ICC Digital Library Forum

LC issued in favour of ABC Co.
Documents presented by ABC Co. T/A CDE Co. submitted (T/A stand for Trading As). Is it constitute a discrepancy ?

Dear Mr. Kwok,

LEGAL ISSUE V. DC ISSUE

This appears more to be a legal issue than a UCP issue. Please better consult your lawyers who also know about DC.

COMPLEX CORPORATE STRUCTURES TO AVOID TAX AND OTHER LIABILITIES AS WELL AS ASSET PROTECTION

What is meant by "T/A - Trading As"? As a co-owner or as an agent or something else. To avoid tax and other liabilities, corporate structures of certain conglomerates these days could be very complicated, with one corporation holding another, registered and operating in different jurisdictions.

SEVEN KINDS OF SHIPOWNERS

For instance, take the example of "shipowner" which bankers are familiar with, to avoid profits tax and legal liabilities as proposed by the company secretarial services, maritime lawyers, tax consultants, asset protection experts and risk management consultants, we may have seven kind of shipowners: the registered owner, the disponent owner, the bareboat charterer, the manager/managing agent, the operating consortium/pool, the owner's representative and the beneficiary owner, as pointed out by the Lloyd's of London.

So if you try to sue a shipowner, do make sure you know which is the right target. You only have 1/7 chance to hit the bull's eye.

UCP CARRIER V. MARITIME CONVENTIONS CARRIER

Then what is the "carrier" that the UCP 500 refers to? We have more than one kind of carrier. We have consulted one very important member of the UCP 500 Working Party, and he said:" Never mine, T. O., we look for carrier 'on its face', however named!" This answer would make life easier for the document checkers.

So the more we know, the more we are scared to answer your query without further details being provided.

ANSWER DIFFERENT IN DIFFERENT JURISDICTIONS

From our experience in resolving international trade disputes, the answer, if there were one, would be different in different jurisdictions. If the dispute is from China, Mr. Kwok, we would like to alert you that the China legislations, particularly for commercial codes and regulations in China, are changing very fast these days to put China WTO ready. So do watch out that the answer may be different based on a yesterday's law and a today's law.

We hope that members would determine whether their queries are genuine UCP issues before they post them in the DC Pro.

http://www.tolee.com

[edited 9/16/01 12:49:34 AM]

Dear Mr. Lee

Your reference to different kinds of shipowners is very enlightening and has triggered an interesting query in my mind. If we have this MANY of kinds of shipowners we also might have different kinds of carriers, which we do. Looking in to the Hague rules the Visby rules the Hamburg rules I found that the definition of carriers are not the same. The carrier could be shipowner, the contracting carrier, the actual carrier, the charterer, and demise charterer, the ship. In multimodal transport the multimodal transport operator.

With this many facets of carriers, the identification of carrier comes up primarily as a threshold problem WHO CAN BE SUED ON THE BILL OF LADING?

Not only that but also if the transport conventions have so many kinds of shipowners and carriers, while we, poor bankers, are requested to abide with article 23 a that state

“If a Credit calls for a bill of lading covering a port-to-port shipment, banks will, unless otherwise stipulated in the Credit, accept a document, however named, which:
I. Appears on its face to indicate the name of the carrier and to have been signed or otherwise authenticated by:
-The carrier or a named agent for or on behalf of the carrier, or
-The master or a named agent for or on behalf of the master.

Any signature or authentication of the carrier or master must be identified as carrier or master, as the case may be. An agent signing or authenticating for the carrier or master must also indicate the name and the capacity of the party, i.e. carrier or master, on whose behalf that agent is acting”

Then the identity of the carrier should be clearly evidenced on the face of bill of lading may seem to contradict the demise clause/the identity of the carrier on the bill of lading itself and this might be construed in contradiction with the UCP requirements!!!!

Thanks to sub-article v. which states"

“Appears to contain all of the terms and conditions of carriage, or some of such terms and conditions by reference to a source or document other than the bill of lading (short form/blank back bill of lading); banks will not examine the contents of such terms and conditions”



[edited 10/29/01 12:40:04 PM]

Dear Hatem,

OUR CONGRATULATIONS

We are quite impressed that a banker member would like to go deeper into the problems in maritime transport, rather than relying solely on the transport Articles in the UCP 500.

