Art 21 states:
‘When documents other than transport documents, insurance documents and commercial invoices are called for, the Credit should stipulate by whom such documents are to be issued and THEIR WORDING OR DATA CONTENT. If the credit does not so stipulate, banks will ACCEPT SUCH DOCUMENTS AS PRESENTED, provided that their data content is not inconsistent with any other stipulated document presented.’ [emphasis added]
However, if I understand correctly, the Banking Commission approved version of ISBP states:
‘The content of a document must appear to fulfil the function of a required document.’ (para 14 in rev4, last sentence).
If a bank does not need to concern itself with a document’s data content (other than its inconsistency with other documents) per Article 21, logic would seem to suggest a bank would not need to concern itself with if a document appears to fulfil the function of the document called for. Therefore, my impression is that ISBP contradicts UCP in this respect. Am I missing something? If not, do others agree that Art 21 must take precedence over this aspect of ISBP?
ART 21 & ISBP
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PGauntlett
- Posts: 153
- Joined: Fri Apr 05, 2019 5:25 pm
ART 21 & ISBP
Jeremy, in this instance I think that ISBP have got it spot-on. In the recent past I have rejected docs that are not what they say e.g. l/c calls for a Cert of Quality without specifying an issuer. The beneficiary issues the doc headed as required, showing description of goods but making no mention as regards quality of goods.
Phil
ps check first part of your last para-it could have been written by John Prescott (as could my ramblings above)!
Phil
ps check first part of your last para-it could have been written by John Prescott (as could my ramblings above)!
ART 21 & ISBP
Phil,
Thanks for taking the time to express your views.
Yes, I can see the opening sentence of my last para is less than elegant in its construction.
I can accept that Article 21 does require a document, that falls within its ambit, to have ‘data content’. However, from its wording, I cannot see how Article 21 permits a bank to concern itself with that ‘data content’ given the Article requires a bank to ‘accept [the] document as presented’.
The only argument that I can think of to justify your approach, given the wording of Article 21, is that by specifying a ‘Certificate of Quality’, by the use of the word ‘Quality’ the credit has stipulated the ‘data content’ of the document. However, to me, a problem arises when the document description uses language that is not found in everyday usage. For example, ‘phytosanitary certificate’. I, for one, would not know what was the stipulated ‘data content’.
An alternative argument is that Article 21 is simply unreasonable or untenable, as it is written, and therefore it would not be interpreted by a court in the way that its wording suggests it ought to be. Consequently, banks are obliged to ignore it. Perhaps this is the approach of the ISBP drafters?
Any other thoughts would be welcome.
Jeremy
Thanks for taking the time to express your views.
Yes, I can see the opening sentence of my last para is less than elegant in its construction.
I can accept that Article 21 does require a document, that falls within its ambit, to have ‘data content’. However, from its wording, I cannot see how Article 21 permits a bank to concern itself with that ‘data content’ given the Article requires a bank to ‘accept [the] document as presented’.
The only argument that I can think of to justify your approach, given the wording of Article 21, is that by specifying a ‘Certificate of Quality’, by the use of the word ‘Quality’ the credit has stipulated the ‘data content’ of the document. However, to me, a problem arises when the document description uses language that is not found in everyday usage. For example, ‘phytosanitary certificate’. I, for one, would not know what was the stipulated ‘data content’.
An alternative argument is that Article 21 is simply unreasonable or untenable, as it is written, and therefore it would not be interpreted by a court in the way that its wording suggests it ought to be. Consequently, banks are obliged to ignore it. Perhaps this is the approach of the ISBP drafters?
Any other thoughts would be welcome.
Jeremy
ART 21 & ISBP
Hi Jeremy,
I have to say that when I read your post, my first reaction was that there was a contradiction between the 2 documents.
However, having read the texts a few more times and seen Phil's post, I don't believe that there is any contradiction - ISBP merely offers an extension to
the logic of UCP that does indeed reflect international banking practice.
As you say, a Certificate of quality should look like/appear to fulfil the function of a Certificate of Quality,
similarly a packing list should contain packing details and so on.
This is what the ISBP is saying - if you ask for a packing list you get something that appears to be a packing list and not just a document entitled "Packing list" but containing only unrelated info.
I feel that the difficulty that you raise in the last post relates to the infrequency of presentation of more obscure documents and not to the principles of checking the document outlined in UCP and ISBP.
[edited 12/6/02 5:42:32 PM]
I have to say that when I read your post, my first reaction was that there was a contradiction between the 2 documents.
