Dear all,
I would like to ask whether you have come across letters of credit requiring a certificate to the effect that the carrying vessel is seaworthy and the certificate presented is evidencing: The vessel is seaworthy before and at the beginning of the journey. Would you consider the wording as sufficient or would you see it as a curtailment of the requirement?
Best regards Marianne Wabnik
The vessel is seaworthy before and at the beginning of the j
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MargaretaSkoglund
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PradeepT_old
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The vessel is seaworthy before and at the beginning of the j
Dear Marianne,
I have come across many many LCs calling for a certificate evidencing seaworthiness of the carrying vessel. In fact, during the mid-80's, it was obligatory for banks in India to incorporate such a condition in their LCs. I understand that a vessel which is not seworthy is not normally covered by an insurance company should something happen to the vessel, e.g., non-seaworthiness leading to the sinking of the vessel. May be hypothetical in approach, in such an event, a claim may not be honoured and hence such a clause in the LC. As regards your instant query, I wonder as to why the shipping company should issue a "qualified" certificate regarding the sea-worthiness of the vessel. Obviously, the vessel which is sea-worthy before or at the beginning of her journey, may not necessarily remain seaworthy during or after commencement of the journey. Then why such a qualilifcation ? Could it then lead to a rejection of a claim if something happened to the cargo or to the vessel..? It would be difficult to maintain whether such a certificate presented was discrepant as it surely certifies that at the time of beginning of its journey, the vessel was seaworthy. But then as a document checker, I would rather reject the certificate as it is not categorical about the vessel's seaworthiness during or after commencement of the journey. I would like to have some other thoughts from fellow members of the discussion forum.
Pradeep
I have come across many many LCs calling for a certificate evidencing seaworthiness of the carrying vessel. In fact, during the mid-80's, it was obligatory for banks in India to incorporate such a condition in their LCs. I understand that a vessel which is not seworthy is not normally covered by an insurance company should something happen to the vessel, e.g., non-seaworthiness leading to the sinking of the vessel. May be hypothetical in approach, in such an event, a claim may not be honoured and hence such a clause in the LC. As regards your instant query, I wonder as to why the shipping company should issue a "qualified" certificate regarding the sea-worthiness of the vessel. Obviously, the vessel which is sea-worthy before or at the beginning of her journey, may not necessarily remain seaworthy during or after commencement of the journey. Then why such a qualilifcation ? Could it then lead to a rejection of a claim if something happened to the cargo or to the vessel..? It would be difficult to maintain whether such a certificate presented was discrepant as it surely certifies that at the time of beginning of its journey, the vessel was seaworthy. But then as a document checker, I would rather reject the certificate as it is not categorical about the vessel's seaworthiness during or after commencement of the journey. I would like to have some other thoughts from fellow members of the discussion forum.
Pradeep
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MargaretaSkoglund
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The vessel is seaworthy before and at the beginning of the j
Dear Pradeep,
Thank you very much indeed for your kind attention - highly appreciated. As far as I can see ICC has not published any opinion on the subject, perhaps an issue to raise. I do agree with you that a claim could be rejected in case something happens to the cargo and I'm sharing you viewpoint, could be considered
a discrepancy be an issuing bank.
I would rather see that the shipping company removed the crucial sentence in question.
Best regards
from Marianne
Thank you very much indeed for your kind attention - highly appreciated. As far as I can see ICC has not published any opinion on the subject, perhaps an issue to raise. I do agree with you that a claim could be rejected in case something happens to the cargo and I'm sharing you viewpoint, could be considered
a discrepancy be an issuing bank.
I would rather see that the shipping company removed the crucial sentence in question.
Best regards
from Marianne
The vessel is seaworthy before and at the beginning of the j
Marianne,
I cannot see:
1. that a certificate stating that the vessel is seaworthy before and at the beginning of the voyage (covered by the bill of lading presented) of itself breaches the requirement for a certificate to the effect that the carrying vessel is seaworthy.
2. how a certificate can attest to the sea worthiness of the vessel during the voyage from the POL to the POD as this is a future ‘event’ (unless issued after the arrival of the goods of course which presumably is not a requirement of the credit).
