Notes

Only the Initiator submitted documents related to this decision. This decision was rendered without the participation of the Respondent.

Parties

Initiator: Company W (Beneficiary)

Respondent: Bank D (Issuing Bank)

Background and transaction

A credit was issued by the Respondent subject to UCP 600 and notified to the Initiator on 10 June 2013.

• Date and place of expiry: 5 December 2013 in the country of the Respondent.

• Goods: Equipment supply for power plant.

• Trade terms as stated in the credit: CIF ....

• Documents: among other documents: "Certificate of origin in one original and 3 copy(ies)" was requested (field 46A).

• Available with any bank by negotiation

• Draft at sight

• Latest date of shipment: 20 November 2013.

• Period for presentation: 14 days.

• Confirmation instructions: without.

During the validity of the credit the expiry date was extended to 16 December 2013 and the latest shipment date to 30 November 2013.

On 20 November 2013, the Initiator shipped the goods and sent documents to the Respondent through their advising bank.

On 29 November 2013, the Respondent received the documents.

On 5 December 2013, the Respondent provided the Initiator with a refusal of documents via the advising bank as follows:

"Cert. of origin showing column 9 FOB value as USD xxx whereas invoice showing CIF value for the same amount i.e. USD xxx for which is conflicting. The above discrepancy is/are not acceptable to us and we refuse to honour the bill we are holding the documents until we receive a waiver from the applicant and agree to accept it or receive further instructions from the presentor prior to agreeing to accept a waiver".

On 13 January 2014, after an exchange of dispute messages, the Respondent advised the Initiator that they returned the documents for their full and complete discharge.

Issues

The Initiator requested the Centre to give a decision on whether the same price for CIF and FOB was a conflict as defined in UCP 600 and ISBP 745, and whether the discrepancy raised by the Respondent was invalid and, if so, that the Initiator should have been paid under the credit.

Analysis

The discrepancy raised by the Respondent was: "Cert. of origin showing column 9 FOB value as USD xxx whereas invoice showing CIF value for the same amount i.e. USD xxx for which is conflicting".

The 'conflict' raised by the Respondent was not based upon a comparison of the same type of data (trade terms "CIF ...." vs. "FOB ....") but from the assumption that the amount linked to the trade term "CIF ...." should not be the same as that linked to the word 'FOB' (which is not necessarily the trade term FOB) mentioned in column 9 of the Certificate of Origin.

In accordance with UCP 600 sub-article 14 (d), banks compare data. Comparing a 'trade term' with a 'word' is not a justified comparison of data.

It cannot be implied that the word 'FOB' in column 9 of the Certificate of Origin was a 'trade term' primarily because it was not followed by the name of a port, as should be the case when it is meant to signify a trade term and a related value. The specific heading in column 9 of the Certificate of Origin was "Gross weight or other quantity and value (FOB)" and the related field was completed by the following data: "3957724KGS G.W. USD 8938290.98". In this context, FOB in brackets - with no mention of a port - was a commercial expression indicating the value of the goods as stated by the issuer of the certificate which, in this case, was denoted as the same as that under "CIF ...." in column 7 of the certificate. Absent a credit requirement, it is irrelevant whether these values are different or equal.

The value declared in column 9 of the Certificate of Origin was not an indication that the transaction was made under any trade term other than "CIF ....". "CIF ...." was duly mentioned in the Certificate of Origin under Column 7, which was headed: "Number and type of packages, description of products (including quantity where appropriate and HS number of the importing party)".

The trade term required by the credit ("CIF ....") was correctly stated in the Certificate of Origin and was appropriately mentioned with the description of goods. It is not the responsibility of banks to investigate any commercial calculation in respect of the amount indicated in column 9, nor is there any requirement to check why such value has been indicated in that column.

It was noted that the validity of the statements made by the Initiator was confirmed by the Certificate of Origin, which stated in field 12: "It is hereby certified on the basis of control carried out, that the declaration by the exporter is correct."

In summary:

1) The trade term "CIF ...." in the Certificate of Origin was compliant with the credit.

2) The word "FOB" in column 9 of the Certificate of Origin did not indicate that the transaction had any trade term other than "CIF ....".

3) The data appearing in column 9 of the Certificate of Origin was not required by the credit and UCP 600 .

4) The discrepancy raised by the Respondent was not valid due to the fact that it originated from a comparison of different type of data: value of the trade term "CIF ...." vs. value of "Gross weight or other quantity and value (FOB)" (not "FOB" followed by the name of a port of loading). Absent a credit requirement, it is irrelevant whether these values are different or equal.

Conclusion

The discrepancy raised by the Respondent was invalid. The Respondent must honour the credit.

This decision was rendered unanimously.