and weight list that was submitted had a dual character. Under sub-Article 13(a) of UCP 500, "documents not stipulated in the credit will not be examined by banks ... ", and the banks " ... shall return them to the presenter or pass them on without responsibility." Hence, as only a "packing list" was called for under the credit, the "weight list" function of the document should be passed on without examination. There was no discrepancy, even though there appeared to be a difference in the weight. In any event, the difference was negligible and need not be considered a discrepancy.

Another expert agreed that the difference of 700g for a consignment that weighed 1627 kg was indeed minuscule, bearing in mind that goods of this nature may vary in weight due to conditions of humidity in the air or other reasons. Under the de minimis rule, this difference cannot be considered a discrepancy. The difference may also be due to "rounding down" by the carrier, since it may not have the ability nor the necessity to take fine measurements. In any event, since the credit does not call for a weight list, nor does it specify the weight that must be listed in the stipulated packing list, the issue of weight and whether the bank is obliged to do mathematical calculations under paragraph 27 of ISBP is irrelevant. There was thus no discrepancy in his view.

The third expert held strongly to the view that there was a discrepancy. The weight difference could not be ignored. Adding up the gross weight listed in all the packing lists could not be considered as "making detailed mathematical calculations" contrary to paragraph 27 of ISBP. The packing list, however titled, was one document and not two. Hence, his contention that it is not right to examine the "packing" part of the document only and ignore the "weight" part of the document as superfluous. It was inconsistent with the other stipulated documents presented (the airway bill) as a whole. Just because no weight list or weight details were called for does not mean that the bank would not examine the gross weight appearing in the six packing lists against the gross weight appearing in the other documents in order to establish whether or not there was an inconsistency amongst the documents.

The bank would sum up the totals of the six packing lists to get the total gross weight of the total goods shipped to determine consistency. The de minimis rule does not apply. In his view, the difference would be acceptable if it could be clearly attributable to "rounding up/down" the figure. However, according to the established counting rules, "rounding" the figure of 1,627.70 would lead to "1.628.00", not "1.627.0".

In the circumstances, the decision is a majority one that there was no discrepancy.

D. The credit called for a "packing list". The document presented is titled "Packing and Weight List". This issue is expressly covered by paragraph 43 of ISBP, which says "Documents may be titled as called for in the credit, bear a similar title or be untitled.

For example, a credit requirement for a "packing list" may also be satisfied by a document containing packing details, whether titled "packing note", "packing and weight list", etc., or an untitled document". There is no discrepancy here.

Finally, under UCP 500 Article 4, banks deal with documents, not with goods. If the documents are not discrepant, Respondent cannot claim a discount based on alleged defects in the goods.

Conclusion

There are no discrepancies, and the Respondent must pay the Initiator's claim without discount. This Opinion was arrived at unanimously except for Part C in the previous section, on which there was a majority Opinion.