ICC Digital Library Forum

Dear colleagues, I will appreciate your opinion on the following question:
should non-negotiable copy of B/L be dated , and should it mirror the dates of original B/L in full?
My case is: B/L is presented in full set of originals and one n-negotiable copy. The originals of B/L do not indicate Date of Issue(the appropriate field is blank) but bear the dated On board notation. The n/n copy has neither date of issue, nor date on on-board notation. Does it comply with UCP?
Thank in advance for your attention.

We have three issues in this query:

(1) Whether a BL copy should bear mirror image to an original BL?

(2) Can the issuing bank dishonour due to a discrepancy in a BL copy where the original BsL are however compliant?

(3) Can banker not having any training on transport documents be relied upon or be expected to give a valid and professional judgement on such technical issues on a transport document?

A BL COPY NEEDS NOT BEAR MIRROR IMAGE WITH AN ORIGINAL BL
.
The first issue has already been addressed in the ISBP, ICC Document 470/951rev3 that tells us that a BL copy needs not bear mirror image to an original BL of which it is based. For example a BL copy needs not have signature or authentication for corrections or alternations.

The issue before us is therefore: Whether this includes the BL issuing date and the on board notation or the on board notation date? The enquirer should clarify whether in the BL copy there is notation or not. Or only that the notation date is missing.

OPINION BASED ON COMMON SENSE

Our opinion on the second issue is that, unless otherwise stated in the DC, if the original BsL are all compliant, then missing the date of notation and the date of BL in a BL copy should not be a valid reason for refusal. This opinion is made according to common sense as there is no such stipulation in the UCP 500 or ISBP.

For the third issue, from the previous postings from Laurence and us, members should know what should be our opinion. For those bankers not trained for transport documents, they should not try to determine discrepancies solely by themselves to avoid the risk of being sued for a decision that they are not competent enough to make. Some intelligent bankers from Hong Kong do retain us for such reasons.

www.tolee.com

[edited 8/5/02 8:49:52 PM]

As, I believe T.O. is saying above, there are not any UCP provisions that cover ‘non-negotiable copy’ bills of lading. As to international standard banking practice on the subject, the only current authoritative statements on the subject seem to be opinions R337 & R455 (the ICC ISBP document not yet being adopted, although I appreciate the extract quoted above follows these opinions). My personal perception was that a ‘non-negotiable copy’ bill of lading need not bear any date -in order to be facially compliant- unless the original document itself appeared to include a date at the time it was issued. This was based purely on experience gained in day-to-day credit operations.

Finally, given the ability of an applicant simply to photocopy the original bill of lading and the apparent valuelessness of a ‘non-negotiable copy’, it has always been a mystery to me why credits should stipulate the presentation of ‘non-negotiable copy’ bills of lading. Can anyone shed any light on this?


[edited 8/7/02 5:07:33 PM]

Jeremy,

your query on non-negotiable B/L can possibly be answered thus :

1. Required for record-keeping (bank, applicant or both)
2. Some countries control imports & foreign currency movements through DCs. I presume that the authorities in such countries require evidence of shipment as part of a documentary prerequisite to sanctioning FOREX release.

Laurence

SOME BL COPIES ARE NOT REALLY NECESSARY

Whilst we agree with all the reasons given by Laurence for asking for presentation of copies of BL in a DC, for the purpose of evidence of actual shipment as required by the import and foreign exchange control authorities, we do feel that for those countries which do not have quota, import licence and foreign exchange controls, those free trade countries, there is no need to include copies of BL in the presentation.

We appreciate the question asked by Jeremy. I also asked a banker for the same question when I was doing import and export business about twenty-five years ago. The honest answer from this banker was:

DON’T ROCK ON THE BOAT!

“Well, T. O., as a manger of the Bills department (at that time we had no fancy names given to the same department, such as international department, trade finance department so on and so forth), I do not want to make any change to the L/C application form designed by people before me. If I have done the right thing, I receive no medals. But if I have screwed up, I may hurt my image if I do not lose my job. The senior mangers may not wish to promote me when there is a vacancy in the head office because I am not a safe banker under him. So why border? Let it be and be happy!” Perhaps this is also part of international standard banking practice – Don’t rock on the boat!

SYSTEM REPLACES PEOPLE IN DC OPERATIONS

On the other extreme, we also heard a lot of bankers complaining to us that for every six months, they have to change the computer software and the procedures for handling documents, under the banner of continuous process development. As a result, the more advanced the system, the less people they want to keep.

This is true for large banks and particularly USA banks, where the system will replace the people, including also the DC experts. In the last couple of years, some seasoned bankers have to retire early because they are getting expensive in the system. This is fact of life. When eUCP is in full swing, this will be even worse. Perhaps this is also one reason why eUCP is not so popular these days.

And many experienced bankers are worrying that one-day they would lose their jobs. So some bright ones try to cultivate good relationship with their customers so that they may one-day work for them instead of the bank. A few knowledgeable ones think of opening a consultancy company. Before that time they want to learn more about transport and insurance so that they may have a competitive advantage over other consultants in the streets.

