Factual Summary:The judgment stated:

A. Defendant's Issuance of the Letter of Credit

Shandong Garments Import and Export Corporation (hereinafter referred to as "Shandong Garments"), a corporation of the People's Republic of China (hereinafter referred to as "China"), importing raw and subsidiary materials necessary for the manufacture of the garments from Hyosan Corporation (hereinafter referred to as "Hyosan"), applied for issuance of a letter of credit for payment of the import proceeds to Shandong Br. of the Bank of China, defendant of this case, which issued the irrevocable letter of credit (hereinafter referred to as "this L/C") with Seoul Br. of [issuer] as advising bank and with Hyosan as beneficiary as follows on Jan. 2, 1997:

L/C No. 509600200896 Commodity: 135,000YDS of Raw Materials and 91,800 PCS of Subsidiary Materials for Sewed Garments under Contract No. 96RSQ83004

L/C Amount: US$ 382,022.86 with Price Term CIF Chungdo Port Port of Loading: Korean Port Port of Destination: Chungdo Port, China

Documents Required:

1. Signed Commercial Invoices with L/C No. & Contract No. in 4 copies

2. 2/3 set of Bills of Lading

3. Insurance Documents covering 110% of Commercial Invoice amount in 3 copies

4. Packing Lists / Weight Lists in 3 copies

5. Certificates of Quality issued by the Manufacturer in 3 copies

6. Statements of Shipment Notice certifying that the Beneficiary has made the notice of shipment within 24 hours after shipment (Name of the vessel, date, quantity, weight, shipment amount, L/C No., port of loading and port of destination must be stipulated on shipment notice.)

7. Certificate certifying that 1/3 set of Bill of Lading and other shipping documents than those for proceeds payments were dispatched directly to the applicant by DHL

Expiry Date: Jan. 31, 1997 Latest Shipping Date: Jan.16, 1997 Other Conditions: Shipping documents must be presented for negotiation within 21 days after shipping date and also within expiry date. This L/C is subject to Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No.500. (hereinafter referred to as "UCP 500").

* Yang K. Kim is a Manager in the Compliance Office at Korea Exchange Bank, Seoul, Korea.

B. Transfer of the Letter of Credit to the [Beneficiary]

On Jan. 10, 1997, this L/C was transferred from Hyosan to Sungsan Yanghaeng Corp., [beneficiary] in this case, after the contract at the beginning of January, 1997 between Hyosan and the [beneficiary] where the [beneficiary] had promised to provide the raw and subsidiary materials of sewed garments exported under this L/C directly to Shandong Garments. On Jan. 15, 1997, [beneficiary] made a freight transportation contract with Dongsuh Marine Corp. where they agreed on making the consignee payable to order, Shandong Garments as notify party, Pusan port in Korea as port of loading and Chungdo Port in China as port of destination. And on the same day, [beneficiary] received full (3/ 3) set of bills of lading with the details as above from Dongsuh Marine Corp.

C. Defendant's Dishonor

After the shipment of the goods, [beneficiary] dispatched the 1/3 set of Bill of Lading and other shipping documents directly to Shandong Garments by DHL, and, on Jan. 27, 1997 they sent the certificate certifying this fact and other documents required in this L/C to [issuer] through Yoido Br. of Kwangju Bank and Seoul Br. of Deutsche Bank, demanding the payment of proceeds of this L/ C. But, on Jan 31, 1997, [issuer] dishonored the payment of the proceeds by reason that the commercial invoice and packing list didn't bear "original" mark, and shipment notice didn't have the date on it.

D. Shandong Garments's Taking Delivery of Freight

On Jan. 22 and Jan. 27, 1997, Shandong Garments took out all the goods as stated above using 1/3 original Bill of Lading and other shipping documents dispatched by [beneficiary] and consumed them.

E. [Beneficiary]'s Commencement of the Lawsuit

Under these circumstances:

[Beneficiary] instituted the lawsuit against the [issuer], maintaining as the cause of action of this case that [issuer] should pay to [beneficiary] US$ 382,022.86 and damages for delay because it was unjust for [issuer] to dishonor the payment of the L/C proceeds by reason that the commercial invoice and packing list didn't bear the "original" mark, notwithstanding that [beneficiary], after taking transfer of this L/C, demanded the payment of L/C proceeds presenting all the documents required in this L/C on Jan. 27, 1997, that is, within expiry date.

