Parties

Claimant: Bank C (Nominated Bank)

Respondent: Bank H (Issuing Bank)

Background and transaction

The Claimant opined that it was obvious that the additional wording 'no hides' on the beneficiary's invoice was an editing error when the invoice was created.

Shipment of '8 containers of Wet Salted Cow Hides at 7475 pcs on 158 plts with net weight of 165,525kgs' was clearly evidenced on the invoice under heading 'Description of Goods (General)'.

Similar shipment data was also evidenced and supported in documents such as: Packing list, Bill of Lading, Certificate of Origin, Insurance Certificate, Shipping Advice, Declaration and Certification issued by the Agricultural, Fisheries and Forestry Department.

As per the Claimant´s views, it was indisputable that the shipment of 7475 pcs of Wet Salted Cow Hides took place on 12 April 2015. Additional data of 'no hides' on the beneficiary's invoice had no meaning in this context according to the Claimant, rather than a simple editing error.

In a SWIFT message MT799, in which the Claimant refuted the claimed discrepancy, the Claimant also stated the following arguments in support of its stance:

• As per ISBP 745, paragraph C5: "An invoice showing a description of the goods, services or performance that corresponds with that in the credit may also indicate additional data in respect of the goods, services or performance provided that they do not appear to refer to a different nature, classification or category of the goods, services or performance."

• Based on the above, the Claimant considered the wording of "no hides" as additional data, which had no meaning in this context and had no bearing on the different nature, classification or category of the goods.

• All other documents (including packing list, b/l's, certificate of origin, insurance certificate, shipping advice, declaration and certification issued by agriculture, fisheries and forestry department) bore consistent information relating to the goods shipped, hence not withstanding the presence of the wording of "no hides" there was no conflict in data.

• As per ISBP 745, paragraph A23: "A misspelling or typing error that does not affect the meaning of a word or the sentence in which it occurs does not make a document discrepant." The Claimant believed that the additional wording of "no hides" was clearly a typing error which should not have been there as part of the goods description but was erroneously inserted.

The Respondent in its SWIFT message MT799 stated that: "we may find it difficult to verify the actual meaning of "no hides" but is does not imply that it has no meanings."

The Respondent claimed that because of the placement of the wording of "no hides" between "description of goods - ox hides" and "quality of goods - no ticks, no grubs, no humps" it considered the "no hides" as quality of goods to describe the goods.

Furthermore, the Respondent opined that because the wording of "no hides" appeared after the goods description of "ox hides", it treated this wording as additional data which bore a different nature (i.e. the documentary credit required a shipment of "ox hides" but the invoice describes the goods as "ox hides" with "no hides".

In a summary, the Respondent believed that: 1) the additional words "no hides" in the invoice did not correspond to the description in the credit because the additional data created the confusion/misunderstanding that "no" ox hides had been shipped or that the invoices goods were "not" the ox hides required by the credit; and 2) the additional words "no hides" did not qualify as acceptable typographical error because its existence created misunderstanding.

Issues

1. DOCDEX decision was required to determine whether a simple editing error on beneficiary's invoice was sufficient to constitute grounds for non-payment despite UCP 600 article 14 and ISBP 745 paragraphs A23 and C5. Whether the issuing bank, in it's professional practice, should have accepted this minor error on the beneficiary's invoice, rather than calling it out as a 'discrepancy'? To put it more precisely: Did the additional wording of "no hides" in the invoice cause the description of goods not to correspond with that in the credit?

2. Did the additional wording of "no hides" in the invoice create a conflict in data in relation to other data in that invoice and/or in the credit?

Analysis

The issue was whether the addition of the wording of "no hides" in the description of goods within the commercial invoice created a discrepancy.

As per UCP 600 sub-article 14 (a): "A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank must examine a presentation to determine, on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation."

UCP 600 sub-article 18 (c) states: "The description of the goods, services or performance in a commercial invoice must correspond with that appearing in the credit."

Furthermore, all data in all presented required documents are subject to the general rule stated in UCP 600 sub-article 14 (d): "Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit."

The Respondent claimed the following discrepancy:

" + INVOICE - SHOWING ´NO HIDES' NO TICKS, NO GRUBS, NO HUMPS I/0 'NO TICKS, NO GRUBS, NO HUMPS' UNDER DESCRIPTION OF GOODS."

Consequently, the alleged discrepancy was evidently that the description of the goods in the commercial invoice did not correspond to that in the credit and/or the words "NO HIDES" conflicted with other data in the invoice and/or the credit.

There were, therefore, two main questions to be dealt with:

1) Did the additional wording of "no hides" in the invoice cause the description of goods not to correspond with that in the credit?

2) Did the additional wording of "no hides" in the invoice create a conflict in data in relation to other data in that invoice and/or in the credit?

Issue 1

The presented commercial invoice showed correctly all details stated in the credit (i.e. Amendment No. 1) in relation to the description of goods, i.e. trade term, number of pieces packed in 8 containers, number of pieces in each container, weight, selection, origin, the contract number, the applicant´s ref. number, as well as the description as "NSW BRINECURED F AND T OX HIDES" and qualifications as "NO TICKS, NO GRUBS, NO HUMPS".

The description of the goods, as above, fully corresponded to the description of goods in the credit and also in other presented documents.

However, the additional words "NO HIDES" were inserted between the description of goods "NSW BRINECURED F AND T OX HIDES" and the qualifications requested by the credit: "NO TICKS, NO GRUBS, NO HUMPS".

