This is somewhat related to the discussion we had last year of what happens when a checker knows that a shipment could not arrive at a named port because it was closed for the winter.
Scenario:
L/C issued by a Middle Eastern Bank requires the commercial invoice to be certified by the Joint Arab Foreign Chamber of Commerce in the exporting country, if available. If not available, then the local chamber of commerce certification is acceptable.
Shipment was effected from the United States. The commercial invoice has been certified by a local (U.S.) chamber of commerce. The first checker wants to call this a discrepancy because she knows for a fact that there is the American Arab Chamber of Commerce in Washington D.C. The second checker does not want to cite this as a discrepancy as there might be mitigating circumstances (as illustrated below in point 4).
My questions/comments to you all:
1) Obviously, this is poor issuance. How on earth are bankers supposed to know what is available where and when? And, let's not get started on the "exporting country" twist of ISBP Paragraph 22, which makes it even worse issuance. For this particular case, the beneficiary is domiciled in the U.S., the goods were both manufactured and exported out of the U.S., so we can safely conclude that the exporting country IN THIS CASE ALONE is the United States. Otherwise, this would be even worse.
2) Do you think that we have a right to call this discrepancy as the checker has personal knowledge of the fact that such a joint foreign chamber of commerce exists?
3) And if the answer to the previous question is yes, would your answer change if the exporting country were a different country, say France, and the particular checker had personal knowledge that such a foreign chamber of commerce existed in that country? In the case of the U.S., it would be much more common knowledge for the checkers in this country to be aware of this fact. In the latter case, it would not. Keep in mind that I am not talking about investigation here. I am talking about knowledge that the checker already possesses.
4) Suppose that the checker does call it a discrepancy, and the beneficiary responds that although this foreign chamber of commerce exists, because of "X" reason (e.g., holidays, force majeure, etc.), the foreign chamber was not "available" for a period of time, therefore the local chamber of commerce had to be used for certification. Would you accept this explanation at face value and certify terms? To me, this is the most difficult question because of the word "available". At first read, one might only think in terms of whether the foreign chamber exists or not, but if you have to add in the concept of "when", that makes it nearly impossible.
I would be most interested in everyone's thoughts, as I am really wrestling with this one. (Oh, and by the way, we did not confirm and it is available with the issuing bank, so we are not in any real dilemma at this point, but we could be in the future if this issue comes up again).
By the way, Happy New Year to all and thank you in advance.
Personal knowledge of checker as it relates to a discrepancy
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RolandLeupi
- Posts: 115
- Joined: Fri Apr 05, 2019 5:26 pm
Personal knowledge of checker as it relates to a discrepancy
Lisa,
the art 22 ISBP indicates how to interprete country of origin. In your case legalisation may be done in the USA, where your client is domiciliated, but would also be acceptable if done in the country of origin of the goods, or in the country of receipt by the carrier or in the country from which shipment or dispatch is made.
Of course the checker may not know if there is or not a Joint Arab Foreign Chamber of Commmerce in the specific area. The customer however should. In those cases when the request is formulated like on your L/C and commercial invoices will only be legalized by the local Chamber we ask, even if not requested by the L/C terms and conditions, the following to be added on the invoices "we certify that no Joint Arab Foreign Chamber of Commerce is available our country (or what applies)".
Roland
the art 22 ISBP indicates how to interprete country of origin. In your case legalisation may be done in the USA, where your client is domiciliated, but would also be acceptable if done in the country of origin of the goods, or in the country of receipt by the carrier or in the country from which shipment or dispatch is made.
Of course the checker may not know if there is or not a Joint Arab Foreign Chamber of Commmerce in the specific area. The customer however should. In those cases when the request is formulated like on your L/C and commercial invoices will only be legalized by the local Chamber we ask, even if not requested by the L/C terms and conditions, the following to be added on the invoices "we certify that no Joint Arab Foreign Chamber of Commerce is available our country (or what applies)".
Roland
Personal knowledge of checker as it relates to a discrepancy
Lisa,
The credit term you describe is fairly common, but not very satisfactory as you have identified.
