ARTICLE 20

[Yahya]

Jeremy,
You may probably remember that I firstly mentioned this situation in my response to your query which was titled "20(a) (iii) and started on 25.01.2007. I said that "this omission would lead some problems"
At the same time, we also applied to The ICC to give an explanation in regards with the intention of the omission.
My previous post which you consider that " it has no relevance with the case" exactly reflects the explanation given by the ICC.
I intentionally sent this post expecting some different viewpoints and objections
Nevertheless, I agree with you that on the basis of UCP600 rules, you have to consider such a presentation as you mentioned in your post is complying . And there is no basis in UCP600 to reject such a presentation.
(And there must be no difference either the place of receipt is an inland place or a port)

Finally , I believe that the situation is still not clear ,The ICC should produce a statement or an explanation for the omission as d/c checkers very often encounter such presentations.

Regards,
Yahya


[edited 7/30/2007 4:50:03 PM]

[NigelHolt]

Yahya,

Point taken.

If this particular matter is not clearly and comprehensively covered in the Drafting Group's commentary/comparison, among many other things, this will merely add to how we have been let down by not having this document available before 1 July.

Regards, Jeremy
[edited 7/30/2007 5:08:47 PM]

[KimChristensen]

Dear Jeremy,

You would? Interesting!

As you know I do like a good “punch up” – but on this one I will simply say that the ground rule has been changed – and only time will show exactly what practice comes out of that. Hopefully discussions like this one will facilitate a good and logic interpretation of the articles.

I will also comment that I think you are being a bit hard on the ICC – just imagine that it was you that had to agree on these things with 7-8 other people In any case my guess is that some of this is too specific to cover in the commentary – and that it will gradually be covered through opinions, docdex’s etc. – as it was the case when the UCP 500 was implemented.

Best regards
Kim

[KimChristensen]

Dear Jeremy,

I assume that you have also read Gary Collyers newsletter (Coastline Solutions Newsletter - Issue 12) on UCP 600 article 20.

The good part is that we are – after all – better off than Morrissey who at Earls Court said “I can’t be wrong about everything. I can’t be. It’s impossible...”
At least we can turn it 180 and say; okay so we can not be right about everything …

Best regards
Kim

[NigelHolt]

Indeed I have, Kim. Disgraceful isn't it?

[KimChristensen]

Dear Jeremy,

I rarely take such strong words into my mouth … but you are not far off here

If I am to take a balanced view on this – then it must be as follows:

Looking at this totally isolated – i.e. if this was an issue that had never ever been addressed before in UCP, ISBP, Opinions etc. – then to some extent I can understand that you can argue the way that it is being done here.

I consider myself a totally open minded person that can take in other views than my own. However in this case, looking at it in the historical perspective, i.e. with the knowledge of what has been removed from the UCP and ISBP – and what ICC Opinions that are still applicable – I simply fail to understand/accept this.

I truly hope that this “practice” will be changed to be in line with the new UCP 600 wording – and if not then I sincerely fear the day that I have to explain this to a beneficiary. In the Demark that are quite many former LC bankers working at export companies – being full aware of rules and practice.

Best regards
Kim

[GARY]

I do not normally respond to questions or responses posed within this forum but feel that I need to here. I will keep my comments to the question posed. At no point in the drafting process did the drafting group intimate or imply that the wording or position had changed from that which applied under UCP 500. The language and style of a number of articles has changed in many ways from that in UCP 500 but their application has remained unchanged. This is another example. The words "indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit ..." require the transport document to clearly indicate that any on board statement applies to the vessel and not any means of pre-carriage. This position has been clearly stated in numerous seminars conducted by the drafting group (on a global basis) and is firmly stated in the soon to be published commentary.

[NigelHolt]

1. If ‘In discussions with the ICC’s Transport Commission it was decided that the structure of this article should reflect the role of a bill of lading i.e., to cover shipment from a port to a port’ and therefore to omit the last para of UCP500 23(a)(ii) this should have been clearly communicated in writing to the NCs so that this information could be disseminated to all members.

2. I do not re-call this subject being mentioned at the ICC UK ‘UNDERSTANDING THE UCP 600 – THE ICC UK ANNUAL TRADE FINANCE SEMINAR’ on 6 Dec.

3. Whether or not the ‘on board’ requirements in UCP500 where the bill of lading indicated a place of receipt different to the port of loading was seen to actually encourage a bill of lading to evidence pre-carriage is totally irrelevant to the ‘Banking’ Commission. What matters is to have as comprehensive a coverage as possible of the matters a document examiner is likely to have to consider when examining documents for compliance so as to avoid any possibility of misunderstanding.

4. The fact that the commentary was not available at the time UCP600 came into affect is very poor. The ‘implementation’ of UCP600 should have been delayed for a sufficient period to allow the commentary to be available so that it could be clearly seen why changes had been made to the UCP.

5. If the position were so clear as claimed then no one would have had any doubt on the position in the first place.

Lastly, I am not expecting a response to this posting.

[KimChristensen]

Dear Gary,

A rare honour indeed. I am sure that all of us feel very privileged that you have taken time to respond to this issue.

I have two comments – or rather concerns that I would like to express in this matter.

First of all I accept the argument that many UCP articles have been changed – without changing their practical application. It is my impression however that when this has happened it has been for the purpose of clarity – mostly in language. In this situation – you have a rather clear UCP 500 article showing exactly what information is required in the on board notation in this particular scenario – being turned into a somewhat general wording – open to interpretation.
What you have in effect is a practice that is unclear – until we have opinions covering the various scenarios.
The thing is that perhaps it was correct to remove this highly practical rule from the UCP – but then it would have been natural to insert the same rule in the ISBP – and in any case not remove paragraph 82.

