Parties

Initiator: Company D

Respondent: Bank F

Background and transaction

The Initiator is the seller under an export contract of frozen meat dated 23 December 2005. The contract provides for payment to occur 20 days after the date of the CMR and requires the buyer to arrange for demand guarantees to be issued in favour of the seller guaranteeing the payment of the price.

Upon the application of the buyer, the Respondent issued in favour of the Initiator four demand guarantees: GA-AA-1234-0 for a maximum amount of EUR 50,000, GA-AA-1256-0 for a maximum amount of EUR 100,000, GA-AA1278-0 for a maximum amount of EUR 100,000, and GA-AA-1290-0 for a maximum amount of EUR 42,000. The guarantees were advised by Bank H in Country G.

All four guarantees were drafted in similar wording, except for the amount and the expiry dates. The guarantees stated in relevant parts: "We, Bank F ( ... ), hereby undertake irrevocably and unconditionally to pay you, upon first demand, irrespective of the validity and legal effects of the above mentioned contract and waiving all rights of objection and defence arising thereof any amount up to but not exceeding [the maximum guarantee amount] or a part thereof after receipt of your duly signed request for payment stating that you have delivered to the buyer the goods in conformity with the above mentioned contract and you have not received the payment at maturity date (20 days after the CMR date) and the amount claimed is still due to you.

Your request for payment as stated above must be accompanied by the following documents:

1. original of seller's signed fully or partially unpaid commercial invoice;

2. copy for sender of international truck consignment note (CMR) consigned to Messrs R Ltd ( ... ) place of delivery City S, Country B, marked 'freight paid' or 'carriage paid', duly dated, signed and stamped by the carrier and the shipper.

Present guarantee shall be reduced prorate by each payment effected thereunder.

This guarantee is valid until [expiry date] in City S and expires in full and automatically should your written request for payment together with the above mentioned accompanying documents and the authentication of the bank had not reached us at our above address before or on that date irrespective of whether it is an working day or not. "

All four guarantees are stated to be subject to ICC Uniform Rules for Demand Guarantees (URDG), ICC Publication No. 458.

The Initiator presented a demand for payment under each of the four guarantees.

Demand for payment under guarantee GA-AA-1234-0

On 31 October 2006, the Initiator claimed payment under guarantee GA-AA-1234-0. The demand for payment was accompanied by the required documents and statement of breach.

On 3 November 2006, the Respondent replied by informing the Initiator that the invoices accompanying the demand had all been paid by the Respondent and contended that the demand should be considered "null and void". The Initiator disagreed with this statement.

On 23 November 2006, the Respondent informed the Initiator of four discrepancies it had identified in the demand and rejected the demand. Those discrepancies are the following:

1. the invoices do not mention the contract number referred in the guarantees;

2. the description of the goods on the invoices do not match their description in the guarantees;

3. the place of taking over the goods as indicated in the CMRs is discrepant;

4. CMR shows two different sender names.

Demand for payment under guarantee GA-AA-1256-0

On 21 November 2006, the Initiator claimed payment under guarantee GA-AA-1256-0. The demand for payment was accompanied by the required documents and statement of breach.

In successive SWIFT messages sent between 27 November 2006 and 30 November 2006, the Respondent replied by informing the Initiator that a number of invoices accompanying the demand had been paid.

On 30 November 2006, the Respondent informed the Initiator of five discrepancies it had identified in the demand and rejected the demand. Those discrepancies are the following:

1. the invoices do not mention the contract number referred in the guarantees;

2. the description of the goods on the invoices do not match their description in the guarantees;

3. the place of taking over the goods as indicated in the CMRs is discrepant;

4. one CMR was not signed by the carrier;

5. the truck number shown on one invoice is C6238 PK/C 1234EH and on the corresponding CMR C6238 KP/C 1234EH;

Demand for payment under guarantee GA-AA-1278-0

On 21 November 2006, the Initiator claimed payment under guarantee GA-AA-1278-0. The demand for payment was accompanied by the required documents and statement of breach.

In successive SWIFT messages sent between 27 November 2006 and 29 November 2006, the Respondent replied by informing the Initiator that a number of invoices accompanying the demand had been paid.

On 30 November 2006, the Respondent informed the Initiator of four discrepancies it had identified in the demand and rejected the demand. Those discrepancies are the following:

1. the invoices do not mention the contract number referred in the guarantees;

2. the description of the goods on the invoices do not match their description in the guarantees;

3. the place of taking over the goods as indicated in the CMRs is discrepant;

4. the truck number shown on one invoice is C6238 PK/C 1234EH and on the corresponding CMR C6238 KP/C 1234EH;

Demand for payment under guarantee GA-AA-1290-0

On 21 November 2006, the Initiator claimed payment under guarantee GA-AA-1290-0. The demand for payment was accompanied by the required documents and statement of breach.

In successive SWIFT messages sent between 27 November 2006 and 28 November 2006, the Respondent replied by informing the Initiator that a number of invoices accompanying the demand had been paid.

