department of policy and business practices - fedai of policy and business practices ... (ucp 600)...

Department of Policy and Business Practices

38 Cours Albert 1er, 75008 Paris, France Tel +33 (0)1 49 53 28 28 Fax +33 (0)1 49 53 28 59 3 November 2008/TS/wj E-mail [email protected] Website www.iccwbo.org Document 470/1110rev final

Mr. Wilko Gunster Secretary General ICC Netherlands Postbus 95309, 2509 CH Den Haag Bezuidenhoutseweg 12, 2594 AV Den Haag The Netherlands 3 November 2008

Subject: Document 470/TA.657rev (UCP 600) Dear Mr. Gunster, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE We advised and confirmed a L/C which was issued by ‘Bank X’ in Country I. After having received and checked the documents we found the following discrepancies. First discrepancy The CMR provides conflicting information regarding the carrier i.e., two carriers are named for the same routing and goods. Explanation: In Box 16 (the name of the Carrier) of the presented CMR document the name quote [Company S] unquote was inserted. In Box 23 (signature and name of the Carrier) the name quote [Company C] unquote was inserted. There was a signature placed in this box. Box 17 (the name of the successive carrier) was not completed. Second discrepancy The date of receipt of the goods and the date of issuance have been corrected and should be authenticated by the party making the change.


– 2 – Document 470/1110rev final

Explanation Box 4 (the place and date of receipt of the goods) was filled in with the typed wording quote France….11-2007 unquote and box 21 (the place and the date of issuance) was filled in with the typed wording quote Breda…..11-2007 unquote. In both boxes was manually written, in blue ink and on the dots, quote 28 unquote. We informed beneficiary about the two discrepancies observed by us and we agreed to send the documents to Bank X for payment. Later, we received an ‘advice of refusal’ from Bank X mentioning several discrepancies from which we quote two:

1. CMR Field 16 contradictory and not complete. 2. CMR Corrections and additions not signed.

Although Bank X drafted the wording of the two discrepancies in a different way, we understood that it endorsed the two discrepancies observed by ourselves, which we had communicated to the beneficiary. Later the documents were returned to us by Bank X and we returned the documents to the beneficiary. Beneficiary, however, now opines that the two discrepancies observed by the issuing bank and by ourselves are absolutely not material and it demands immediate payment from us, as the confirming bank. Please let us know whether you endorse the two discrepancies. UNQUOTE We discussed the two items within our Organization and we concluded as follows QUOTE First discrepancy Analysis Sub-article 14 (d) of UCP 600 reads:



Data in documents, when read in context with the credit, the document itself and international standard banking practice need not be identical, but must not conflict with data in that document, any other stipulated document or the credit. ICC opinion R 466 states that a CMR mentioning both quote the carrier unquote and quote the successive carrier unquote is not considered discrepant. As per Sub-article 24 (a) (i) of UCP 600 Box 23 is correctly completed by stating the name and the signature of the carrier, being apparently Company C. Conclusion A. The CMR provides conflicting information regarding the carrier i.e., two carriers are named for the same routing and goods. B. Box 17 (the name of the successive carrier) is not filled in on the CMR document and consequently ICC Opinion R 466 is not applicable. We endorse the opinion of the Dutch bank. One member has voted against this endorsement by arguing as follows: In daily practice the shipper issues the CMR on its own stationary. At time of issuance of the document the shipper apparently thought that Company S would act as the carrier and consequently this name was filled in (in Box 16.). Later, the driver of the truck stamped the document with his company stamp (Company C) and signed the document as carrier in Box 23. Whereas this procedure is normal daily practice, banks should facilitate and not refuse a CMR for that reason provided the document is signed in accordance with sub-article 24 (a) (i) of UCP 600. Second discrepancy Analysis ICC Opinion R533/TA.103 reads:

Quote The Commission was invited to comment. In the discussion the following comment was made "that corrections or additions on a transport document must be authenticated by a correction stamp as well as a signature or initials. The Commission agreed it should be clear who has corrected the document and on what authority.



