Parties

Initiator: Company G

Respondent: Bank I

Background and transaction

On 6 July 2011, the Respondent issued a letter of credit ("L/C") for USD 114,240 in favour of the Initiator available by negotiation with any bank. The L/C required presentation of the following documents:

• Signed commercial invoice in duplicate

• Full set of clean on board ocean bills of lading made out to the order of the Respondent marked "Freight Prepaid" and "Notify Applicant"

• Packing list in duplicate

When documents were received by the Respondent, they were refused due to the following discrepancy: "to applicant" was not mentioned on invoice according to UCP 600 sub-article 18 (a) (2), the invoice must be made out in the name of applicant.

Issues

Was the discrepancy valid?

Initiator's claim

The Initiator wishes to determine if the refusal of documents by the Respondent is appropriate with regard to UCP 600.

Respondent's reply

The Respondent did not submit a reply in this matter.

Documents submitted by the Initiator

(i) A copy of the advising bank's notification letter dated 6 July 2011 to which a copy of the issuing bank's MT 700 establishing the L/C also dated 6 July 2011 is attached

(ii) A copy of the original commercial invoice

(iii) A copy of the packing list

(iii) A copy of the bill of lading

(iv) A copy of the SWIFT MT734 dated 17 August 2011

Analysis

Was the invoice was compliant with the requirements of the credit and UCP 600?

The credit called for "Signed Commercial Invoice in duplicate" with no other conditions or requirements mentioned.

UCP 600 article 18 relates to commercial invoices, and sub-article 18 (a) (ii) requires that "A commercial invoice must be made out in the name of the applicant (except as provided in sub-article 38 (g)).

Reference to sub-article 38 (g) above is not relevant as this L/C was not transferable.

The document presented is named "Commercial Invoice". It shows the Initiator's name as "shipper/exporter", the issuing bank's name as "consignee" and the applicant's name as the "Notify Party", which is the party the carrier must notify when the goods arrive at the port of destination. A notify party is not the debtor of an invoice. It is often the applicant, but may not necessarily be so; in many cases the notify party is the issuing bank or a forwarder acting on behalf of the buyer.

Accordingly, the commercial invoice is not correctly made out in the name of the applicant.

Conclusion

The rejection by the issuing bank/Respondent is valid. The Panel of Experts was unanimous in its Decision in this case.