Parties

Initiator: Company S

Respondent: Bank B

Background and transaction

- On 12 February 2004, the Respondent issued a documentary credit subject to UCP 500 in favour of the Initiator. The credit is available by negotiation with "any bank in Country C", prohibits partial shipments in field 43P and states in field 47B: "Shipment to be effected in 2x20 FCL Containers by any conference line".

- On 19 February 2004, the credit was amended to add, among other changes:

. in field 43P, the requirement of two shipments and in full containers only instead of partial shipments not allowed;

. in field 47B, "Read two shipments are required as follows:

1st shipment covering 1x20 FCL container to be shipped not later than 12 March 2003 1

2nd shipment covering 1x20" FCL container not later than 20 March 2004".

- The Initiator indicates in its Request having made on 26 March 2004 two presentations of documents through Bank A, acting as advising bank: the first presentation consisted in a set of documents presented in respect of the first shipment, and the second presentation consisted in a separate set of documents presented in respect of the second shipment. The bills of lading in each set refer to a shipment having occurred on the same vessel on the same date, i.e., 12 March 2004. The Respondent indicates in its Answer that two sets of documents were indeed received on 7 April 2004, but in one lot.

- The Initiator indicates in its Request that the Respondent rejected the first presentation on 19 April 2004 and the second presentation on 20 April 2004. SWIFT messages with those dates were produced by the Initiator. The Respondent produced two SWIFT messages notifying rejection, both dated 16 April 2004. Both notices of rejection give one reason for rejection: one shipment is effected instead of two shipments.

Issue(s)

Does the presentation of two separate sets of shipping documents, where the goods have been shipped in two containers loaded on the same vessel and same journey, conform with the terms of the documentary credit?

The timeliness of presentation, of rejection or the terms of the notice of rejection are not in dispute. The DOCDEX Panel will therefore not address these issues.

Initiator's claim

The Initiator considers that the two presentations are conforming, as the goods were shipped in two separate containers which, according to the Initiator, were considered as two shipments. The Initiator contends that it is irrelevant that the two shipments actually occurred on the same vessel and the same journey. The Initiator argues that the documents should be considered conforming according to UCP 500 article 21 and that the case does not concern partial shipments, but rather multiple shipments, thus rendering UCP 500 article 40 irrelevant.

Respondent's reply

The Respondent considers that, as a result of the amendment of the credit, two separate shipments should have taken place, i.e., on two different journeys. Two different sets of bills of lading do not infer separate shipments, the Respondent contends. This is the more so when the bills of lading show that the two shipments were made on the same vessel and on the same date. The Respondent considers UCP 500 article 21 irrelevant, as it does not apply to transport documents. The Respondent refers to UCP 500 sub-article 40(b) and concludes that the case does not concern partial shipments, but one shipment. As such, the documents should be rejected as not complying with the credit's requirement of two shipments.

Documents submitted by the parties

Documents submitted by the Initiator

(i) Request, dated 5 July 2004;

(ii) Copy of documentary credit and amendment;

(iii) Respondent's notice of rejection of first presentation dated 19 April 2004;

(iv) Respondent's notice of rejection of second presentation dated 20 April 2004;

(v) Advising bank's message dated 26 April 2004 contesting the rejection;

(vi) Respondent's message dated 29 April 2004 confirming the rejection;

(vii) Advising bank's message dated 2 June 2004 contesting the rejection;

(viii) Copy of combined transport bill of lading for the first container;

(ix) Copy of combined transport bill of lading for the second container;

(x) Extract from DC PRO of ICC Opinion;

(xi) Exchange of e-mails between Initiator and Respondent agreeing to submit the dispute to DOCDEX for a final and binding decision.

Documents submitted by the Respondent

(i) Answer, dated 27 July 2004;

(ii) Copy of documentary credit and amendment;

(iii) Copy of documentary remittance of first set;

(iv) Copy of documentary remittance of second set;

(v) Respondent's notice of rejection of first presentation dated 16 April 2004;

(vi) Respondent's notice of rejection of second presentation dated 16 April 2004;

(vii) Advising bank's message dated 27 April 2004 contesting the rejection;

(viii) Respondent's message dated 28 April 2004 confirming the rejection;

(ix) Respondent's letter dated 17 May 2004 notifying return of first set of documents;

(x) Respondent's letter dated 17 May 2004 notifying return of second set of documents;

(xi) Respondent's letter dated 4 June 2004 notifying return of first set of documents;

(xii) Respondent's letter dated 4 June 2004 notifying return of second set of documents;

(xiii) Copy of documentary remittance of first set;

(xiv) Copy of documentary remittance of second set;

(xv) Respondent's letter dated 23 June 2004 notifying return of first set of documents;

(xvi) Respondent's letter dated 23 June 2004 notifying return of second set of documents;

(xvii) Exchange of e-mails and faxes between Initiator and Respondent agreeing to submit the dispute to DOCDEX for a final and binding decision.

Analysis

Two points are particularly relevant for the determination of the only issue in dispute in this case. The first relates to the requirement in the credit of two shipments, and the second to the dates of shipment.

When issued, the documentary credit designated in field 44C as the latest date of shipment 12 March 2004. The credit was subsequently amended to indicate in field 47B that the first shipment should be made no later than 12 March 2004 and the second shipment no later than 20 March 2004. Field 44C was also amended to provide for 20 March 2004.

Further, when issued, the documentary credit prohibited in field 43P partial shipments, while requiring in field 47B that shipment be made in two containers. The credit was subsequently amended to exclude in field 43P the prohibition of partial shipments and to specifically require two shipments in full containers. The requirement for two shipments is further reiterated in the amendment to field 47B.

Had there been no amendment to the original credit, the issuing bank would have been compelled to take up the documents as presented by the Initiator, albeit they were presented in two separate sets, whether or not in one lot. The reason is that UCP 500 sub-article 40(b) would have precluded the bank from considering the case as being one of partial shipments, which was prohibited in field 43P as originally issued.

The situation has radically changed after the amendment. The amendment to fields 43P and 47B now require specifically two shipments. Shipping the goods on the same vessel on the same date for the same destination amounts to making one shipment, not two. True, the dates indicated in the amendment to field 47B indicate latest shipment dates, which allows the shipper to ship the containers at any date that precedes the maximum dates, including on one and the same date as the Initiator rightly contends. However, in order for him to comply with the express requirement of two shipments, the shipper would have had to ship the goods on two different vessels, albeit on the same date. ICC Banking Commission Opinion R. 313 cited by the Initiator is therefore of no assistance to his case.

The finding stated above is based on the interpretation of the terms "two shipments" as a matter of normal language. In order to reach this finding, there is no need to second guess the applicant's intent behind the amendment as the Respondent suggests.

Conclusion

The DOCDEX Panel unanimously decides that the presentation by the Initiator of two separate sets of documents indicating that the two containers were shipped on the same vessel for the same journey does not comply with the terms of the documentary credit, which require two shipments. The Respondent was therefore right in rejecting the documents.

This Decision is final and binding as agreed by the Initiator and the Respondent.

1 In its request, the Initiator asserts that the date should be read as 2004 instead of 2003. This point is not contested by the Respondent.