Summary of representations

On 19 April 2005, the Respondent issued, by SWIFT MT 700, an irrevocable documentary credit (the "credit" or "L/C") for an amount of USD 2,453,204 available with any bank in a specified town by negotiation of drafts at 90 days after the bill of lading date drawn on the Respondent for full invoice value covering shipment from "SRIRACHA THAILAND" of "COMMODITY: MIXED AROMATICS" and stipulating as required documents inter alia:

- "SIGNED COMMERCIAL INVOICE IN 5 COPIES INDICATING THIS L/C NO. AND CONTRACT NO. ..."

- "FULL SET OF CLEAN ON BOARD OCEAN BILL OF LADING ENDORSED TO THE ORDER OF THE [RESPONDENT]"

- "CERTIFICATE OF QUANTITY IN 1 ORIGINAL AND 1 COPY ISSUED BY INDEPENDENT INSPECTION AUTHORITIES IN THAILAND"

- "CERTIFICATE OF QUALITY IN 1 ORIGINAL AND 1 COPY ISSUED BY INDEPENDENT INSPECTION AUTHORITIES IN THAILAND"

This credit, being subject to UCP 500 and without confirmation instructions, has been advised to the beneficiary by the Initiator (being a bank in the specified town) and contained the following instructions to the negotiating bank: "REIMBURSEMENT CLAIM: ON RECEIPT OF ABOVE MENTIONED DOCUMENTS CONFORMING TO THE TERMS OF THIS DOCUMENTARY CREDIT, WE ENGAGE THAT THE DRAFT DRAWN UNDER THIS CREDIT WILL BE DULY ACCEPTED ON PRESENTATION AND DULY HONOURED AT MATURITY IN ACCORDANCE WITH THE NEGOTIATING BANK'S INSTRUCTIONS".

After an amendment of the credit on 25 April 2005, the excerpt of the detailed L/C clause concerning the price calculation relevant for the dispute reads as follows: "PRICE: CFR BASIS ONE SAFE BERTH/PORT DONGGUAN, CHINA. PRICE SHALL BE IN USD PER BARREL BASED ON THE AVERAGE OF MEAN OF PLATT'S (MOPS) QUOTATIONS FOR SINGAPORE PHYSICAL 95 UNL CARGOES AS PUBLISHED IN PLATT'S ASIA PACIFIC/ARAB GULF MARKETSCAN FOR 5 ISSUES, NAMELY 2 ISSUES IMMEDIATELY PRECEDING, 2 ISSUES IMMEDIATELY FOLLOWING, AND THE ISSUE ON B/L DATE WITH A PREMIUM OF USD 5.20 (FIVE POINT TWENTY) PER BARREL PLUS USD 36.50 PER MT.

SHOULD THE B/L DATE FALL ON SATURDAY, SUNDAY OR OTHER HOLIDAYS, THE 2 ISSUES IMMEDIATELY PRECEDING AND 2 ISSUES IMMEDIATELY FOLLOWING THE B/L DATE SHALL BE APPLIED ...".

"PRICE FORMULA: (MOPS FOR 95 UNL + USD 5.20) PER BBL + USD 36.50 PER METRIC TON".

On 6 June 2005, the Initiator negotiated documents for an invoice value of USD 2,148,430,38 presented by the beneficiary under the credit and dispatched such documents to the Respondent.

On 15 June 2005, the Respondent sent a notice of refusal of the documents (the "refusal") per SWIFT MT 799 to the Initiator, refusing such documents and holding them at the disposal of the Initiator, stating the following discrepancies:

"1. COMMODITY NAME IS MIXED AROMATICS WHILE 'MOGAS' APPEARS IN CALCULATION OF PRICE IN INVOICE.

2. L/C STIPULATES PRICE BASED ON MOPS QUOTATIONS WHILE INVOICE SHOWS 'MOGAS 95 UNL' QUOTATION.

3. INVOICE SHOWS '02 MAY 2005 NO PRICING ON B/L DATE' WHILE 02 MAY 2005 IS NON-HOLIDAY DATE IN SINGAPORE.

4. 'THAI OIL REFINERY SRIRACHA, THAILAND' IN CERTIFICATE OF QUANTITY AND CERTIFICATE OF QUALITY DIFFER FROM 'SRIRACHA, THAILAND' in L/C AND OTHER DOCUMENTS."