On 30 November 2006, the Respondent informed the Initiator of five discrepancies it had identified in the demand and rejected the demand. Those discrepancies are the following:

1. the invoices do not mention the contract number referred in the guarantees;

2. the description of the goods on the invoices do not match their description in the guarantees;

3. the place of taking over the goods as indicated in the CMRs is discrepant;

4. one CMR was not signed by the carrier;

5. one CMR is not stamped.

On 4 April 2007, the Initiator applied for a DOCDEX decision. On 2 May 2007, the Respondent submitted an Answer indicating that it is not bound by the decision to be ultimately issued by the Panel.

Issue(s)

The Initiator seeks a DOCDEX decision to decide whether the rejection of the demand for payment is wrongful on the grounds stated in the Respondent's messages of rejection, to wit:

1. the invoices do not mention the contract number referred in the guarantees;

2. the description of the goods on the invoices do not match their description in the guarantees;

3. the place of taking over the goods as indicated on the CMRs is inconsistent with the same place indicated on the invoices;

4. CMRs not signed by the carrier;

5. inconsistency in the truck number shown on an invoice: C6238 PK/C 1234EH, and on the corresponding CMR: C6238 KP/C 1234EH;

6. CMR shows two different sender names.

Initiator's claim

In the Request dated 4 April 2007, the Initiator contends that the discrepancies listed by the Respondent as grounds for the rejection of the demand are wrongful. In particular, the Initiator states:

1. the guarantees did not require the invoices to mention the contract number;

2. the description of the goods on the invoices is more detailed than their description in the guarantees, but is not inconsistent with such description;

3. the port of discharge on the invoices and the loading place showed on the CMRs (port of Thessaloniki) is not inconsistent;

4. even if one CMR was unsigned, there is no doubt about the issuer of the CMR;

5. the truck number shown on invoices (C6238 PK/C 1234EH instead of C6238 KP/C 1234EH) is an obvious typing mistake;

6. the different names for the sender on the CMR do not show a different issuer, as Mr V is the appointed broker for Company M.

Respondent's reply

In its Answer dated 2 May 2007, the Respondent reiterated the discrepancies already notified to the Initiator. Specifically, the Respondent indicated that:

1. the documents accompanying the demands: (i) were not in conformity with the guarantees, (ii) were inconsistent amongst themselves, and (iii) were inconsistent with the statement required under the guarantees. The Respondent indicated that those discrepancies did not allow it to link the documents with the relevant contracts;

2. the description of the goods on the invoices do not match their description in the guarantees;

3. the invoices showed Thessaloniki as "port of discharge" only without showing the place of loading. Accordingly, they are inconsistent with the accompanying CMRs indicating Thessaloniki as place of loading/taking over the goods;

4. Two CMRs were not signed by the carrier. This does not allow the bank to evidence the receipt of the goods by the carrier as required in the guarantees;

5. the truck number shown on two invoices is different from that evidenced by the CMRs (C6238 PK/C 1234EH instead of C6238 KP/C 1234EH);

6. two CMRs are not signed by the sender/shipper.

Documents submitted by the parties

Documents submitted by the Initiator

1. Request dated 4 April, 2007 (3 pages)

2. Statement dated 4 April, 2007 (1 page)

3. L/G No. GA-AA-1234 and related correspondence/documentation (31 pages)

4. L/G No. GA-AA-1256 and related correspondence/documentation (36 pages)

5. L/G No. GA-AA-1278 and related correspondence/documentation (32 pages)

6. L/G No. GA-AA-1290 and related correspondence/documentation (16 pages)

7. Extract of Contract No.45678/2 (1 pages)

8. Copies of Bank H credit advices (17 pages)

9. Copies of SWIFT correspondence exchanged between Bank F and Bank H (25 pages)

10. Copy of Company M Ltd fax declaration dated 7 December 2006 (1 pages)

11. Copies of e-mail correspondence exchanged betweens and buyer (3 pages).

Documents submitted by the Respondent

1. Answer dated 2 May, 2007 (4 pages)

2. L/G No. GA-AA-1234 and related correspondence/documentation (45 pages)

3. L/G No. GA-AA-1256 and related correspondence/documentation (31 pages)

4. L/G No. GA-AA-1278 and related correspondence/documentation (31 pages)

5. L/G No. GA-AA-1290 and related correspondence/documentation (25 pages)

6. Comparative file of invoices (37 pages)

7. Comparative file of some payment orders vs. credit advices (14 pages)

Analysis

URDG article 9 provides: "All documents specified and presented under a Guarantee, including the demand, shall be examined by the Guarantor with reasonable care to ascertain whether or not they appear on their face to conform with the terms of the Guarantee. Where such documents do not appear so to conform or appear on their face to be inconsistent with one another, they shall be refused."

URDG article 16 provides: "A Guarantor is liable to the Beneficiary only in accordance with the terms specified in the Guarantee and any amendment(s) thereto and in these Rules, and up to an amount not exceeding that stated in the Guarantee and any amendment(s) thereto."