However, having read the texts a few more times and seen Phil's post, I don't believe that there is any contradiction - ISBP merely offers an extension to
the logic of UCP that does indeed reflect international banking practice.
As you say, a Certificate of quality should look like/appear to fulfil the function of a Certificate of Quality,
similarly a packing list should contain packing details and so on.
This is what the ISBP is saying - if you ask for a packing list you get something that appears to be a packing list and not just a document entitled "Packing list" but containing only unrelated info.
I feel that the difficulty that you raise in the last post relates to the infrequency of presentation of more obscure documents and not to the principles of checking the document outlined in UCP and ISBP.
[edited 12/6/02 5:42:32 PM]
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
ART 21 & ISBP
The nth degree example
In citing the Packing List example Leo has given probably the best example relating to Article 21.
My understanding of ISBP is that the data content must be consistent with the named document, but if the content is not specified, there is no requirement to examine it to the nth degree. In the Packing List example, if no content details were expressed in the DC, one would expect to see at least total weight and/or volume information. However, at the other extreme, this could be expanded to include container & seal nos, no. of pallets per container, measurement & weight per pallet, per outer carton, per inner carton. Production & quality detail could also be added to a similar degree of detail. Banks would not be expected to examine such a document "to the nth degree", but would be expected to establish that the data is consistent with the document named.
An allusion to childhood Mathematics may be pertinent here. Every set is a subset of itself. When a document is required to be consistent with all other documents, it should also be consistent with itself. I would consider it not to be consistent with itself if the nature of the content was at variance with the expectations imposed by naming the document.
Laurence
In citing the Packing List example Leo has given probably the best example relating to Article 21.
My understanding of ISBP is that the data content must be consistent with the named document, but if the content is not specified, there is no requirement to examine it to the nth degree. In the Packing List example, if no content details were expressed in the DC, one would expect to see at least total weight and/or volume information. However, at the other extreme, this could be expanded to include container & seal nos, no. of pallets per container, measurement & weight per pallet, per outer carton, per inner carton. Production & quality detail could also be added to a similar degree of detail. Banks would not be expected to examine such a document "to the nth degree", but would be expected to establish that the data is consistent with the document named.
An allusion to childhood Mathematics may be pertinent here. Every set is a subset of itself. When a document is required to be consistent with all other documents, it should also be consistent with itself. I would consider it not to be consistent with itself if the nature of the content was at variance with the expectations imposed by naming the document.
Laurence
ART 21 & ISBP
Gentlemen,
Thank you for your thoughts.
I apologise if I have missed the obvious, but the basis on which you believe Art 21 allows a bank to adopt the approach outlined in ISBP is not clear to me, given that if the actual practice of banks deviates from the provisions of the UCP, then the UCP must take precedence as it sets out the terms of the contract with the beneficiary etc. (In other words, ‘international standard banking practice’ is no defence if it contradicts the UCP.) Therefore, if you were able to spare the time to clarify this I’d be most grateful.
Jeremy
[edited 12/9/02 5:10:02 PM]
Thank you for your thoughts.
I apologise if I have missed the obvious, but the basis on which you believe Art 21 allows a bank to adopt the approach outlined in ISBP is not clear to me, given that if the actual practice of banks deviates from the provisions of the UCP, then the UCP must take precedence as it sets out the terms of the contract with the beneficiary etc. (In other words, ‘international standard banking practice’ is no defence if it contradicts the UCP.) Therefore, if you were able to spare the time to clarify this I’d be most grateful.
Jeremy
[edited 12/9/02 5:10:02 PM]
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DimitriScoufaridis
- Posts: 85
- Joined: Fri Apr 05, 2019 5:17 pm
ART 21 & ISBP
Jeremy,
The point you are raising is an interesting one. I think para 14 of ISBP simply makes relevance between the title of the document and its data content to justify the former, i.e. you do not want to be receiving a phytosanitary certificate that does not refer to the inspection of plant products.
Laurence,
Let’s assume that an inspection certificate is required without specifying its data content. Let’s also assume that it contains a statement on the quality of the packing of goods, e.g. inadequate packing. How would you handle it?
Dimitri
The point you are raising is an interesting one. I think para 14 of ISBP simply makes relevance between the title of the document and its data content to justify the former, i.e. you do not want to be receiving a phytosanitary certificate that does not refer to the inspection of plant products.
Laurence,
Let’s assume that an inspection certificate is required without specifying its data content. Let’s also assume that it contains a statement on the quality of the packing of goods, e.g. inadequate packing. How would you handle it?
