Parties

Initiator: Bank T

Respondent: Bank H

Background and transaction

Respondent issued, via SWIFT, an irrevocable letter of credit, subject to UCP 600. The beneficiary presented documents through the Initiator to the Respondent. The Respondent dishonoured the presentation, citing a single discrepancy: "DESCRIPTION OF GOODS IN B/L DIFFER FROM INVOICE AND L/C". An exchange of messages between the Initiator and Respondent cites paragraph 108 of ICC Publication No. 681, International Standard Banking Practice (ISBP), and the Initiator further notes sub-article 14 (e) of UCP 600.

The Initiator represents the description of the goods in the letter of credit is not required to be replicated in full in each document, noting the respondent's letter of credit did not require a full merchandise description in each document and the contents of sub-article 14 (e) of UCP 600 and paragraph 58 of ISBP publication 681.

The Respondent, in its exchange of messages with initiator, states: "OUR LC SPECIFICALLY CALLS FOR STAINLESS STEEL COIL SLITTED EDGE, WHEREAS THE B/L ONLY MENTIONED STAINLESS STEEL, WHICH DOES NOT REFLECT WHAT IS REQUIRED UNDER THE SAID LC. "

All information for consideration under this case has been provided by the Initiator. The Respondent has elected not to take part in the decision process.

Issue

Is the discrepancy alleged by the issuing bank, i.e., "Description of goods in B/L differ from invoice and L/C" valid?

Decisions taken

The letter of credit was sent by the respondent via SWIFT. Field 45A (DESCRIPTION OF GOODS AND/OR SERVICES) reads: "PRIME QUALITY AISI 304 STAINLESS STEEL COIL SLITTED EDGE CIF KUCHING, SARAWAK".

The requirement for the bill of lading in Field 46 of the same SWIFT message reads: "BILL OF LADING MADE OUT TO ORDER OF (RESPONDENT) NOTIFY THE ABOVENAMED (SIC) APPLICANT AND MARKED FREIGHT PREPAID."

The bill of lading stated:

"SHIPPER'S LOAD, COUNT AND SEALED"
3 X 20' CONTAINER SAID TO CONTAIN:
8 BUNDLES
STAINLESS STEEL

Analysis

Sub-article 14 (e) of UCP 600 states: "In documents other than the commercial invoice, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit."

Paragraph 108 of International Standard Banking Practice (ISBP) ICC Publication 681 states: "A goods description in the bill of lading may be shown in general terms not in conflict with that stated in the credit."

Paragraph 58 of International Standard Banking Practice (ISBP) ICC Publication 681 states, in part: "The description of goods, services or performance in the invoice must correspondent with the description in the credit. There is no requirement for a mirror image."

Decision

Neither the UCP 600, international standard banking practice nor the letter of credit require the merchandise description as stated in the letter of credit and in the invoice to appear in the bill of lading.

A reading of UCP 600 sub-article 14 (e) and paragraph 108 of ISBP makes clear that if a merchandise description is stated in the bill of lading, it may be stated in general terms.

The bill of lading may contain only a general description of goods. "STAINLESS STEEL" represents such a general description, and there is no conflict between "Prime quality Aisi 304 stainless steel coil slitted edge" stated in the credit and invoice and "stainless steel" stated on the bill of lading ("Prime quality Aisi 304" being an indication of quality, and "coil slitted edge" being more or less a form into which the steel is shaped).

NOTE: The initiator further noted ISBP paragraph 58 (stated above) in its position. It is not necessary to address this because it relates to the invoice. The document at issue is the bill of lading.

Conclusion

In accordance with the terms and conditions of the credit, UCP 600 and international standard banking practice, the discrepancy alleged by the Respondent is not valid. The presentation is complying in this respect. Accordingly, the Respondent is obliged to honour its payment obligation under the credit.

The decision of the DOCDEX Panel is unanimous.