We do have a few points to make in response to your comments.

EASY LIFE FOR BANKERS ACCORDING TO UCP 500

(1) In the first year that the UCP 500 became effective, we had already pointed out the problem in identification of carrier, as you have mentioned here, to Mr. Charles del Busto.

His answer is “T. O. Never mind whether the carrier is a contractual carrier (such as a freight forwarder), an actual carrier (such as a liner shipping company) or a charterer (who carries goods for other sub-charterers in a charter party bill of lading as he cannot use up all these stowage spaces in the ship) and other kinds of carrier.

What a banker needs to do under the UCP 500 is to check on the face of the bill of lading to see whether the carrier (of however nature) has identified himself and whether the bill of lading is signed in a way required by the UCP 500 Articles.

In a nutshell, bankers under the UCP 500 are not required to go into such a depth in identification of the carrier”.

This message was from the Chairman of the UCP 500 Working Party and the Chairman of the ICC Banking Commission at that time. Of course these are not exact words but the meaning is the same.

DIFFICULT LIFE FOR BANKERS ACCORDING TO FRAUD PREVENTION

(2) From risk management point of view, and also from fraud prevention perspectives, we are of the opinion that bankers should know more about the maritime transport documents. Otherwise they can never be able to see the footprints left by the fraudsters in the bills of lading, which are quite obvious to us.

Fraudsters know not much about maritime transport and are always leaving some footprints on their bills of lading. It is only a matter of whether the banker who examines these bills of lading can or cannot spot these footprints.

Some bankers after our two-day footprints checking workshops can easily see those footprints when they come to them. This is our experience to share with members. We have no intention to sell. We just wish to convey the message that this problem can be resolved. That is all our intent. Don’t read us wrong, please.

ARMOUR YOURSELF WITH KNOWLEDGE FIRST BEFORE ARGUING WITH OTHER BANKERS

(3) A banker often argues with another banker about whether the named discrepancies in the bill of lading are valid or not. With both parties knowing little about bills of lading, this exchange of strong words in the SWIFT messages is only a time wasting exercise that leads to nowhere as both sides do not know what they are talking about.

If bankers wish to convince the other side that this is a discrepancy or this is not a discrepancy, he or she has to do some homework on bills of lading. Otherwise he or she may create some amusing messages to those who know about bills of lading.

CONFLICTS AMONGST RULES AND CONVENTIONS ARE "NORMAL"

(4) Hatem, you are right in pointing out that there are conflicting terms and conditions at the back of the bills of lading with the UCP 500 Articles. We would say this is "NORMAL". If you look further, comparing different rules and conventions from different industries, you would be amazed that there are so many conflicting terms and conditions amongst them.

The reason is that rule makers never sit together with rule makers from other professions. Each working party is an island.

To talk about such conflicts, the listeners must have a basic knowledge of what such rules and conventions are. Otherwise we would only confuse them more. All these are highly technical and can only be introduced or discussed systematically in a workshop but not by piece meal style in the DC Pro Discussion Forum.

Also some members do not like us lecturing here. But lecturing is absolutely necessary to get our message clearly across. Otherwise we would do more harm than good if our messages are misinterpreted by certain members, which are always possible. The matter is only to what extend.

THE DEMISE CLAUSE IS ONLY A TIP OF AN ICEBERG

(5) The demise or identity of carrier clause is always causing problems, as commented by Hatem. Three is no solution unless and until the shipping and banking industries sit down and resolve this problem together. Otherwise it will be there for the rest of our lives.

(6) We do not wish to scare members by pointing out more other anomalies in bills of lading and UCP 500.

http://www.tolee.com

[edited 10/29/01 5:18:51 PM]

Dear Mr. Kwok:

I think the discussion digressed to a point that the original question was forgotten.

It is my considered opinion that if the beneficiary company is different from the one submitting the documents, it would be considered a discrepency, unless third party documents are acceptable under the LC.

Best regards

Vijay M. Lal