Parties

Initiator 1: Company R (Beneficiary)

Initiator 2: Bank B (Negotiating Bank)

Respondent: Bank S (Issuing Bank)

Background and transaction

Two credits contained two stipulations in SWIFT field 47A as follows:

A) "All required documents must indicate our L/C number and date".

B) "Any minor typing mistake which will not affect quality, quantity, price, value and expiry date and shipment date shall be acceptable".

Documentary credit no. 1 subject to UCP latest version, issued on 7 March 2013 in favour of Initiator 1.

• Date and place of expiry: 21 May 2013 in country of Initiator 2.

• Available with any bank by negotiation.

• Draft: at sight (later amended to 150 days after sight).

• Documents in summary: 7 separate sets of documents to be presented with the following documents for each set: Invoice 3 original + 2 copies, full set B/L + 3 copies, Packing list 3 original + 2 copies, two different beneficiary's certificates.

• Confirmation: "without".

After the presentation on time of the prescribed 7 sets of documents the Respondent refused the documents on 27 May 2013 with a SWIFT MT 734 stating: "INVOICE NOT INDICATE LC NUMBER AND DATE. HOLDING DOCS AS PER ART. 16C-III B OF UCP 600".

Initiator 2 opposed that: a) missing L/C date and number was a typing error, while L/C number and date were correctly shown on other 6 invoices and 128 other documents (including copies) of the presentation, b) the lack of credit number and date was covered by the special condition in the credit where "typing mistake which will not affect quality, quantity [...] shall be acceptable", c) ISBP Para 25 indicates a practice where misspelling or typing error does not make a document discrepant, and d) Banking Commission Opinions R289 and R635 state that a credit number on a document is only to assist in tracing documents should they go astray and even the misquoting of a credit number is not grounds for refusal of documents.

On 29 May 2013, the Respondent replied stating that the question was not related to a typing error but was a true discrepancy due to the failure of an explicit and specific requirement of the credit in MT700, field 47A (Additional Conditions) irrespective of the use of such data.

On the same date, 29 May 2013, the Respondent returned the documents to Initiator 2.

Documentary credit no. 2 subject to UCP latest version, issued on 15 March 2013 in favour of the Initiator 1.

• Date and place of expiry: 21 May 2013 in country of Initiator 2.

• Available with any bank by negotiation.

• Draft: at sight (later amended to 150 days after sight).

• Documents in summary: 10 separate sets of documents to be presented with the following documents for each set: Invoice 3 original + 2 copies, full set B/L + 3 copies, Packing list 3 original + 2 copies, two different beneficiary's certificates.

• Confirmation: "without".

After the presentation on time of the prescribed 10 sets of documents, the Respondent refused the documents on 24 May 2013 with a SWIFT MT 734 stating: "INVOICE INDICATED DIFFERENT NAME OF VESSEL FROM THAT OF BILL OF LADING (Shan Dong Da i/o Shan Dong Hai Da). HOLDING DOCS AS PER ART. 16C-III B OF UCP 600".

Initiator 2 opposed that: a) the other documents in the same set of the invoice including B/L and shipping advice indicated the vessel correct name, b) all other 9 sets of document (totalling 115 documents including copies) indicated the vessel correct name, c) the missing "Hai" was a typing error and ISBP paragraph 25A applied and also the specific stipulation in the credit which made acceptable "typing mistake which would not affect quality, quantity [...]", d) the Banking Commission opinion R698 states that "a typographical error, when read in context with the other presented documents, does not create a discrepancy".

On 29 May 2013, the Respondent replied stating that it was not possible to consider the failure of "Hai" as a typographical error because the "error" leads to another name that may belong to another vessel.

On the same date, 29 May 2013, the Respondent returned the documents to Initiator 2.

Issues

1. Was the missing of L/C number and date on invoice - while it was correctly typed in all other documents of the same presentation - a discrepancy in terms of UCP 600 and International Standard Banking Practice?

2. In the circumstances outlined above, was the miss-typing "Hai" from the vessel name only in the invoice - while it was correctly typed in all other documents of the same presentation - considered a discrepancy under UCP 600 and International Standard Practice?

Analysis

In both credits, certain data, as required by the credit, was not shown in the documents: L/C number and date in the first credit; a part of the vessel name in the second. ISBP 681 paragraph 25 only applies to "misspelling" or "typing errors" and not to missing data. The examples in ISBP 681 paragraph 25 are clear on what is intended for "misspelling" or "typing error". This position is not different in ISBP 745.

Issue 1

ICC Opinion R289 stated: "Regarding the question of the L/C number missing from the Rail Waybill, it has been the previous Opinion of the ICC that the requirement is only to assist in tracing documents should they go astray. Since the documents were received by the issuing bank, the absence of the reference number, which in itself neither adds nor detract from the purpose of the document, would seem an irrelevance, and not valid grounds for rejection". This Opinion further stated: "Regarding the L/C number, however, the ICC has on numerous occasion stated that it disapproves of the practice, especially where transport documents are concerned, and now again reiterates this view".

ICC Opinion R578 stated: "It should be pointed out that the request for insertion of L/C numbers is usually at the instigation of the issuing bank to facilitate the collation of documents when one or more go astray. The ICC has commented in the past that a refusal based on the absence of a L/C number on a document, where requested in the L/C, is not grounds for refusal".

The same position was stated in ICC Opinion R635: "As referred to in ICC Opinion 289, a requirement for the insertion of a credit number on a document is only to assist in tracing documents should they go astray. Since the documents were received by the issuing bank and the issuing bank is applying the presented bill of lading under the correct credit number, it would seem to be an irrelevance, and not valid grounds for refusal."

More recently, this position had been reiterated in ICC Opinion TA.774, which re-emphasised the findings of Opinion R578.

The ICC Banking Commission, in these opinions, has stated that a missing L/C number in documents is not a reason to dishonor an otherwise complying presentation. As stated within these opinions, the L/C number is used primarily to facilitate the Respondent in applying the documents to the correct credit.

The only exception would be if there was a need for the L/C number to appear on the documents as a requirement of national or customs regulations; which appears not to be the case in this circumstance.

Based on the statements in the referenced opinions, the misquoting or absence of the L/C number and date were not grounds for discrepancy, even if required by the credit.

Provided that the Respondent can relate the presentation of documents to the applicable credit, this was sufficient.

Issue 2

10 sets of documents were presented, with 10 bills of lading, 10 invoices and 10 shipping advices: all of them showing the correct vessel name "MV Shan Dong Hai Da" apart from one invoice in which the word "Hai" is missing.

The presentation of documents, collectively, referred to shipment on one vessel as indicated in the bills of lading.

UCP sub-article 14 (d) states: "Data in a document, when read in context with the credit, the document itself, and international standard practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit."

The absence of the word "Hai" in one invoice was not considered to be a conflict. There was sufficient evidence in the documents as a whole to reflect compliance with the credit.

Conclusion

The discrepancies under issues 1 and 2 were not valid. The Respondent must honour.

This decision was rendered unanimously.