Parties

Initiator: Bank A (nominated negotiating bank)

Respondent: Bank C (issuing bank)

Background and transaction

Initiator, as named nominated negotiating bank, submitted documents which it determined to be compliant to the Respondent. The Respondent, as issuing bank of an irrevocable L/C subject to UCP 500, identified two discrepancies in respect of which it determined the documents to be discrepant and dishonoured the presentation. Several telecommunications ensued between the parties with no resolution. The Initiator suggested submission of the dispute to a DOCDEX Decision in accordance with the ICC DOCDEX Rules, ICC Publication No. 811. The Respondent answered the Initiator's request and submitted its reply and supporting documents as detailed herein, requesting a DOCDEX Decision in accordance with the ICC DOCDEX Rules, ICC Publication No. 811.

Issue(s)

Whether the discrepancies noted by the Respondent, are valid and whether or not their refusal to honour under their irrevocable letter of credit was in accordance with UCP 500. The Respondent cites two discrepancies, namely: "(i) the container No. "MAEU 1234-5 in containers details [on the packing list] differ from that showing in B/L as 'MAEU1234-6" and (ii) the beneficiary's stamp showed an address different from that on the L/C in the commercial invoice, packing list and B/L endorsement."

Initiator's claim

The Initiator contends that the documents comply with the L/C and UCP 500 and that the discrepancies cited by the Respondent are not valid. The Initiator takes the position that the difference in container numbers is a clear typing error and that the different addresses are merely a different spelling of the same city name, i.e., in one case "WIEN" in German and in the other "Vienna" in English. The Initiator submitted a supporting explanation from the Freight Forwarder Maersk-Logistics, in German, with an accompanying handbook explaining how container numbers are constructed, concluding that there is no such container as that mistyped on the packing list and therefore there is no confusion and no discrepancy.

The Initiator also cites ICC official Opinion 470/TA548, which says that in a similar situation such a typing error could not be considered a relevant discrepancy. The Initiator continues to maintain that the presentation complied and that the alleged failed attempts by the buyer to contact the seller to resolve the matter were outside the L/C and UCP, and demanded payment.

Respondent's reply

The Respondent maintains that discrepancy (i) above is valid citing UCP 500 sub-article 13(a), reading in part: "Documents which appear on their face to be inconsistent with one other will be considered as not appearing on their face to be in compliance with the terms and conditions of the Credit." UCP 500 sub-article 13(a) also reads that compliance "shall be determined by international standard banking practice as reflected in these articles." The Respondent refers to ISBP (ICC Publication No. 645) paragraph 23 Misspellings and typing errors, which states:

"23) Misspellings or typing errors that do not affect the meaning of a word or the sentence in which it occurs, do not make a document discrepant. For example, a description of the merchandise as 'mashine' instead of 'machine', 'fountan pen' instead of 'fountain pen' or 'modle' instead of 'model' would not make the document discrepant. However, a description as 'model 123' instead of 'model 321' would not be regarded as a typing error and would constitute a discrepancy." It also noted ICC Opinions R 209, R 409 and R 431.

[The Panel notes without prejudice to the Respondent's position that the ISBP paragraph number referred to is incorrect; it should be paragraph 28, not paragraph 23, and that the cited ICC Opinions, which may only be partially applicable, are not part of the ISBP publication.]

ICC Publication No. 632, R 244 (sub-articles 23(a)(i), 34(b) and 48(h) states: "The mention of wrong container number which is inconsistent with the container number indicated on other documents is a reason for rejection." [The Panel notes without prejudice that the correct official Opinion reference number is R 224.] The Respondent consulted the national committee in Country C and submits that national committee Opinion in support of discrepancy (i) but not discrepancy (ii).

It is not clear from its response whether the Respondent has dropped discrepancy (ii), though the national committee in Country C said that the address differences are not a discrepancy. However, as the Initiator has requested a decision on both (i) and (ii) above, this decision will address both cited discrepancies.