The second concern that I have is regarding the customers. If you discuss this with a beneficiary who knows the rules and the practices, then the fact that this rule was removed places you in a very weak position. If that rule had been kept then you would have a much stronger case. As far as I can see this case is not beneficial for the LC instrument.

One last comment – regarding the view on whether or not the pre-printed on board notation on the bill of lading relates to the “port of loading” or “post of discharge” field.
I accept and appreciate the practical industry focus in that statement. I must say however that if you apply that principle then the transport articles should look completely different. There are numerous examples where a rule makes only little sense from a real life / industry perspective.
Just one example: The default rule in article 23 is that “shipment” is determined based on the date of issuance of the air waybill. What the date of issuance tells you is when the document is issued. It does not actually indicate when the goods are accepted for carriage.

Best regards
Kim

[edited 9/28/2007 11:54:53 PM]

[GARY]

For the benefit of those who have not been privy to the revision process, I feel that the points made by Jeremy need some response and I will try to keep my comments short.

1. The wording in UCP 500 sub-article 23 (a) (ii) was seen as encouraging a
multimodal type shipment within the confines of a bill of lading. The early drafts of article 20 included the words “covering a port-to-port shipment”. This was intended to establish the bill of lading as a document that should only cover port to port shipments. This view was shared by both the Drafting Group and the ICC Transport Commission representatives. Those that followed the revision process will know that reference to “covering a port-to-port shipment” was subsequently removed following a number of comments from ICC national committees. What was clear to the Drafting Group, however, was that by removing those words the wording of the article should not encourage a bill of lading to indicate a different place of receipt, whilst still recognising that in practice it will continue to happen. The addition of the words “at the port of loading stated in the credit” to the wording that appeared in the opening line of UCP 500 sub-article 23 (a) (ii) i.e., “indicates that the goods have been loaded on board, or shipped on a named vessel” requires a document checker to determine that any on board statement – whether it be pre-printed or by notation – relates to the goods being shipped on board a named vessel at the port of loading stated in the credit and that such statement does not relate to any different place of receipt and/or conveyance indicated in the bill of lading. Using an example:

LC requires shipment from Rotterdam.

BL shows:
Place of Receipt: Brussels
Port of Loading: Rotterdam
Vessel: Sunshine

The bill of lading bears a pre-printed statement “Shipped on board in apparent good order and condition ……………….”. The question is ‘does the document checker know that the on board statement refers to the vessel Sunshine leaving Rotterdam or the conveyance that is transporting the goods from Brussels to Rotterdam? Remembering that in the example quoted, the document checker would not be concerned with the transportation from Brussels to Rotterdam.

If the pre-printed wording had stated “Shipped on board the named vessel in apparent good order and condition …………..” you have an indication as to whom the on board statement refers.

On the other hand, in one example seen by the Drafting Group it was stated “Shipped on board the named vessel or conveyance from the place of receipt …….” and in another “Shipped on board ……. from the place of receipt or port of loading (whichever is applicable) ….”.
In either of these examples, is there an indication that the on board statement refers to the “named vessel at the port of loading stated in the credit”?
It should be noted that each release of a draft text included either a short commentary on the changes (where wording was changed from UCP 500 or where a position changed from a previous draft) or a marked up version showing the changes made from the previous draft.

2. Jeremy, as you will recall the session on transport documents at the ICC UK event was not covered by a member of the Drafting Group. I would add that I was not a party to the creation or content of that presentation. To my recollection, whilst this issue was not covered (and neither were many other issues on other articles) no questions were asked from the floor to either seek clarification or intent. I would also add that due to timing constraints the session did not go into any great detail on any of the respective transport articles. If there had been questions, I would have responded. Certainly in all the workshops where I have covered either all of the articles, or the transport section, this has been covered. I would also point out that in all of the sessions that I have conducted there has been no differing interpretation to that which I have expressed and which appears in the commentary as the views of the Drafting Group. In fact, it seemed that most people had taken that view anyway. This issue was also fully covered in the 2 ICC seminars in Paris (October 2006 and January 2007) plus the event that followed the ICC Banking Commission in Singapore (April 2007).

3. A document checker is required to determine whether the goods have been shipped from the port stated in the credit and that the bill of lading so evidences. If an on board statement refers to the pre-carriage (not covered by the LC) then the document does not comply with the credit. This would be the position under 500 and 600.

4. This was not a decision for the Drafting Group. The implementation date was driven by the ICC national committees. In any event, the commentary is not an official publication of the ICC and has been written by the Drafting Group as a reflection of the drafting process for each of the articles. At the end of the day it is the rules themselves that determine whether or not the documents comply. At each Banking Commission meeting including the special (additional) meeting that was held in Dublin in 2005 any issues that national committees may have considered were fully debated or, at least, there was the opportunity to raise them.

5. As I have stated above, I have spoken in every continent of the world at well over 50 locations and in all of those workshops/seminars I have not come across any dissenting viewpoint to that expressed.

Briefly responding to the couple of comments made by Kim, I am not sure why we would need opinions covering the various scenarios. The basic premise is ‘as a document checker am I happy that the on board statement refers to the port of loading stated in the credit and the named vessel’. If yes, document is OK. If no, I refuse. The argument for banks is that the rules require the bill of lading to indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit. Where a place of receipt is shown, the on board statement must appear to relate to the port of loading and the named vessel and leave no ambiguity that it could relate to a place of receipt.

For air waybills, the rules have always sought to reflect industry practice. For air consignments it is not the practice of every airline or forwarder to insert the date of despatch. The Drafting Group made one significant change to recognise the situation where a flight stamp is indicated so as to bring this in line with other transport documents that have a notation of shipment or despatch.

I will now sign off gracefully (!?) and revert to my observing and reading brief.

Best regards
Gary