We have been receiving a government certificate of origins for 10 yrs with a manual written certificate number at the top. An overseas bank has now come back to advise this is a discrepancy advising that "The handwritten information requires an authentication by the issuer as other details are typewritten"
Is there any case studies or any opinions/ruling in relation to this matter.
Certificate of Origin
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MichaelFlanagan
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We have once faced the same problem since our Cantonal Chamber of Commerce also manually number the certificate. We have rejected the discrepancy arguing that the fact that the number is manually written does not change anything to the content of the document and is therefore irrelevant. In those cases, good sense should prevail over pedantic burocraty
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larryBacon
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This rejection is so nonsensical that I don't think that there are any Official Opinions about it.
My suggestion is to examine the DC in question. Many will have the reference no. of the advising bank handwritten on the original DC. If so, does the issuing bank consider the DC to be discrepant ? If not, why does it consider the C/O to be discrepant ?
The rationale in both these cases is that the addition of a reference no. in whatever form does nothing to alter the essential nature of the document. It is merely additional information which may be useful if needed for checking fraud etc, but otherwise has no bearing on the check done under the UCP.
Laurence
My suggestion is to examine the DC in question. Many will have the reference no. of the advising bank handwritten on the original DC. If so, does the issuing bank consider the DC to be discrepant ? If not, why does it consider the C/O to be discrepant ?
The rationale in both these cases is that the addition of a reference no. in whatever form does nothing to alter the essential nature of the document. It is merely additional information which may be useful if needed for checking fraud etc, but otherwise has no bearing on the check done under the UCP.
Laurence
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I do not know if there are any opinions on the subject. My personal thoughts, without responsibility, are:
I have sympathy with both sets of views expressed above.
An alternative approach is that as a result of your bank’s day to day credit operations you know that government certificates of origin have a manual written certificate number at the top. Therefore, you have applied this knowledge in determining documents compliance, with reasonable care, in accordance with sub-Article 13a. Thus, the issuing bank, when apprised of this fact, is no longer entitled to treat the c/o as discrepant (assuming it ever was in the first place).
I assume your bank is the nominated bank and that therefore the credit is subject to Australian law and that the Australian courts would require such an approach, as the English courts do (see Kredietbank Antwerp v Midland Bank Court of Appeal 1999; the ‘Griffith Inspectorate issue’), in the event of litigation between you and the issuing bank on the subject.
[edited 6/13/02 11:09:13 AM]
I have sympathy with both sets of views expressed above.
An alternative approach is that as a result of your bank’s day to day credit operations you know that government certificates of origin have a manual written certificate number at the top. Therefore, you have applied this knowledge in determining documents compliance, with reasonable care, in accordance with sub-Article 13a. Thus, the issuing bank, when apprised of this fact, is no longer entitled to treat the c/o as discrepant (assuming it ever was in the first place).
I assume your bank is the nominated bank and that therefore the credit is subject to Australian law and that the Australian courts would require such an approach, as the English courts do (see Kredietbank Antwerp v Midland Bank Court of Appeal 1999; the ‘Griffith Inspectorate issue’), in the event of litigation between you and the issuing bank on the subject.
[edited 6/13/02 11:09:13 AM]
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I fully agree with the opinion that this is not a discrepancy. The fact that the document is completed by hand or that it shows different typing fonts etc. is, by itself, no reason to reject such a document.
Pavel Andrle
Pavel Andrle
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PGauntlett
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Opinion R339 may help.
In any event, if an on board notation on a b/l doesn't need authenticating it would be illogical that an addition of a serial number to a C/O does.
In any event, if an on board notation on a b/l doesn't need authenticating it would be illogical that an addition of a serial number to a C/O does.
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STUPID THINGS DONE BY DOCUMENT CHECKERS
The fact that a document examiner considers that a hand written certificate number in a certificate issued by a chamber of commerce is discrepant only indicates that in order to do the jobs well, training on banking alone is not enough. They should be trained by professionals from other trades as well.
ORDER OF STRENGTHS OF TEXT WORDS IN AN INSURANCE POLICY
Why we say this? If the document checkers knew something about insurance, they would not make such a stupid mistake. For instance, in case of conflicts or inconsistency amongst the data content of an insurance policy, the hand written text would override the words in the margin, which would in turn override the typewritten words that would in turn override the pre-printed text. This is an insurance law concept that would apply readily to other trades as well since the underlying reasons are across industries.
FABRICATED DISCREPANCIES CANNOT STAND IN FRONT OF PROFESSIONAL CONSULTANTS
In our ten-year consultancy career, we have seen a lot of such stupidity done by those document checkers. Some of them should not appear to be so stupid but they just try their best to help their applicant customers to avoid payments, particularly in the commodity trades. Sometimes they have to fabricate discrepancies to keep their customers.
For most of the cases, with our intervention, the parties have to resolve the disputes out of court, particularly when the bankers are aware that their reasons behind the discrepancies are stupid, like the one we are handling in this query.
www.tolee.com
[edited 6/13/02 8:37:35 PM]
The fact that a document examiner considers that a hand written certificate number in a certificate issued by a chamber of commerce is discrepant only indicates that in order to do the jobs well, training on banking alone is not enough. They should be trained by professionals from other trades as well.