Documents submitted by the parties

Documents submitted by the Initiator

Documents identified by Initiator as Annex 1 through Annex 27.

Documents submitted by the Respondent

- Opinion from the national committee in Country C, dated 20 July 2006, in the language of Country C

- Opinion from the national committee in Country C, Dated 20 July 2006, English translation

- Respondent Reply cites a number of the same documents submitted by Initiator, namely their 2, 15, 11a and 11b.

Analysis

As to the first discrepancy cited by the Respondent, namely, "THE CONTAINER NO. 'MAEU 1234-6 IN CONTAINERS DETAILS [ON THE PACKING LIST] DIFFER FROM THAT SHOWING IN B/L AS 'MAEU1234-5'", to determine whether the cited discrepancies are valid, the Panel examined all of the documents presented in this drawing for compliance with UCP 500 and the L/C. The Panel also considered supporting documentation from both parties as well as all applicable ICC official Opinions, not just those cited by the parties.

While the explanation from the freight forwarder was informative, the Panel felt that it goes beyond the knowledge requirement or responsibility of a bank document examiner, who must examine documents on their face. The Panel also considered the Respondent's references to ISBP paragraph 28 regarding misspellings and typographical errors and in particular ICC official Opinion R 224 the Initiator's reference to official Opinion, now TA 548rev.

The Panel's position is that the bank obligation is to examine all documents on their face to determine if data required to be on the document by the L/C or UCP is in compliance with the L/C subject to UCP 500. Accordingly, as there was no requirement in the L/C nor in the UCP for the container numbers to be stated on the packing list, the packing list is to be examined against article 21 of UCP 500 as to issuer and data content and against article 13 for "inconsistency" with other required documents and data. The Panel does not find the conclusion in official Opinion 224 useful in this case, as it has no related context whereas the official Opinion TA 548rev parallels this situation and is persuasive. In the words of that Opinion, "The requirement of Article 21 of UCP 500 is not that the data content be identical, merely that the documents not be inconsistent. The key is that the data that is being portrayed is not inconsistent between documents. The credit did not require the invoice to quote the container number. Nevertheless, the invoice quoted the number but misquoted one of the figures, which was clearly a typographical error. Other key data was consistent."

Similarly in this case, (i) the L/C did not require the packing list to indicate container numbers, (ii) the number cited on the packing list, which was different from that cited on the B/L, also involved a mistype of one of the five digits, and (iii) as in the official Opinion, there was sufficient other data on the document to properly link it to the presentation, i.e., L/C number, contract number, merchandise description, name of vessel, voyage number, number of containers and weights (gross and net).

Further, the Panel finds the guidance provided by ICC official Opinion R 11 (while dated 1978 and issued under UCP 290) still relevant, as the UCP language has not changed: "The commission decided that the notion of 'consistency' referred to in Article 7 should be understood as meaning that the whole of the documents must obviously relate to the same transaction, that is to say, that each should bear a relation (link) with the others on its face ... ". In the present case, there is sufficient "linkage" to determine that this document relates to this presentation and this L/C, and therefore it is not inconsistent with the B/L.

As to the second discrepancy cited by the Respondent, namely that "THE BENEFICIARY'S STAMP SHOWING ADDRESS DIFFER FROM THAT OF THE L.C IN COMMERCIAL INVOICE, PACKING LIST AND B/L ENDORSEMENT", the Panel considered this question and finds no requirement in this L/C or in UCP 500 for the beneficiary's address on the documents to be identical in street number, street name, city, state, country or language to that in the L/C. It is clear that the German spelling of the city name refers to the same city name as the English spelling, and this should have been taken as the natural version, given the domicile of the beneficiary. However, should an examiner note such a discrepancy as "city name different", as in this case, the matter should be dropped upon clarification from the nominated or presenting bank that this is a simple translation and the same city.

Conclusion

The two discrepancies cited by the issuing bank are not valid. The documents complied with the L/C and UCP 500. Accordingly, the nominated bank is entitled to reimbursement.