ISBP 745, paragraph C5 states: "An invoice showing a description of the goods, services or performance that corresponds with that in the credit may also indicate additional data in respect of the goods, services or performance provided that they do not appear to refer to a different nature, classification or category of the goods, services or performance. For example, when a credit requires shipment of "Suede Shoes", but the invoice describes the goods as "Imitation Suede Shoes", or when the credit requires "Hydraulic Drilling Rig", but the invoice describes the goods as "Second Hand Hydraulic Drilling Rig", these descriptions would represent a change in nature, classification or category of the goods."

The words "NO HIDES" in the invoice, as described above, apparently referred to a different nature, classification or category of the goods. The words "NO HIDES" evidently negate the nature of the goods as described as obviously there is a difference between "NSW BRINECURED F AND T OX HIDES NO TICKS, NO GRUBS, NO HUMPS" and "NSW BRINECURED F AND T OX HIDES NO HIDES NO TICKS, NO GRUBS, NO HUMPS" type of goods.

It could be argued that the insertion of the words "NO HIDES" was caused by a typing error.

ISBP 745, paragraph A23 states: "A misspelling or typing error that does not affect the meaning of a word or the sentence in which it occurs does not make a document discrepant. For example, a description of the goods shown as "mashine" instead of "machine", "fountan pen" instead of "fountain pen" or "modle" instead of "model" would not be regarded as a conflict of data under UCP 600 sub-article 14 (d). However, a description shown as, for example, "model 123" instead of "model 321" will be regarded as a conflict of data under that sub-article."

As evident, the paragraph A23 of ISBP 745 does not suggest that any misspelling or typing error is acceptable (i.e. any error of this nature). It only states that a mere occurrence of a misspelling or a typing error in a stipulated document does not make the document discrepant (on its own). What matters is whether such a typing error or a misspelling affects the meaning of a word or the sentence in which it occurs in such a way that it would cause a discrepancy (e.g. it creates a conflict in data or it would give rise to the description of the goods not to correspond with the description of the goods in the credit).

The experts opined that inclusion of the words "NO HIDES" in the description of goods in the commercial invoice created a doubt whether the item shipped was "Hides" or "No Hides", i.e. (completely) different goods than the goods described in the credit. In the context of examination of documents, the document-checker was not expected to go beyond what is appearing on the face of invoice/documents and the conflict arising from the documents alone.

As the commercial invoice, on its face, stated: 'No Hides", it appeared that "no ox hides" were shipped or that the goods shipped were not the "ox hides" requested by the credit. Consequently, in the opinion of the experts, the description of goods in the commercial invoice did not correspond with that appearing in the credit.

Issue 2

It had been evidently claimed by the Respondent that the additional words of "no hides" created a conflict in data within the description of goods in the commercial invoice and in the credit.

The credit, as amended (Amendment no. 2), required shipment of the "NSW BRINECURED F AND T OX HIDES", therefore, the argument that the words "NO HIDES" create a conflict in data is to be considered.

The commercial invoice showed in the box designated as "Description of goods (General)":

8 CONTAINERS OF WET SALTED COW HIDES

7475 PCS ON 158 PLTS

REF. H2124

NET WEIGHT: 165,525 KGS

The box described as "(Item) Description of Goods" showed all details stated in the credit, however, in addition, it also showed "NO HIDES" as follows:

NSW BRINECURED F AND T OX HIDES

NO HIDES NO TICKS, NO GRUBS, NO HUMPS

The words of "NO HIDES" were apparently in conflict with the description of goods appearing in the commercial invoice as: "WET SALTED COW HIDES" and "NSW BRINECURED F AND T OX HIDES". As discussed above, the expression "NO HIDES" suggested that no hides or hides of another nature were shipped, therefore creating a conflict in data.

The words "NO HIDES" were, for the same reason, in conflict with the description of the goods as: "NSW BRINECURED F AND T OX HIDES" stated in the credit.

It could be again argued that the insertion of words "no hides" was evidently a typing error. On the other hand, it did not actually matter whether the data in question was inserted intentionally or by an error, being it a human error, typing error, typographical error, misspelling or the like.

As ISBP 745, paragraph A23 explains, a misspelling or typing error that does not affect the meaning of a word or a sentence in which it occurs does not make a document discrepant. This provision is, for the purposes of dealing with the issue at hand, to be interpreted in the context of the general rule stated in UCP 600 sub-article 14 (d). Consequently, the principle is that if a misspelling or typing error affects the meaning of a word or a sentence in which it occurs in such a way that it causes a conflict in data as formulated in UCP 600 sub-article 14 (d) then (and only then) it makes the document discrepant.

Whether there was or not a conflict among data in a document and other data in that document, any other stipulated document or the credit is to be determined in context of the credit (the requirements of the credit), the document itself (above all its function) and international standard banking practice.

In a summary, in the opinion of the experts, the contradiction among data in the commercial invoice and the credit (words "no hides" v. "nsw brinecured F and T ox hides" and/or "wet salted cow hides") did constitute "a conflict in data" as reflected in UCP 600 sub-article 14 (d).

Conclusion

The discrepancy claimed by the Respondent was valid. The additional words "no hides" in the invoice rendered the description of the goods in the invoice as not corresponding to the description of goods in the credit; and also created a conflict in data as described in UCP 600 sub-article 14 (d).

This was a majority decision.