ORDER OF STRENGTHS OF TEXT WORDS IN AN INSURANCE POLICY
Why we say this? If the document checkers knew something about insurance, they would not make such a stupid mistake. For instance, in case of conflicts or inconsistency amongst the data content of an insurance policy, the hand written text would override the words in the margin, which would in turn override the typewritten words that would in turn override the pre-printed text. This is an insurance law concept that would apply readily to other trades as well since the underlying reasons are across industries.
FABRICATED DISCREPANCIES CANNOT STAND IN FRONT OF PROFESSIONAL CONSULTANTS
In our ten-year consultancy career, we have seen a lot of such stupidity done by those document checkers. Some of them should not appear to be so stupid but they just try their best to help their applicant customers to avoid payments, particularly in the commodity trades. Sometimes they have to fabricate discrepancies to keep their customers.
For most of the cases, with our intervention, the parties have to resolve the disputes out of court, particularly when the bankers are aware that their reasons behind the discrepancies are stupid, like the one we are handling in this query.
www.tolee.com
[edited 6/13/02 8:37:35 PM]
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A typically forthright, and unambiguous, contribution from T.O.
Given our previous discussions I will not comment on his (and I imagine, my) now well known (to ‘veteran’ Forum participants) views as to the level of knowledge a ‘credit banker’ should have.
Where I would comment is on the apparent assertion that the document checkers have been ‘stupid’ here, or elsewhere, or that they are not infrequently motivated by a desire to protect their customer or bank by raising spurious discrepancies. The fact is that the documentary credit is a high operational risk product. In fact, to me it as the most risky ‘product’ offered by banks, from an operational point of view. Very large sums can turn on quite small details, as credit litigation over the years more than amply demonstrates, I believe, with the potential to wipe out a bank’s credit earnings for many years past/to come. Therefore, I believe it is only natural that bank document checkers should take a very cautious approach when examining documents under any credit, particularly one for a large amount.
Therefore, while I do not believe the discrepancy raised is ‘valid’, I can nonetheless understand it being raised given the high risk environment in which credit operations are conducted. Therefore I personally would not automatically be too disdainful towards, or questioning of the motives of, the raisers of this particular discrepancy or other debateable discrepancies.
[edited 6/14/02 11:11:11 AM]
Given our previous discussions I will not comment on his (and I imagine, my) now well known (to ‘veteran’ Forum participants) views as to the level of knowledge a ‘credit banker’ should have.
Where I would comment is on the apparent assertion that the document checkers have been ‘stupid’ here, or elsewhere, or that they are not infrequently motivated by a desire to protect their customer or bank by raising spurious discrepancies. The fact is that the documentary credit is a high operational risk product. In fact, to me it as the most risky ‘product’ offered by banks, from an operational point of view. Very large sums can turn on quite small details, as credit litigation over the years more than amply demonstrates, I believe, with the potential to wipe out a bank’s credit earnings for many years past/to come. Therefore, I believe it is only natural that bank document checkers should take a very cautious approach when examining documents under any credit, particularly one for a large amount.
Therefore, while I do not believe the discrepancy raised is ‘valid’, I can nonetheless understand it being raised given the high risk environment in which credit operations are conducted. Therefore I personally would not automatically be too disdainful towards, or questioning of the motives of, the raisers of this particular discrepancy or other debateable discrepancies.
[edited 6/14/02 11:11:11 AM]
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larryBacon
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Jeremy,
You cannot have a foot in both camps ! At one point you say that you believe the discrepancy not to be valid, but later regard it as a debateable discrepancy. Which is it ?
While I would not expect any bank to go on the record to admit that the practice of setting out to find spurious discrepancies at the behest of the applicant exists, the facts speak volumes. Some bankers have been honest enough to admit this to me off the record.
Regarding the highest risks to banks, I think that dubious honour goes to their staff - Nick Gleeson, John Rusnak et al.
Laurence
You cannot have a foot in both camps ! At one point you say that you believe the discrepancy not to be valid, but later regard it as a debateable discrepancy. Which is it ?
While I would not expect any bank to go on the record to admit that the practice of setting out to find spurious discrepancies at the behest of the applicant exists, the facts speak volumes. Some bankers have been honest enough to admit this to me off the record.
Regarding the highest risks to banks, I think that dubious honour goes to their staff - Nick Gleeson, John Rusnak et al.
Laurence
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DimitriScoufaridis
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When examining a certificate of origin there are quite a few things to consider, e.g. the issuer of the document, the signing authority, certification requirements [e.g. for imports into Saudi Arabia, such certificate has to be either issued by the supplier and certified by the Chamber of Commerce or Industrial Union of the exporting country or the U.S. – Saudi Arabian Business Council (for goods of U.S. origin) or issued by the Chamber of Commerce, and legalized by any Saudi Arabian Embassy or Consulate] and its contents (e.g. country of origin and description of goods).
Michael,
In your case it appears that all of the above requirements have been met. If this is the case and taking into consideration articles 13(a), 20 & 21 too, then it is my opinion that such a discrepancy is immaterial and should not have been raised.
We have seen quite a few banks being unable to distinguish between what is a material discrepancy and what is not. This is dangerous especially if the intention is to invent or manufacture discrepancies aiming at non-payment or discounted payment!
Michael,
In your case it appears that all of the above requirements have been met. If this is the case and taking into consideration articles 13(a), 20 & 21 too, then it is my opinion that such a discrepancy is immaterial and should not have been raised.
We have seen quite a few banks being unable to distinguish between what is a material discrepancy and what is not. This is dangerous especially if the intention is to invent or manufacture discrepancies aiming at non-payment or discounted payment!