ABSURD

[POLTERD.]

I think in most of the cases 14f must be read in connection with 14d. I dont' agree with their exclusion.
The "data" and the issuer of any docs except transport doc.,insurance doc. and comm.inv., when not specified under l/cs,are checked based on international practice,the role of the document itself and common-sense.
When you have any doubts you must ask issuing bank for clarification.
Regards,
Bogdan

[AsifMahmoodButt]

Thanks Bogdan
We are now getting somewhere and I agree with your comments.
We would need to approach the IB for further clarifications rather than try to decide too much by ourselves.
Regards
Jason

[JimBarnes]

Maybe I should expand on my earlier post predicting that LCs will be issued under UCP600 that exclude or modify Article 14d (no data conflict).

My prediction is based on my experience with standby LCs and ISP98 Rule 4.03 (examination for inconsistency is required only to the extent provided in the standby). To the extent that SLCs are issued under UCP600 rather than ISP98, separate examination of documents or data in a document for inconsistency (or conflict) is problematic.

Under the usual commercial LC issued subject to UCP, the LC effects payment of the purchase price for the sale and contemporaneous delivery of goods or services against commercial documents evidencing that kind of transaction. There is no equivalent story line for standbys. For example, the amount demanded under the SLC may be different from the amount(s) claimed in accompanying documents.

Many standbys require so little that examination for conflict or inconsistency cannot matter. But because UCP600 expands the scope of this separate examination, I predict that SLC beneficiaries will insist that Article 14d be excluded (so as to exclude any risk of an objection based on data conflict). Alternatively they may recite the substance of ISP98 Rule 4.03 so as to override most of 14d.

Of course, the required documents must otherwise comply. In this regard, SLCs rarely require "default" or "performance" certificates or other documents without spelling out the text of the document, so I do not expect SLC beneficiaries to worry much about application of 14e or f to their SLCs, but I wouldn't be shocked if exclusion of 14d, e, and f became routine for SLCs.

Maybe some commercial LCs will exclude or, more likely, limit the scope of 14d. That is a separate topic for another day.

Regards, Jim Barnes

[VincentMaulella]

I love it! The issues, this is just one such issue, raised but ignored by the drafting group may have come home to haunt UCP600. As I recall, at the May 2007 BC meeting in Vienna, members vociferously commented that paragraph 2 of Article 35 (guess you will have to buy the Commentary, for insights as to why Article 35 did not use sub-article identification, perhpas to make reference to it more difficult) did not accurately reflect the ICC Official Opinion on which it was supposedly based. In particular, that decision noted that the issuer had a right to request (I prefer “require”) copies of documents so that it might determine compliance for itself. How many issuers have received documents under cover letters claiming that documents comply only to examine documents and find obvious discrepancies?
While it may be ABSURD to delete the entire article, it may be irresponsible not to modify the second paragraph to protect one’s customer, the applicant, or to protect oneself, if doing a back to back. Of course, it may not matter if reimbursement has already been obtained from a reimbursing bank, may need another modification clause. Please don't expect an ongoing dialog; I only visit here when someone points me to a particular issue which I find fun. Enjoy.

[NigelHolt]

Vin,

A rare honour indeed!

The problem I have with requiring copy documents is that it obliges the nominated bank to take copies of all documents prior to despatch. This would increase processing costs in a field that -I believe- already struggles to be profitable.

Regards, Jeremy

[DanielD]

I do not think that 14d should be excluded in the case of a sblc as this sub article could fall within the frame of article not applicable with sblc according to art.1. It is unfortunate that UCP art. 1 does not specify the articles applicable or not despite many requests and I wonder why.
Daniel

[KimChristensen]

Dear all,

As for article 35 ¶ 2:

I am not saying that this issue could not have been handled better in the UCP 600 – but if I am to defend the drafting group, it would be to say that they have been trying to state the overall rule.
If/when the documents are really lost in transit there will be a lot of practical issues to consider – depending on the actual case, and that would most likely be quite impossible to regulate in a rule book. E.g.:

* When are the documents actually lost? After one week, one month, one year – or when the courier company gives up searching, or?

* Was the presentation in fact complying? I would think that it would be natural to provide copy documents – but (as Jeremy suggest) unfair to require that banks keep copies of all documents.

* Have the instructions to the nominated bank been complied with; e.g. how they are to be dispatched to the issuing bank (one lot, two lots, courier etc.)

* How is the applicant to get hold of the goods? Depending on the transport document presented.

My personal view is that this rule is logical and correct – the tricky part is how the practice will look like – and most likely this will be determined through the “usual” channels; the commentary, the opinions etc.

One of the sources available at this point in time for establishing a practice is the UpSkill600 – which reads:

Quote
The nominated bank is provided protection in that the issuing or confirming bank must reimburse if the documents complied. This will, in all probability, necessitate the nominated bank providing copies of the documents to the issuing or confirming bank in order that they may determine that the documents did comply at the time of sending.
Unquote

Have a nice day.

Best regards
Kim

[VincentMaulella]

In my view, this was an unnecessary sub-provision. The incidences of lost documents are rare enough and could well have been handled by the existing ICC Opinion. I wonder how many National Committtees voted to revise this portion of UCP -- this one had to be an issue for the drafting committee or one member, clearly was not an issue for the world at large -- until now.

[KimChristensen]

Dear Vin,
Point accepted.
Best regards
Kim

[VincentMaulella]

I see that another issue was raised re sub-Article 14(b). FYI, I have it from a good source, that, a law firm in Hong Kong, recommended to beneficiaries to delete 14(d). Personally, I would have added 14(f) or if I were a power bene, modify along the lines of: Notwithstanding sub-Article 14.d and 14.f the standard of examination of documents against each other shall be limited to determining that the documents taken as a whole belong to one and the same presentation.
The standard of examination of documents to insure that they fulfill the function of the required document shall be limited to determining compliance with the issuer and data content expressly required by the LC.
The standard of examination of documents against international standard banking practice shall be limited to those practices articulated in ICC Publication No. nnn.
If it ain't broke, don't break it -- unless of course you can profit from selling publications: UCP600- 25 euros; ISBP- 25 euros; Commentary- ??euros; 525- ?? euros; upskill- 200 euros; seminars- upwards of 700 euros per day, etc., etc. Then, once you have killed LC; create a new less complicated lc with new rules or no rules. Enjoy!