Paragragh 21

[LisaVC]

We are the presenting bank on a draw under a standby credit subject to UCP 500. The credit requires "Copy of B/L." The credit also listed ports in fields 44A and 44B. A copy of a charter party B/L was presented. The confirming bank is refusing the draw because a copy of a charter party B/L was presented rather than a copy of an ocean B/L. They quoted both Articles 23 and 25. My response was that per paragraph 21 of the ISBP, they cannot cite any discrepancies per Articles 23 and 35. A charter party is a type of B/L, therefore, it is acceptable. The confirming bank has now responded with a confusing (to me) message: "Art. 21 of the ISBP states that 'the Credit must explicitly state the details to be shown.' Details must be considered as contents of the required document and not the type of document. Therefore, we insist on the discrepancy "'Charter party bill of lading presented.'"

Do you think they are trying to say that because the issuing bank did NOT explicitly state the details to be shown on the B/L, that paragraph 21 does not apply? And if it does not apply, then Articles 23 and 25 do?

Or, do you think that they are trying to say that paragraph 21 only deals with details, therefore, Articles 23 and 25 still apply and a charter party B/L cannot be presented unless the credit so permits?

I think it is the latter, but I vehemently disagree with their position. Any advice/opinions?

Thank you in advance,
Lisa
[edited 2/15/2007 7:44:00 PM: Typos, but unfortunately cannot correct the typo in the topic title.]

[JimBarnes]

If this is a "standby" that calls for "copy of B/L", then you have the additional question of whether UCP500 Article 1 (with or without Article 21) makes the UCP500 transport doc rules inapplicable. Note that standby practice (see ISP98 Rule 4.20b) would have that effect. Regards, Jim Barnes

[NigelHolt]

Lisa,

I am cannot say what the bank is trying to say; I suspect they are either very confused or trying to hide their own ineptitude.

The position is very simple: para 21 (see also Opinion TA582rev) confirms that where an undertaking subject to UCP500 specifies, for example, "Copy of B/L." neither Article 23 nor 25 can be applied in determining the compliance of the document presented to meet that requirement and that therefore if the "Copy of B/L." must contain any specific data then the undertaking ‘must explicitly state the details to be shown’. (Incidentally, whether or not ‘ports in fields 44A and 44B’ constitutes such details could be open to question given neither Article 23 or 25 applies to the document stipulated. To me they can only be on the basis of Position Paper 3 regarding NDCs. If I had issued the standby I would have said "Copy bill of lading showing shipment from X to Y." so as to eliminate any possibility of dispute on the question.)

My opinion is that the only basis on which what appears to be a copy charter party bill of lading can be refused in this situation is that it is that it is isbp (not ISBP645) that the term ‘bill of lading’, without any qualification, automatically excludes a CPBL. I suspect in the minds of most bankers this is the case as UCP600, and the proposed revision to the ISBP, would seem to testify. Nonetheless, I would not be surprised if such an argument received little sympathy in a court of law; I could well see a judge saying ‘You asked for a ‘Copy of B/L’ and that’s exactly what you got’.

Regards, Jeremy


[edited 2/16/2007 12:03:28 PM]

[KimChristensen]

Dear Lisa,

I think that they are trying to say that they have asked “explicitly” for a “Copy of B/L” – i.e. not a “Copy of Charter party B/L”.

In any case I think they are wrong. I think that the document must be examined in accordance to UCP 500 article 21 and ISBP paragraph 19.
(I would think that the sentence quoted from paragraph 21 relates to UCP 500 article 21: “…the Credit should stipulate by who such documents are to be issued and their wording or data content…”)

So I guess the question is whether you can say that “Charter bill of lading” is a similar title as “Bill of lading” (Bearing in mind that article 23 is not in play here). I would argue that it is.

Best regards
Kim

[NigelHolt]

Good point about Art. 21 Kim.

[NigelHolt]

One thing I had not realised is that the MT700 'field specifications' expressly allow for the MT700 message to be used for standbys. Given how many of the fields simply should not be used with a standby -as Lisa’s example illustrates- it seems to me this should not be the case.

I would have thought it better to modify the -currently far from ideal for demand guarantees- MT760 to encompass expressly both standbys and guarantees.

[Yahya]

What would be your determination if the presented doc had been a copy of a CMR (Road transport doc) despite the credit calls for "copy of B/L?


Regards ,
Yahya

[LisaVC]

Wow, that's a good question. A CMR is definitely NOT a B/L as it does not meet the same requirements of what constitutes a B/L. But thankfully, I did not have to deal with that question in real life.

I just wanted to report, though, that we just received the funds from the confirming bank, so the argument worked. I am most grateful for your opinions and feedback.

As a side note, I just got back from IIBLP Annual Survey in Miami, and I encourage anyone who has the opportunity to attend one to go. I am never disappointed. [Leo, it was fantastic to see you again. Next year, save one night for dinner on me.]

Lisa

[LeoCullen]

Really good to see you too Lisa. Dinner next year
is pencilled into my diary.

And I echo your views on the Survey, Miami was a
particularly good event.

[NigelHolt]

Leo, will you be buying me dinner in Vienna? Or will it just be a beer?