On 17 June 2005, the Initiator refuted these stated discrepancies, in essence, for the following reasons:

"1. THE DSCR. OF GOODS/COMMODITY NAME IS CLEARLY MENTIONED ON THE FIRST PAGE OF THE INVOICE EXACTLY AS STATED IN THE CREDIT.

2. THE PRICE CLAUSE IS ALSO CLEARLY MENTIONED ON THE SECOND PAGE OF THE INVOICE EXACTLY AS STATED IN THE CREDIT. THE WORDS 'MOGAS 95 UNL' IS THE ACTUAL NAME OF THE QUOTATION AS STATED IN PLATT'S AND IS NOT IN CONTRADICTION WITH THE PRICE CLAUSE OF THE CREDIT.

3. THE 02 MAY 2005 WAS A BANK HOLIDAY IN SINGAPORE THUS NO QUOTATIONS WERE PUBLISHED ON THAT DAY.

4. THE PORT OF LOADING AS STATED IN THE CREDIT IS CLEARLY SHOWN ON THE BILLS OF LADING. THE MENTION 'THAI OIL REFINERY' IS AN ADDITIONAL INFORMATION WHICH IS NOT IN CONTRADICTION WITH "SRIRACHA, THAILAND."

Thereafter, the Initiator and the Respondent exchanged several communications upholding their viewpoints with respect to these discrepancies under dispute, in the course of which the Initiator quoted the beneficiary to the effect that goods had been delivered to the applicant on 12 May 2005 although the B/L had been endorsed to the Respondent. The Respondent clearly and firmly answered that all original documents, including a full set of B/Ls, were still held by it and that the B/L had not been endorsed by it. On 27 July 2005, the Respondent returned the documents to the Initiator, and the Initiator did not claim that the returned documents did, in any respect whatsoever, deviate from the documents originally presented under the credit, so that the Respondent's statement appeared to be correct.

Issue to be determined

1. The Initiator's Request of 12 April 2006, supported by copies of various documents as per the respective list of attachments, requests a DOCDEX Decision whether the Respondent is entitled to reject the presented documents on the grounds stipulated in the Respondent's refusal of 15 June 2005, and appears, in its conclusion, to extend that request, if the refusal is ill-founded, to whether the Respondent is duty-bound to reimburse the Initiator and pay late payment interest.

2. The Respondent's Answer dated 28 April 2006, supported by copies of various documents as per the respective list of attachments, requests a DOCDEX Decision combined with the request and says, if possible, please return the Initiator's Request to the Initiator.

3. The Supplements dated 10 May 2006 and 18 May 2006 of the Initiator and the Respondent, respectively, do not amend these issues.

Analysis and conclusion

Each issue and each of the four discrepancies will be addressed separately.

Return of the Initiator's Request to the Initiator

The Initiator's Request may not be rejected, because none of the grounds for rejection pursuant to Sub-Article 5.4 of the ICC DOCDEX Rules, ICC Publication No. 811, is applicable.

The discrepancies stated in the refusal (according to the order stated therein) follow.

"COMMODITY NAME IS MIXED AROMATICS WHILE 'MOGAS' APPEARS IN CALCULATION OF PRICE"

Pursuant to sub-article 37(c) of UCP 500, "the description of the goods in the commercial invoice must correspond with the description in the Credit." The invoice presented under the credit does so by stating "COMMODITY: MIXED AROMATICS".

The further reference in the invoice to "MOGAS 95 UNL" appears in connection with the calculation of the unit price only.

The "PRICE" and "PRICE FORMULA" clauses of the credit, which are repeated in the commercial invoice, do not, however, refer to the description of the goods stated in the credit, but to a reference price basis only, i.e., "THE AVERAGE OF MEAN OF PLATT'S (MOPS) QUOTATIONS FOR SINGAPORE PHYSICAL 95 UNL CARGOES" or "MOPS FOR 95 UNL".