Dimitri
ART 21 & ISBP
Dimitri,
I do not disagree with your analysis of ISBP. What I am seeking is justification for it, given the wording of Article 21 which seems to require:
1. The credit to stipulate the ‘wording or data content’ of a document that falls within its ambit and,
2. Where the credit does not so stipulate, banks to ‘accept such documents as presented’.
Incidentally, I seem to recall there is an opinion on the question you have put to Laurence.
Jeremy
I do not disagree with your analysis of ISBP. What I am seeking is justification for it, given the wording of Article 21 which seems to require:
1. The credit to stipulate the ‘wording or data content’ of a document that falls within its ambit and,
2. Where the credit does not so stipulate, banks to ‘accept such documents as presented’.
Incidentally, I seem to recall there is an opinion on the question you have put to Laurence.
Jeremy
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
ART 21 & ISBP
I agree with Jeremy that UCP takes precedence over ISBP in all cases, but the UCP, by its nature, is concise and this may lead people to "read between the lines". Such interpretation may or may not be correct and ISBP sets out to indicate correct interpretations.
Dimitri
On the basis as described by you, I would accept the document. There are a number of reasons for this :
1. The data content is not stipulated.
2. Even if the inspection certificate called for a report on the quality of packing, this would still be acceptable, as it did not prohibit inferior packing.
3. No indication of when, where, or by whom the inspection cert. is to be provided. For example, this could be pre-shipment inspection, inspection on board the vessel, or inspection upon delivery.
4. If the packing is described as inadequate in the inspection cert., it is logical to compare this with the B/L and determine if the B/L is clean. This allows us to consider a variety of possibilities - the packing was improved subsequent to issue of the cert.; the ship's captain disagreed with the cert.; the inadequacy was disguised to the captain; the cert. was issued after the B/L etc.
There is a standard default requirement that a B/L is "clean". However, this does not apply to any other document, including an inspection cert., unless specified in the DC.
If it can be argued that the condition of the packaging was different when considering the issue of the B/L as opposed to the inspection cert., one cannot reject on the basis of inconsistency between a clean B/L and inspection cert. as described by Dimitri.
Laurence
Dimitri
On the basis as described by you, I would accept the document. There are a number of reasons for this :
1. The data content is not stipulated.
2. Even if the inspection certificate called for a report on the quality of packing, this would still be acceptable, as it did not prohibit inferior packing.
3. No indication of when, where, or by whom the inspection cert. is to be provided. For example, this could be pre-shipment inspection, inspection on board the vessel, or inspection upon delivery.
4. If the packing is described as inadequate in the inspection cert., it is logical to compare this with the B/L and determine if the B/L is clean. This allows us to consider a variety of possibilities - the packing was improved subsequent to issue of the cert.; the ship's captain disagreed with the cert.; the inadequacy was disguised to the captain; the cert. was issued after the B/L etc.
There is a standard default requirement that a B/L is "clean". However, this does not apply to any other document, including an inspection cert., unless specified in the DC.
If it can be argued that the condition of the packaging was different when considering the issue of the B/L as opposed to the inspection cert., one cannot reject on the basis of inconsistency between a clean B/L and inspection cert. as described by Dimitri.
Laurence
ART 21 & ISBP
Dimitri,
the relevant Opinion is R390
Jeremy,
As I said above, I see no contradiction between UCP and ISBP.
In your answer to Phil, I believe that you have outlined the reason why there is no conradiction:
"that by specifying a ‘Certificate of Quality’, by the use of the word ‘Quality’ the credit has stipulated the ‘data content’ of the document."
I believe that the real issue being debated here is the minimum data that a document must contain in order for it to be acceptable as the document required by a credit.
I have a question for you.
In the following situation -
A credit requires a 'Packing List' (no mention of issuer or data content)
Would you accept a document that very obviously contains no packing details?
(i.e it does not "appear to fulfil" the function of the required document.)
[edited 12/10/02 2:24:24 PM]
the relevant Opinion is R390
Jeremy,
As I said above, I see no contradiction between UCP and ISBP.
In your answer to Phil, I believe that you have outlined the reason why there is no conradiction:
"that by specifying a ‘Certificate of Quality’, by the use of the word ‘Quality’ the credit has stipulated the ‘data content’ of the document."
I believe that the real issue being debated here is the minimum data that a document must contain in order for it to be acceptable as the document required by a credit.
I have a question for you.
In the following situation -
A credit requires a 'Packing List' (no mention of issuer or data content)
Would you accept a document that very obviously contains no packing details?
(i.e it does not "appear to fulfil" the function of the required document.)
[edited 12/10/02 2:24:24 PM]