Parties

Claimant: Company C (Beneficiary)

Respondent: Bank B (Issuing Bank)

Background and transaction

The Claimant claimed that the Respondent wrongly rejected the documents presented to the Respondent through the Advising Bank.

The credit required presentation of a detailed packing list showing, inter alia, the steel grade. The words "steel grade" were not shown on the packing list.

The Claimant submitted that the Respondent was not justified in rejecting the documents presented under the credit.

The Claimant also submitted that the Advices of Refusal were not in compliance with the requirements of UCP 600

Issues

1. Whether the advices of refusal sent from the Respondent to the presenting bank on 7 June 2013 were in compliance with sub-articles 14 (b) and 16 (d) of UCP600?

2. Whether the advices of refusal sent from the presenting bank to the Claimant on 10 June 2013 were in compliance with sub-articles 14 (b) and 16 (d) of UCP 600?

3. Whether the Respondent was justified to refuse the presentation although the steel grade (not the words "steel grade") was actually shown in the packing list as required by the credit?

4. Whether the Respondent had given a single notice to the Claimant in accordance with sub-article 16 (c) of UCP 600, in particular, whether sub-article 16 (c) (iii) requirements have been satisfied?    

Documents submitted

Submitted by Claimant:

1. Request for a DOCDEX Decision submitted by the Claimant dated 12 June 2015.

2. Copy of LC with presenting bank's covering advice.

3. Copy of LC amendment.

4. Copies of MT734's.

5. Copies of fax messages from presenting bank to the Claimant in respect of the advices of refusal.

6. Copies of SWIFT messages from presenting bank to the Respondent disputing discrepancy.

7. Copy of Claimant's presentation letter to the presenting bank.

Submitted by Respondent

1. Copy of LC issued by the Respondent with covering letter from the presenting bank.

2. Copies of three packing lists.

3. ICC's Official Opinion R211.

4. ICC's DOCDEX Decision No. 323.

5. SWIFT manual on MT 734.

6. ICC's Official Opinion TA779rev.

7. ICC's Official Opinion R660/TA636rev.

8. ICC's Official Opinion R320.

9. High Court Judgment - Claimant v Respondent dated 28 August 2014

10. England and Wales High Court Decision - Bulgrains & Co Limited v Shinan Bank dated 24 July 2013.

11. Copies of presenting bank's presentation schedules.

Analysis

Issue 1

Sub-article 14(b) of UCP 600 states: "A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of five banking days following the day of presentation to determine if a presentation is complying."

Sub-article 16(d) of UCP 600 states: "The notice required in sub-article 16 (c) must be given by telecommunication or, if that is not possible, by other expeditious means no later than the close of the fifth banking day following the day of presentation."

The presenting bank presented documents to the Respondent under cover of their schedule dated 29 May 2013 (Wednesday). The Respondent received documents on 3 June 2013 (Monday). The notice of refusal SWIFT MT734 sent on 7 June 2013 (Friday) to the presenting bank met the requirement of sub-article 16 (d) of UCP which requires the notice of refusal to be sent by telecommunication and was also sent within the time limit required by sub-article 14 (b).

Issue 2

The documents were sent to the Respondent by the presenting bank. It is not certain whether they acted on their nomination under the credit from the documentation reviewed. The presenting bank transmitted the advices of refusal sent by the Respondent to the Claimant on 10 June 2013. UCP 600 does not govern the forwarding of these messages to the Claimant.

Issue 3

Sub-article 14 (a) states that a bank must examine a presentation on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation. The credit required presentation of the following document:

"DETAILED PACKING LIST IN 1 ORIGINAL AND 1 COPY SHOWING STEEL GRADE, NET WEIGHT AND GROSS WEIGHT AND PACKING: MILL'S STANDARD EXPORT PACKING"

A document checker, when examining a document, must ensure that it meets the requirement of the credit, UCP 600 in this case, and does not conflict with similar data in any other stipulated documents. The detailed Packing List was required to show, inter alia, the "STEEL GRADE".

There was no ambiguity in this requirement and the document checker, when examining the document, must ensure that on the basis of the document alone it complies with the credit requirement. The packing list presented included "KSD3504 SD400" under the description of the goods. However, the words "STEEL GRADE" were not included. A document checker would not be expected to know whether the inclusion of "KSD3504 SD400" represented the steel grade and the Issuing Bank was justified in refusing the presentation.

Issue 4

The Respondent sent separate refusal notices via SWIFT MT734 to the presenting bank for each drawing on 7 June 2013. UCP 600 article 16 (c) states: "When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter." Each notice mentioned the discrepancy "P/L not showing steel grade". UCP 600 sub-article 16 (c) also details what should be included in the notice of refusal.

Sub-article 16 (c) (iii) details the actions that the bank refusing the documents must take. The bank must state that it is: (i) holding the documents pending further instructions from the presenter or, (ii) holding the documents until a waiver is received from the applicant or further instructions from the presenter, (iii) returning the documents or, (iv) acting in accordance with instructions previously received from the presenter.

In an MT 734, mandatory field 77B is used to denote the action taken by the Issuing Bank. In this case, option "NOTIFY" was used to represent UCP 600 sub-article 16 (c) (iii).

The requirements of sub-article 16 (c) (iii) of UCP 600 had been fulfilled.

Conclusion

Issue 1

The advices of refusal were sent in compliance with the requirements of articles 14 (b) and 16 (d) of UCP600. This decision was unanimous.

Issue 2

The forwarding of the Respondent's advices of refusal by the presenting bank to the Claimant was not governed by UCP. This decision was unanimous.

Issue 3

The Respondent was justified in refusing the presentations. This decision was a majority decision.

Issue 4

The requirements of sub-article 16 (c) (iii) had been fulfilled. This decision was unanimous.

Overall, this was a majority decision.