This is also one of the reasons why I do not choose to work in a bank. I retired ten years ago before the conglomerate I worked with found me too expensive.

www.tolee.com

[edited 8/7/02 7:04:45 PM]

SOME DCS CALL FOR ONLY COPIES OF TRANSPORT DOCUMENTS

We do see some DCs calling for presentation of copies of bills of lading or rail waybills where the originals are to be sent to the applicants directly for real time receipt of the goods on arrival, to save demurrage, and also to help speedy performance of pre-shipment formalities, such as customs clearance and declaration, quota and import licensing. These authorities may demand originals as valid evidences of shipment.

Some government officials are bureaucratic and you cannot argue with them. You can only follow their rigid protocol. Also the same rule may have different interpretations, varying from one officer to another. This is not only a practice in Canada but other countries as well.

FUNNY STORY IN TORONTO ABOUT “HELL”

In the commercial sector, the same thing may happen. To create some interest for a dry subject, here is our story from Toronto.

We read in a newspaper in Toronto a couple of weeks ago that a Chinese lady purchased over CAD2,000 goods from Branch A of a giant USA chain store applying a 10% discount coupon. For some of the items, Branch A had no stock and the salesman requested the lady to shop in Branch B where the 10% discount coupon could also apply. But the Branch B salesman refused to give any discount and the lady called for the manager. She complained, “What the hell your business is!” The manager considered "hell" as a foul language and felt offended. He asked for the Police to drive the lady out of the chain store.

That is not the end of the story. The most unexpected ending was that the manager gave a permanent sanction to the lady and banned her from entry to that Branch B - FOR LIFE! The lawyer who was requested by the newspaper to comment on the case opined that Branch B is a private place and its manager has the right to refuse any customer from entry if he thinks fit.

Our view is that even for careless driving, such as crossing a road junction when the red light is on, or being a drunken driver, the worst thing is suspension for three months to one year, or even imprisonment, but never for life, particularly for the first offence. So as we said:” Anything may happen these days!” We think the manager is overdoing as "hell" is also a word used in the Bible.

We would like to hear opinions from Hatem.

www.tolee.com

[edited 8/7/02 8:20:34 PM]

The reason for my query was that it is not apparent to me what is to prevent a beneficiary presenting a photocopy to meet the requirement for ‘non-negotiable copy’ bill of lading. After all a photocopy is a ‘copy’, literally ‘non-negotiable’ and a ‘mirror’ (in the sense used in the relevant opinion) of the original document. Therefore, except where all originals bills are being dealt with outside the credit, what is to be gained by specifying documents that the issuing bank/applicant can seemingly quite easily produce if they wish with a photocopier?
[edited 8/8/02 12:51:02 PM]

There is one issue that does not seem to have been addressed so far which is the enquirer’s question of whether the original BL which is bearing a dated on board notation but does not contain a date of issue is compliant or not? The critical date in the LC terms is the date of shipment not the date of issuance (a date that could be before or after the shipment date). Art. 23(ii) & point 82 of the ISBP doc. 470/951rev3 refers. “The date of the BL will be deemed to be the date of shipment unless the bill of lading bears a separate dated on board notation, in which event the date of the on board notation will be deemed to be the date of shipment”. In short, provided all other requirements under article 23 have been met, shouldn’t the dated on board notation suffice?

Jeremy,
I agree with you that the ISBP document is not yet approved for usage, however, the fact that some of us have already started referring to it, it gives us an indication on its necessity, usefulness and future success.

Dimitri

Dimitri,

If you have taken my remarks as indicating I am against the ICC ISBP document in principle then this not the case. While there are elements of the latest draft with which I do not agree, I nonetheless welcome the initiative as a whole as, once the document is adopted, it ought to lead to greater certainty for banks in determining if documents are (non-) compliant. My intention was merely to make the point that it is -I believe- premature to refer to the ISBP document, the contents of which may change prior to adoption, as an authoritative source of ‘isbp’ and that until adoption the opinions remain the primary (if not in practice the only?) authoritative source of ‘isbp’.

Jeremy

[edited 8/8/02 3:34:19 PM]

QUOTING ISBP IN DISCUSSION FORUM - WHY NOT?

Regarding the issue whether it is appropriate to quote the ISBP in the Discussion Forum, our opinion is why not? Our reasons are:

(1) We may quote the ISBP as a supporting opinion from the authorities, PROVIDED we have clearly indicated that the ISBP is (i) still in the drafting stage, with its contents subject to change, and (ii) not yet approved by the ICC Banking Commission (BC). Then it is up to the members to weight the strength of such opinion.

(2) As the Discussion Forum is an informal chatting venue in the cyberspace, we should not treat it as if it were a courtroom. Hence, member may post any message in it PROVIDED it is not misleading or against the DC Pro Rules. Freedom of speech is to be upheld.

(3) However, we do see parties quoting the ISBP in DC disputes. This is OK PROVIDED the parties have clearly indicated that it is still subject to changed and not yet approved by the ICC Banking Commission. Some judges may accept it as an indication of the current trend of international banking practice or a source of reference on those issues that the UCP 500 has not yet addressed to. Some judges may refuse it until it has been officially approved by the ICC BC.

www.tolee.com