ICC Digital Library Forum

This is me again. I had posted a reply yesterday but it does not show up.
I was of the opinion that a truck consignment note is to be considered a transport document and is to be checked under article 28.
Kind regards
Heinz

Dimitri,

You have said that the L/C required despatch by truck to CIF (city of destination). Under Incoterms (any version) this is a contradiction. If not under Incoterms, this may be undefined except perhaps, under local law.

The carrier's declaration on the consignment note suggests that this is assignable. This is highly irregular and at least questionable. (See my article in DC Insight on AWBs consigned to order which raises similar questions).

Laurence

T.O.,

I am afraid we seem to be going round in circles. The issue to me is:

What determines the article to be applied in determining compliance? Is it the terms of the credit or the contents of the document presented?

I believe it is the former, the terms of the credit. You seem to be suggesting it is the latter, the contents of the document presented. Please clarify if my interpretation of your views is correct, as this will save a great deal of time in any further discussions.

Jeremy

Jeremy,

PLEASE PLAY IT COOL

Please do not make assumptions and put words in our mouth. Kindly see the issues analytically, as we have said before.

Of course, nobody would argue that the terms and conditions of the credit determine what Article of the UCP 500 is to be used in examination for compliance.

OUR ANALYTICAL APPROACH

What we are trying to say is that, if the terms and conditions of the DC are unclear or imprecise (as we now have an unclear and imprecise term “truck consignment note” which may be and may be not a transport document, depending on its data content as well as its terms and conditions of carriage) then we have to do something:

(1) To advise the DC with reservation, meanwhile to get clarification from the issuing bank according to Article 12 of the UCP 500.
.
(2) Failing which, according to some DC judicial decisions, the “benefit of doubt” would go to the presenter and the unclear and imprecise terms and conditions of the DC are to be interpreted in favour of the presenter who may then have the right to present a document under either Article 28 or Article 21.

(3) The issuing bank then has to find out which of these two Articles is to be applied. It cannot rely on the DC terms and conditions any more as they are unclear and imprecise. The only way to do this is by looking into the data content of the document presented.

We hope we have made ourselves crystal clear now.

CHEESE SHOULD NOT BE CUT WITH A CARVING KNIFE

Our difference in opinions and approaches is because you deem “truck consignment note” definitely as a transport document, whilst we think it may and may not be a transport document, depending on its data content.

In other words, you determine the nature of a “transport related document” (which may and may not be a transport document) purely from a banker’s perspectives, without referring to transport practices and the Conventions for International Transport by Road, such as the CMR. We do, to make it fair to the documents and the parties.

When we cut cheese, we should use the cheese knife and not the carving knife. For rice and noodles we use chopsticks and not spoon and folk.

www.tolee.com

[edited 7/8/02 4:40:29 PM]

T.O.,

Thank you for your clarification. It would seem we at least agree on a fundamental principle and much else relating to this matter. Hurrah! However, it would seem our interpretations of ‘cool’ and ‘analytical’ differ, as my impression is that I have displayed both attributes up till now. Any way, in a spirit of incisive sang froid I respond as follows:

A. I agree that at the issuing/advising stage, if the relevant bank has any doubts as to the meaning of the term ‘rcn’ it needs to revert to its principal.

B. I agree that if the credit is advised, and then there is genuine room for doubt as to the correct interpretation of ‘rcn’ (which I, of course, do not accept), the bank has to make a decision one way or the other. I accept in some jurisdictions (‘Jurisdiction A’) the beneficiary must be given the benefit of the doubt where credit terms really are, in law, unclear. However, in other jurisdictions, such as England, I believe the test would be: what is the reasonable interpretation based on banking (as opposed to any other) practice?

C. It is your 3. with which I have difficulty. You seem to be suggesting a bank, in Jurisdiction A, would have ask itself the question (if, in law, there was doubt as to the correct interpretation of rcn): Is the document actually presented a ‘transport document’ in the sense the term is used in the ‘wider world’, e.g. based on what you say, T.O., it contains the terms and conditions of carriage etc? This is where I disagree, because -among other things- as a banker this is not a matter on which I can reasonably be expected to have any knowledge and, in the case of terms and conditions of carriage, it has no application to Article 28 anyway.

To me the question must remain exclusively within the field of banking and therefore be in Jurisdiction A: Has the beneficiary appeared to interpret the term ‘rcn’ as being a road transport document as envisaged by Article 28 or some other document?

Given that you will disagree with my C. above, I think it best to leave it there.

Yours glacially, Jeremy

Jeremy,

I think that you do yourself a disservice in stating that you do not take decisions outside of the banking world in relation to the determination of transport documents. You surely receive documents, some of which may state "Bill of Lading". To determine which UCP Article applies, you must then determine whether this B/L relates to Marine, Multimodal, Charter Party, Truck etc. It is only by a more detailed examination and at least a basic knowledge of the requirements of such documents that this is possible.

T.O.

Your culinary example may be inappropriate here. A cheese wire is equally appropriate for cutting cheese as a cheese knife. You suggest that you are opposed to rice & noodles being spoon-fed to you by your folk and we would tend to agree with this, but not to the exclusion of the use of a knife & fork in some parts of the world.

Perhaps you are speaking with a bifurcated tongue !!!

