On deck / on board (art 31(i))

[KimChristensen]

Hi there,

Need your view on the following:


A Doc credit includes the following document requirements:
+ Full set of at least 3 original and 1 non negotiable copy of ‘clean on board’ marine or ocean bills of lading marked freight prepaid, made out to order, endorsed in favour of XX, marked notify applicant and issuing bank
+ Copy of shipment advice sent by fax within 3 international working days from shipment date, to “insurance company” referring to open policy no and showing the name of the carrying vessel, date of shipment, marks, amount, B/L and/or AWB no. and the number of this documentary credit.

Under additional conditions the following is mentioned:
+ Shipment loaded on deck allowed. Shipment in container allowed.

After presentation of documents the issuing bank refuses based on the following discrepancy:
“Shipment advice mentions goods loaded on deck, whereas B/L mentions goods shipped on board”


Both are actually correct – but is this a discrepancy?

Your view – including reference if possible to Opinions etc. – is highly appreciated.

Thanks in advance
Kim

[RolandLeupi]

Kim,
Shipment advice is requested in order to allow the insurance company to insure the voyage. If then same indicated that goods are loaded on deck should not be considered as a discrepancy even if the B/L indicated that goods are shipped on board. I would reject such discrepancy but hav unfortunately no ref. to any opinion on subject. However an indicationg specifying how the goods are loaded on a vessel is an additional information and should be regarded for that purpose only
Roland

[NigelHolt]

Kim,

I assume:

1. The ‘additional conditions’ are contained in the credit, as opposed to the documents presented.

2. The ‘shipment advice’ actually states that the goods are loaded on deck.

3. The basis of the issuing bank's refusal is inconsistency between documents.

I am amazed that a bank would apparently consider the statement, on a bill of lading, that goods had been shipped on board meant that the goods were in the ship’s hold. I would have expected any reasonable person to assume it simply meant the goods were somewhere on the ship and no more. Support for my non-expert view can be found in the A to Z of International Trade, ICC Publication 623 where it is stated:

‘on-board B/L A marine transport document indicating that the shipped goods have been LOADED [my emphasis] on the carrying vessel.’

Overall, I consider this ‘discrepancy’ to be absolutely ridiculous.

Jeremy
[edited 8/31/2006 2:57:32 PM]

[KhalidI]

I agree with Jeremy an on board notation only indicates that goods have been loaded on the vessel & would go when the vessel leaves as opposed to being left on the quay or where no arrangement for passage is concluded.
You may find ruling under the "Tiposan Harf Ve Matbaa Gerecleri A.S. v. Masonite Corporation" 1997 LC CASE SUMMARIES useful.


Regards
Khalid
[edited 8/31/2006 12:43:07 PM]

[KimChristensen]

Dear Roland, Jeremy and Khalid,

Thanks for responses – highly appreciated and very helpful!

Just want to share with you an e-mail that ticked into my mailbox as a response to this one:

Quote
Another "discrepancy" which tends to kill the documentary credits. Is it the intention?
There is no opinion/query because somebody requesting one for such a reason would make a fool of himself.
Unquote

and best regards
Kim

[RolandLeupi]

Dear Kim,
Not to be controversial but is'nt that a good example why UCP 500 had no need to be redesigned ? Will the future be better ?
Between us it is not my intention to provocate, but after a while in Trading Financing sometimes questions arise.
Anyhow, let's be optimistic
Roland

[KimChristensen]

Dear Roland,

I am not sure it is an example of exactly that – but I follow your line of thinking.
The way that I would put it would be some thing like: You can amend the UCP a thousand times – and you will never ever fix things like that!

Best regards
Kim

[POLTERD.]

Dear all,
I think it is a very simple (but not understanding) explanation for how issuing bank acted:
they tried to win some time before paying.
I met several time such cases: rejections made based on hilarious so called discrepancies.
Once I found out that issuing bank rejected docs because the applicant was a vip for them and they were afraid to pay without his prior consent (applicant being gone on vacancy).No comments !!!
Such cases will never stop appearing.
I give you a/m case (changing names):
bnf under l/c: TRADE EXPORT CO.
bnf under docs: TRADE EXPORT CO (without point after CO).Issuing bank rejected docs.
Would you ?
Best wishes to all
Bogdan

[KimChristensen]

Dear Bogdan,

Thanks for comments. I agree that this is the case in most of these refusals. I can not go into the specific case, but the reason I have taken it up here, it does not seem that the reason is to stall payment – or to earn the discrepancy fee (!!) – But that they consider this to be valid discrepancy within the documents. Meetings are being arranged and all

As for the TRADE EXPORT CO – with or without the punctuation … I can not say whether or not I would have rejected docks without having seen them – but surely not on the ground that you mention

Have a nice weekend.

Best regards
Kim