Rather than commenting on the issues you raise, I can only say what I believe we do at my bank in the U.K. We know full well that there is a Joint Arab Foreign Chamber of Commerce in the U.K. Therefore we refuse all relevant documents not certified / issued (as appropriate, depending on the credit’s stipulations) by, in our case, the Arab-British CoC (where the country where the Joint Arab Foreign Chamber of Commerce has to be found is the U.K.).
Were a beneficiary to claim the Arab-British CoC was not ‘available’ -a problem I understand we have not faced- we would then have to consider what would be acceptable evidence of this. At the every least I would anticipate we would require a beneficiary’s certificate which dealt satisfactorily with the fact that there is the Arab-British CoC.
I would add that I do not think it is a question of individual staff members’ knowledge. To me what matters is the information that the bank concerned already has or should have collectively, whether as a result of its documentary operations or otherwise. My impression is that your bank now has the relevant knowledge, if it did not previously, with respect to the U.S.
Jeremy
The credit term you describe is fairly common, but not very satisfactory as you have identified.
Rather than commenting on the issues you raise, I can only say what I believe we do at my bank in the U.K. We know full well that there is a Joint Arab Foreign Chamber of Commerce in the U.K. Therefore we refuse all relevant documents not certified / issued (as appropriate, depending on the credit’s stipulations) by, in our case, the Arab-British CoC (where the country where the Joint Arab Foreign Chamber of Commerce has to be found is the U.K.).
Were a beneficiary to claim the Arab-British CoC was not ‘available’ -a problem I understand we have not faced- we would then have to consider what would be acceptable evidence of this. At the every least I would anticipate we would require a beneficiary’s certificate which dealt satisfactorily with the fact that there is the Arab-British CoC.
I would add that I do not think it is a question of individual staff members’ knowledge. To me what matters is the information that the bank concerned already has or should have collectively, whether as a result of its documentary operations or otherwise. My impression is that your bank now has the relevant knowledge, if it did not previously, with respect to the U.S.
Jeremy
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JudithAutié
- Posts: 195
- Joined: Fri Apr 05, 2019 5:20 pm
Personal knowledge of checker as it relates to a discrepancy
I agree with Jeremy that there must be a certain level of knowledge (and knowledgeable staff) in any bank that deals with documentary credits.
For example when a port to port B/L is required and the credit stipulates "any port in X country", the staff must certainly know whether or not the information on the B/L is correct.
Although the word "available" is perhaps not the best, it is very common in credits coming from the Middle East, and certainly understood to mean "is there one or not", and not whether it is closed for holidays or another reason, except eventually force majeur.
Judith
For example when a port to port B/L is required and the credit stipulates "any port in X country", the staff must certainly know whether or not the information on the B/L is correct.
Although the word "available" is perhaps not the best, it is very common in credits coming from the Middle East, and certainly understood to mean "is there one or not", and not whether it is closed for holidays or another reason, except eventually force majeur.
Judith
Personal knowledge of checker as it relates to a discrepancy
hello everyone.
ucp500-art.15 states that "banks assume no liability or responsibility... for the good faith or acts and/or omissions,...".it is bnf's responsibility to comply with l/c terms and conditions.you may say it is a matter of common-sense to check if a port exists in a country or if an arab joint fcc exists in bnf's country.
i give you 2 examples:
1. l/c stating "harmonized system code no.for each item as defined by customs corporate council in brussels is required on the invoice".what you will do? you will contact the corporate council in brussels or your chamber of comerce to check? may involve a great loss of time.
2. l/c stating "invoice to be certified by a proper authority in bnf's country according to the law".you will check who is the proper authority?
ucp500-art.15 states that "banks assume no liability or responsibility... for the good faith or acts and/or omissions,...".it is bnf's responsibility to comply with l/c terms and conditions.you may say it is a matter of common-sense to check if a port exists in a country or if an arab joint fcc exists in bnf's country.
i give you 2 examples:
1. l/c stating "harmonized system code no.for each item as defined by customs corporate council in brussels is required on the invoice".what you will do? you will contact the corporate council in brussels or your chamber of comerce to check? may involve a great loss of time.
2. l/c stating "invoice to be certified by a proper authority in bnf's country according to the law".you will check who is the proper authority?