Judgment on the Merits

Regarding whether or not the shipping documents are discrepant:

In this case, the main issue was whether or not the shipping documents can be properly dishonored because the commercial invoice and packing list did not bear the "original" mark notwithstanding that they are signed by the issuers.

In this case, the main issue was whether or not the shipping documents can be properly dishonored because the commercial invoice and packing list did not bear the "original" mark notwithstanding that they are signed by the issuers.

Sub-Article 20(c) of the UCP 500 applicable to this case stipulates that credits that require multiple documents such as "duplicate", "two fold", "two copies" and the like, will be satisfied by the presentation of one original and the remaining number in copies except where the document itself indicates otherwise. Therefore, in case that the L/C requires the multiple documents, at least one original document must be presented even if the L/ C does not require the original one.

In the present case, this L/C required signed commercial invoices in 4 copies and packing lists in 3 copies, and it can be confirmed by the evidence presented that the commercial invoices and packing lists bore the issuer's signatures but not the "original" mark. Therefore, whether or not the documents which the [beneficiary] presented are in compliance with the terms and conditions of the L/C can be decided by whether or not the commercial invoices and packing lists without "original" mark can be regarded as original documents.

In this regard, there is some possibility that commercial invoices and packing lists, if they don't bear original marks on themselves, can be construed as copies not as originals, considering sub-Article 20(b) of the UCP 500 which states the following:

"Unless otherwise stipulated in the credit, banks will also accept as an original document(s), a document(s) produced or appearing to have been produced:

i. by reprographic, automated or computerized systems;

ii. as carbon copies;

provided that it is marked as original and, where necessary, appears to be signed.

A document may be signed by handwriting, by facsimile signature, by perforated signature, by stamp, by symbol, or by any other mechanical or electronic method of authentication."

However, on the other hand, commercial invoices are only the specifications for the demand for payment of goods proceeds, and not the negotiable instruments where the rights therefrom are embodied in themselves, and sub-Article 37(a)(iii) of the UCP 500 stipulates that commercial invoices don't need to be signed. And packing lists are also the documents with the similar effect as commercial invoices having no influence on [issuer's] exercise of rights by whether or not the original documents are presented, and in the actual transactions, they simply impress the seals reading "Original" on the documents stated above without any formality. Considering all the practical transactions, if the documents bear the signature by the stamps or of one's own handwriting, it would be just to treat them as original not as copies produced by reprographic system etc. according to UCP500 sub-Article 20(b), although the documents are partly made out by the reprographic or computerized systems and to construe that marking "original" on the documents is unnecessary in this case.

The ICC Banking Commission decided on July 12, 1999, relating to UCP 500 sub-Article 20(b) that it does not apply to documents that appear to be only partially produced by reprographic, automated or computerized systems or as carbon copies and that, in this regard, a photocopy ceases to be "reprographically produced" within the meaning of sub-Article 20(b) when it is also manually stamped, dated, completed or signed by the issuer of the document.


Banks assume no liability or responsibility for the genuineness or falsification of any document (UCP Article 15). Also, they do not undertake to determine whether a document is original in fact and they have only to determine whether a document appears on its face to be an original document when necessary. And when the original document must be presented, if a document appears to be original or to have been marked as original but in fact not original, its presentation may give rise to the legal question of the forged or fraudulent presentation and it will shift over to the domain of law. The opinion of the ICC Banking Commission clarified this point.

Under such assumption, this case treated the question of whether or not the banks will accept the document as consistent with the terms and conditions of the LC when the document do not bear the "original" mark.

In Korean law, an original document is construed as the document which the maker prepared for the first time that its maker represented the contents definitely. Usually it must be signed but doesn't have to be marked "original" (The Law Times, The Encyclopedia of the New Science of Law, pp.1252). From this point of view, if the commercial invoice and packing list are signed by the issuer, they must be the original documents within the meaning of the UCP, and the opinion of the ICC Banking Commission can be construed as reflecting the legal meaning of the original document (eg. Part of the decision reads, "... For example, a document printed on plain paper from electronically stored text is acceptable without regard to sub-Article 20(b), if it appreas to be an original.). This judgment reaffirmed and adopted this construction properly.

Although the binding force of this judgment is somewhat limited, as it is the judgment of the Court of Appeal, not that of the Supreme Court, it should be persuasive as a standard of the interpretation of what is the original document in the case of LC transaction pending in the Korean court to some extent.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.