URDG sub-article 20(a) provides:

"a) Any demand for payment under the Guarantee shall be in writing and shall (in addition to such other documents as may be specified in the Guarantee) be supported by a written statement (whether in the demand itself or in a separate document or documents accompanying the demand and referred to in it) stating:

i) that the Principal is in breach of his obligation(s) under the underlying contract(s) or, in the case of a tender guarantee, the tender conditions; and

ii) the respect in which the Principal is in breach.

1. Is the absence of the reference to the contract number in the invoice a valid reason to reject the demands for payment?

The guarantees require the demand to be accompanied by:

(i) a statement stating that the seller has delivered to the buyer the goods in conformity with "the above mentioned contract" and has not received the payment at maturity date (20 days after the CMR date) and the amount claimed is still due to you;

(ii) original of seller's signed fully or partially unpaid commercial invoice; and

(iii) copy for sender of international truck consignment note (CMR) consigned to Messrs R Ltd. ( ... ) place of delivery City S, Country B, marked "freight paid" or "carriage paid", duly dated, signed and stamped by the carrier and the shipper.

None of the four guarantees require any additional statement, reference or documents. In particular, the guarantees require nowhere other than in the statement of breach in (i) above that a reference to the contract be made.

Accordingly, it is the Opinion of the DOCDEX Panel that a reference to the contract in the invoices or in the CMRs, where made, is a surplusage and, as such, should not be examined by the guarantor for the purpose of determining the conformity of the demand.

2. Is the difference between the description of the goods on the invoices and their description in the guarantees a valid reason to reject the demands for payment?

The guarantees refer to the underlying contract as covering the supply of frozen meat. However, the guarantees do not require the statement or the other documents accompanying the demand to refer to the goods object of the contract.

It is the Opinion of the DOCDEX Panel that the more detailed description of the goods in the invoices and CMRs does not contradict and is not in conflict with their description in the guarantee. Accordingly, this is not a discrepancy that justifies the rejection of the demands.

3. Is the place of taking over the goods as indicated in the CMRs a discrepancy?

The submitted invoices show Thessaloniki as port of discharge. The CMRs show the same as place of taking over the goods. Neither of these indications is required in the guarantees. Nonetheless, there is no contradiction between the two indications, given that each of the two documents serves a different purpose.

Accordingly, this is not a discrepancy that justifies the rejection of the demands.

4. Is the absence of the signature of the carrier on two CMRs a valid discrepancy?

The guarantees require the copies of CMRs to be "duly dated, signed and stamped by the carrier and shipper". The Respondent contends that two CMRs are not signed by the carrier, to wit, the CMRs presented under Guarantee GA-AA-1256-0 and Guarantee GA-AA-1290-0. The Initiator pointed out that they were stamped by the carrier which, according to the Initiator, leaves no doubt that the carrier has, in fact, received the goods.

The DOCDEX Panel considers that the absence of signature where the guarantees expressly require the same is a discrepancy that justifies the rejection of the demand accompanied by the unsigned CMRs.

5. Is the difference between the truck number shown on one invoice and the one on the corresponding CMR C6238 KP/C 1234EH a valid discrepancy?

Viewed in the context of the relevant document and the guarantee, the DOCDEX Panel considers that the difference in the number is not an inconsistency in the sense referred to in URDG article 9. This decision is reached notably in light of the fact that the invoice is not expected to indicate the truck number and that no such requirement is stated in the guarantees anyway.

6. Does the fact that the CMRs show two different sender names a valid discrepancy?

The CMRs presented under guarantee GAA-AA-1234-0 show a different sender in each box: "Company M" and "Mr V". The Initiator pointed out that Mr V is appointed custom broker for Company M and produced a statement from Company M to that effect.

The DOCDEX Panel believes that this difference in the name of the sender in the respective boxes in one and the same document amounts to an inconsistency that justifies the rejection of the demand accompanied by the relevant CMR.

Conclusion

The Panel of Experts unanimously makes the following decision under the ICC DOCDEX Rules:

1. the absence of the reference to the contract number in the invoice is not a discrepancy that justifies the rejection of the demands for payment;

2. the difference between the description of the goods on the invoices and their description in the guarantees is not a discrepancy that justifies the rejection of the demands for payment;

3. the difference between the place of taking over the goods as indicated in the CMRs and the port of discharge in the invoices is not a discrepancy;

4. the absence of the signature of the carrier on two CMRs is in breach of the requirements of the guarantees and justifies therefore the rejection of the demand for payment under Guarantee GA-AA-1256-0 and Guarantee GA-AA-1290-0;

5. the difference between the truck number shown on one invoice and the one on the corresponding CMR C6238 KP/C 1234EH is not a discrepancy that justifies the rejection of the demands for payment;

6. the fact that the CMRs show two different sender names is a discrepancy that justifies the rejection of the demand for payment under Guarantee GA-AA-1234-0.