Therefore, this commercial invoice contains a description of the goods being identical to that of the credit. Such goods description is not part of the price calculation formula as per the credit terms, and the price calculation in such commercial invoice does not indicate that "MOGAS 95 UNL" is to describe the goods to the delivery of to which such commercial invoice refers.

Therefore the allegation of a discrepancy is ill-founded.

"L/C STIPULATES PRICE BASED ON MOPS QUOTATIONS WHILE INVOICE SHOWS 'MOGAS 95 UNL' QUOTATION"

The credit deals in its "PRICE FORMULA" and "PRICE" clauses with the unit price calculation, so that the issuing and negotiating banks cannot stop their examination with the repetition of such clauses on page 2 of the commercial invoice, but must not ignore the calculation proper in the commercial invoice presented.

The calculation of unit price in the commercial invoice lists four prices under the title "MOGAS 95 UNL" and describes the average of these 4 prices as "AVERAGE MOPS PRICE".

The terms and conditions of the credit do not refer to "MOGAS 95 UNL" or "MOGAS", but in connection with the price calculation, inter alia, to "PHYSICAL 95 UNL" and "MOPS 95 UNL". The abbreviation "MOGAS 95 UNL" is not a key word nor a generally accepted abbreviation in international documentary credit practice and/or international banking practice linking it with the price clause of the credit, so that such abbreviation appears to disagree with the credit terms.

Even if a bank or document checker with extraordinary experience in oil or oil-related products matters knows that "MOGAS 95 UNL" is an abbreviation of the oil industry and/or of PLATT'S one for "Motor gasoline 95 octane unleaded", such bank or document checker would also need to know that "MOPS" is used in the oil industry as an abbreviation for "mean of Platt's Singapore" in order to reasonably conclude that those abbreviations might complement each other. However, "MOGAS 95 UNL" is still inconsistent with "MEAN OF PLATT'S (MOPS) QUOTATIONS FOR SINGAPORE PHYSICAL 95 UNL CARGOES" stipulated in the "PRICE" clause of the credit - in particular with such part thereof which, according to the "PRICE" clause of the credit, appears to complete "MOPS", i.e., "PHYSICAL 95 UNL". This discrepancy is not remedied by the repetition in the commercial invoice of the abstract "PRICE" and "PRICE FORMULA" clauses of the credit, because the same do not contain any indication of "MOGAS 95 UNL".

The Respondent stated "MOGAS 95 UNL" as a discrepancy in respect of which it refused the documents, giving first a reason, i.e., disagreement with "MOPS", and later another reason, i.e., disagreement with "PHYSICAL 95 UNL". Both reasons are justified, as demonstrated. The Respondent is not barred by sub-article 14(e) of UCP 500 from amending its reasoning as long as it refers to the very same discrepancy stated in its (first) refusal dated 15 June 2005, and as long as the refusal, pursuant to sub-article 14(d)(ii) of UCP 500, does "state all discrepancies in respect of which the bank refuses the documents" and also because the Respondent stated in such refusal the inconsistency of "MOGAS 95 UNL" with the terms of the price stipulations of the credit.

Therefore this discrepancy is justified and valid.

"INVOICE SHOWS '02 MAY 2005 NO PRICING ON B/L DATE' WHILE 02 MAY 2005 IS NON-HOLIDAY DATE IN SINGAPORE"

The "shipped on board" bill of lading appears to have been issued on 2 May 2005 and the commercial invoice, in its calculation of the unit price, does not show any amount opposite such date, but has the following remark instead: "NO PRICING ON B/L DATE".

Under a credit, the bank's obligation is made absolute by a representation of facts rather than by an ascertainment of facts. Therefore, banks must consider such representations as correct and exact unless the contrary is (exceptionally) general knowledge or is obvious to banks under the circumstances. Absent such exception, since an early May holiday is customary in quite a few countries, the Initiator and the Respondent were not bound to ensure that 02 May 2005, being neither a Saturday nor a Sunday, was any "other holiday" in the sense of that clause, i.e., the day on which there was not published any mention of Platt's quotation in Platt's Asia Pacific/Arab Gulf Marketscan.