Regards, Jeremy
I cannot see:
1. that a certificate stating that the vessel is seaworthy before and at the beginning of the voyage (covered by the bill of lading presented) of itself breaches the requirement for a certificate to the effect that the carrying vessel is seaworthy.
2. how a certificate can attest to the sea worthiness of the vessel during the voyage from the POL to the POD as this is a future ‘event’ (unless issued after the arrival of the goods of course which presumably is not a requirement of the credit).
Regards, Jeremy
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AbdulkaderBazara
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The vessel is seaworthy before and at the beginning of the j
We have to look at two issues here:
1) Document Examination:
The document examiner should not look beyond what is required by the certificate and should honour if otherwise in order. Refer to Article UCP 4, 13 & 21.
2) Risk Management / Security Interest.
This is a different issue and should be taken care of before the issuance of the letter of credit. The Applicant and / or the Issuer must ensure that the certificate called under the LC incorporates the specific requirements the certificate has to represent be it related to requirements by the insurance policy covering the shipment or that of the authorities of the port of discharge.
Therefore it depends where you stand. If you are the nominated paying bank or negotiated bank, you should not look beyond the requirement in the letter of credit if you opted to pay or negotiated if otherwise in order. However, if you are the Issuer you may need to satisfy yourself that other dependencies for importation related to port regulations or insurance cover are met.
1) Document Examination:
The document examiner should not look beyond what is required by the certificate and should honour if otherwise in order. Refer to Article UCP 4, 13 & 21.
2) Risk Management / Security Interest.
This is a different issue and should be taken care of before the issuance of the letter of credit. The Applicant and / or the Issuer must ensure that the certificate called under the LC incorporates the specific requirements the certificate has to represent be it related to requirements by the insurance policy covering the shipment or that of the authorities of the port of discharge.
Therefore it depends where you stand. If you are the nominated paying bank or negotiated bank, you should not look beyond the requirement in the letter of credit if you opted to pay or negotiated if otherwise in order. However, if you are the Issuer you may need to satisfy yourself that other dependencies for importation related to port regulations or insurance cover are met.
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KimChristensen
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The vessel is seaworthy before and at the beginning of the j
Dear Abdulkader
Valid points!
I am not sure however what is you ”conclusion”; regardless if you are the nominated or issuing bank, there is a credit requirement – and a presented document to satisfy this requirement. Roughly you could say, that either it complies or it does not (knowing of course that documentary credits are the “land of grey zones”
I am very much in line with Jeremy here.
Such certificate need not be identical – and somehow it is logical that the seaworthiness is determined before and at the beginning of the journey.
Best regards
Kim
[edited 3/1/2006 10:19:39 AM]
Valid points!
I am not sure however what is you ”conclusion”; regardless if you are the nominated or issuing bank, there is a credit requirement – and a presented document to satisfy this requirement. Roughly you could say, that either it complies or it does not (knowing of course that documentary credits are the “land of grey zones”
I am very much in line with Jeremy here.
Such certificate need not be identical – and somehow it is logical that the seaworthiness is determined before and at the beginning of the journey.
Best regards
Kim
[edited 3/1/2006 10:19:39 AM]
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AbdulkaderBazara
- Posts: 256
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The vessel is seaworthy before and at the beginning of the j
Dear Kim,
My conclusion: Issuer has to request the right document in the LC. However once the credit is issued, it doesn't make difference on who examines the document (Issuer or Nominated Bank). The examiner should go by the terms and conditions of the credit to either accept or reject the document. He / she should not be influenced by other factors beyond what is required in the LC.
I’m also very much in agreement with Jeremy.
regards
Abdulkader
My conclusion: Issuer has to request the right document in the LC. However once the credit is issued, it doesn't make difference on who examines the document (Issuer or Nominated Bank). The examiner should go by the terms and conditions of the credit to either accept or reject the document. He / she should not be influenced by other factors beyond what is required in the LC.
I’m also very much in agreement with Jeremy.
regards
Abdulkader