Laurence

Laurence

I’m sorry but I disagree. The article I will apply will be a function of the credit provisions, i.e. whether it specifies a port-to-port bill of lading (therefore Article 23 applies irrespective of the document actually presented), a charter party bill of lading (therefore Article 25 applies irrespective of the document actually presented), a multi-modal transport document (therefore Article 26 applies irrespective of the document actually presented) etc and NOT a function of the document presented. This is the fundamental principle that I am trying to get over, but apparently failing to do so.

Jeremy

[edited 7/9/02 10:27:08 AM]

Jeremy,

I do not dispute that the article to be applied is determined by the wording of the L/C, but regardless of which article is inherently referenced, if you receive a document titled "Bill of Lading", such document could relate to Articles 23, 25, 26 etc. It doesn't matter which of these articles is referenced in the L/C. The point is that the document checker must be able to distinguish a document titled "Bill of Lading", which on its face relates to Article 23, from another "Bill of Lading", which on its face relates to a Charter Party agreement etc. This requires a basic knowledge of the transport documents & ergo of the transport industry.

Laurence

Laurence,

I regret I must continue to disagree. Having identified from the credit provisions the relevant article, of Articles 23 –29, that must be applied to the ‘transport document*’ (assuming one is specified) the document checker can then simply work through the applicable article to determine if the relevant document presented meets its requirements. So, for example, if the credit specifies a port-to-port blading, but a charter party blading is presented, when the document checker gets to sub-Article 23a(vi) and cross checks it with the blading presented they will automatically discover it is discrepant (without any understanding of the significance of the term ‘charter party’) as it will contain ‘an indication it is subject to a charter party’.

However, for the avoidance of misunderstanding, I must stress that I am not suggesting that a credit banker need not have any comprehension whatsoever of transport or other documents. They at least need to be able to distinguish between an invoice, certificate of origin and transport document, for example! What I am saying is that such a knowledge needs to be quite limited and does not extend, for instance, to knowing how non-bankers understand the term ‘transport document’, as T.O. seemed to be suggesting.

Jeremy

*Definition (in the context of credit operations): a document specified in a credit to which, by virtue of the credit provisions, one of Articles 23 – 29 must be applied in order to determine its compliance.

To Jeremy,

WHAT IS “SOMETHING” - DIFFICULT TO DAW A LINE

We are glad that (i) you respond with a cool attitude, and (ii) that you have soften a bit on the issue “a banker needs to know “something” about transport documents” as you finally admit that, to quote your own words:

“I must stress that I am not suggesting that a credit banker need not have any comprehension whatsoever of transport or other documents”.

Our special thanks to Laurence who plays the role of a white knight and has already said what we want and need to say on this issue. So we need not repeat them here.

Yes, three of us all agree that bankers have to know “something” about transport documents, in order to be able to determine which of Article 23-28 should be applied for a document named “bill of lading”, which may be for port-to-port, multimodal, truck (in USA particularly) or even air (we did see one as a retainer to a bank in a DC fraudulent documents case presented by a stupid and greedy beneficiary who knows nothing about these things).

Now it boils down to a simple argument. The only difference amongst us is the scope of this “something”. There cannot be a clear demarcation but we definitely know that what Jeremy suggests is not enough for this purpose, not to mention to spot the “footprints” in a fake transport document, which has now become part of a daily job for a document checker in Asia and Middle East, where there are so many fraudulent DC cases every month, as we have seen recently in the DC Pro for the Hang Sang Bank case. We know much more DC fraud cases through the gossip channel than in the DC Pro simply because and the banks are hiding this bad news to protect their images as well as not to affect the banks’ share prices in the marketplace.

To Laurence,

Thanks for doing this work for us and our congratulations for doing one job, which we have failed on every attempt – to make Jeremy admit that bankers need to know “something” about transport documents.

THE RIGHT ARTICLE FOR THE RIGHT DOCUMENT
THE RIGHT TOOL FOR THE RIGHT FOOD

Of course, there are more than one thousand ways to cut a piece of cheese, from lateral thinking point of view. However, using spoon and folk to eat rice and noodles may hurt one’s image. A friend of mine once said to me: “ T. O. This guy is not an international senior executive. Otherwise he should know how to use chopsticks. And we wonder whether he has travelled to China, or has any China connections. Otherwise he should have a lot of opportunities to learn this simple trick”. In Toronto, even the Westerner kids know how to use chopsticks in a Japanese restaurant.

LESSON FROM THE FILM TITANIC

From culinary point of view, if you see the Titanic, in the dining scene (to thank Jack saving the host’s fiancée) where caviar is served, when the camera does a close up on the cutlery, by my culinary instinct, I promptly check what the spoon for eating caviar is made of. And I find it made of bone or shell. The filmmakers have surly done their homework. Why? According to the culinary experts, a silver or metal spoon would bring forth a metallic tint/taste that would not be complimentary to the expensive caviar, such as Beluga. (By the way this food is for the boss. IF you know the grading of caviar you know what we mean, B, O, S)

So for handling rice and noodles, using tools made of wood, bone or any natural material is safer than silver, a metal. It is more “green“ too from environmental point of view. However, you may eat with your hands as well, which after all, are the most expensive tool in this world.

In Buddhism, we are told to respect the foods we eat. So, like DC, we have to handle them with care and respect.

www.tolee.com

[edited 7/9/02 5:06:37 PM]