In addition, the Initiator presented a copy of a download of Platt's Holiday Schedule for January through June 2005, which lists 2 May 2005 as "day after Labour Day. UK early May Bank Holiday", and as Platt's Offices closed in "London, Guangzhou, Hong Kong, Singapore", and further specifies for that date, that, inter alia, the following service will be affected: "Asia-Pacific/Arab Gulf crude and product markets will not be assessed." Further, the Respondent presented a copy of Platt's Oilgram Price Report of Tuesday, 3 May 2005, on page 2 of which all spaces for quotations referring to Singapore only show "NA-NA", and a respective footnote explains as follows: "NA = Not available due to a holiday".

Therefore, the beneficiary's representation in the commercial invoice that there was no relevant pricing on the B/L date should not have been raised as a discrepancy. Moreover, it was proven not to be a discrepancy as a matter of fact.

"'THAI OIL REFINERY SRIRACHA THAILAND' IN CERTIFICATE OF QUANTITY AND CERTIFICATE OF QUALITY DIFFER FROM 'SRIRACHA, THAILAND' IN L/C AND OTHER DOCUMENTS"

The credit stipulates in field 44A ("Loading on Board/Dispatch/Taking in Charge)" "SRIRACHA THAILAND" and not the "port" or any other specific area there.

The credit requires, inter alia, a clean on board ocean bill of lading, so that the words "SRIRACHA THAILAND" in field 44A of the credit instrument designate the respective port which is so indicated in the bill of lading and referred to opposite "shipment" in the commercial invoice. The credit does not require this to be indicated in the required certificate of quantity and/or certificate of quality.

Any certificate of quantity and any certificate of quality, pursuant to article 21 of UCP 500, must be issued by the (natural or legal) person stipulated in the credit and must have such wording or data content as stipulated in the credit. Otherwise it will be accepted "as presented, provided that their data content is not inconsistent with any other stipulated document presented".

The certificate of quantity and the certificate of quality presented appear to be issued by the same issuer. Each contain, below their title and the reference to the issuer, a box containing "Vessel: M.T. 'X'/Cargo: Mixed Aromatics/Port of Loading: Thai Oil Refinery, Sriracha, Thailand/B/L No.: SR1234ABC". The name of the vessel and the B/L number are identical with the vessel name and B/L number stated in the bill of lading. Therefore, the words "Thai Oil Refinery" in addition to the name of port of loading do not indicate in any way that the subject matter of the inspections referred to in these certificates appears to be other goods than those referred to in the commercial invoice and in the bill of lading. The certificate of quantity indicates "Quantity established from Shore tank measurement", and the certificate of quality refers, inter alia, to "sample source: Shore tank No. X-4567". Further statements in these certificates appear to indicate that Thai Oil Refinery, as far as relevant "shore tank" is concerned, is situated in the port of Sriracha in Thailand, all the more so because these certificates include the specification "Thai Oil Refinery", together with the words "Sriracha Thailand" in the denomination of the "Port of Loading".

Therefore, there is no substantial disagreement and thus no inconsistency between the description of the port of loading in the certificates and the description thereof in the credit, nor in the commercial invoice and bill of lading presented together with these certificates thereunder.

This allegation of a discrepancy is therefore not justified.

Reimbursement of the Initiator by the Respondent

Since the Respondent, in respect of one discrepancy, determined correctly that the documents appear on their face not to be in compliance with the terms and conditions of the credit, and since the Respondent notified the Initiator thereof in full compliance with sub-article 14(d) of UCP 500, the Respondent is not bound to reimburse the Initiator.

Decision

It is the unanimous decision of the Experts that the Respondent is entitled to reject the presented documents on account of a discrepancy stated in its refusal in compliance with sub-article 14(d) of UCP 500, i.e., a commercial invoice containing, in connection with the unit price calculation, an abbreviation which is neither part of the detailed price clause stipulated in the credit nor a key word, nor a generally accepted abbreviation in international documentary credit practice and/or international banking practice, that would link the abbreviation with the price clause of the credit. This appears on its face to be inconsistent with the terms and conditions of the credit.