Such documents are only acceptable if this procedure is, in fact, followed." [emphasis added] The adding of a freight paid stamp or an annotation of an on board date are not considered to be additions .Unquote

ISBP paragraph 9 reads: Quote Corrections and alterations of information or data in documents other than documents created by the beneficiary must appear to be authenticated by the party who issued the document or by a party authorised by the issuer to do so. Unquote Conclusion Within our National Committee we have differing views. Several of our members opine as follows: In line with ICC opinion R533, the manual adding of an issuing date or the date of receipt of the goods in a transport document is not considered to be an addition or correction and consequently there is no need for such dates to be authenticated by the issuer of the document. Especially, in case of a CMR, it is daily practice that the driver manually fills in CMR with the date of receipt of the goods. Furthermore, ISBP paragraph 11 reads Quote The use of multiple type styles or font sizes or handwriting in the same document does not , by itself, signify a correction or alteration. Unquote Other members opine as follows: The date of issue and the date of receipt/on board of the goods are crucial information on any transport document and banks must be able to ascertain that the issuer of the document completed this information. Therefore, the carrier or its agent must authenticate manual alterations or additions in this respect. Since ICC Opinion R533/TA103 was published prior to ISBP, the Banking Commission is invited to reconsider ICC Opinion R533 in such a way that a manually inserted ‘issuing date’ or ‘date of receipt of the goods’ or ‘on board date’ on any transport document is to be considered a correction or alteration as prescribed in ISBP paragraph 9. UNQUOTE Please let us know whether you endorse our opinion with regard to the first discrepancy and which of the two opinions with regard to the second discrepancy you endorse.



ANALYSIS Discrepancy 1. The CMR evidences two carrier names and therefore there is no clear indication of the party that is acting as carrier. Sub-article 24 (a) (i) requires the road transport document to indicate the name of the carrier. ICC Opinion R.466 is not applicable in this case. Discrepancy 2. Whilst the month and year were typed on the CMR document, the actual day of the month that the goods were received for shipment was added by pen. The same circumstances apply to the date of issuance of the CMR. Sub-article 24 (a) (ii) requires that the CMR indicate the date of shipment or the date the goods have been received for shipment, dispatch or carriage at the place stated in the credit. This sub-article goes on to state “Unless the transport document contains a dated reception stamp, an indication of the date of receipt or a date of shipment, the date of issuance of the transport document will be deemed to be the date of shipment.” By the completion of box 4 (place and date of receipt of the goods), the date appearing in box 21 (place and date of issuance) will not be considered in the determination of the date of receipt or shipment. Therefore, the manual date inserted in box 21 is not relevant to the determination of compliance of the CMR and should not be considered discrepant for the reason of the addition not being authenticated. With regard to the insertion, by pen, of “28” in box 4 and 21 it should be noted that the document was produced with a space for the actual date (day) to be inserted. As referred to in ISBP paragraph 11, a document containing different forms of styles, font sizes or handwriting in the same document, does not, by itself, signify a correction or alteration to the document. CONCLUSION Discrepancy 1. The CMR is discrepant. Discrepancy 2. The insertion of the actual date in box 4, by pen, does not require authentication by the carrier or their agent. There is no discrepancy.



The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,

Thierry Senechal Policy Manager Banking Commission



Mr. Kim Hyun Min ICC Korea Chamber of Commerce Building 45 Namdaemunnu-4ga, Joong-gu Seoul 100-743 Republic of Korea 3 November 2008

Subject: Document 470/TA.658 final (UCP 600) Dear Mr. Kim, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE Issue: whether a mistype of the L/C No. in a bill of lading is a discrepancy justifying refusal of payment by an issuing bank and whether the action by the negotiating bank of sending a revised document to the issuing bank after receiving the discrepancy notice is deemed as having accepted the discrepancy notice on the part of the negotiating bank. We received the following discrepancy notice from the issuing bank. Discrepancy notice states: “B/L marked L/C No.7AAAA1/0165/AN instead of 7AAAA1/0165/4A.” [The correct L/C No. in the credit was stated as 7AAAA1/0165/4N] The L/C No. in the B/L was mistyped as AN instead of the correct 4N stated in the credit. The issuing bank also mistyped the L/C No. as 4A instead of 4N in their discrepancy notice to the negotiating bank. It shows to the issuing bank how easy it is to mistype one letter in a long L/C No.



All other documents are in order in terms of the LC number. Is this is a discrepancy which would justify the issuing bank from refusing payment? When a nominated bank sends a revised document after receiving a discrepancy notice, is this action considered as having accepted the discrepancy notice as valid? ANALYSIS As referred to in ICC Opinion R. 289 a requirement for the insertion of a credit number on a document is only to assist in tracing documents should they go astray. Since the documents were received by the issuing bank and the issuing bank is applying the presented bill of lading under the correct credit number it would seem to be an irrelevance and not valid grounds for refusal. The fact that the issuing bank misquoted the credit number would not detract from the intent of the discrepancy that they were intending to highlight. CONCLUSION The misquoting of the credit number on the bill of lading does not create a reason for refusal. The fact that a refusal is sent to a nominated bank or a beneficiary and they provide a replacement or corrected document does not, in itself, signify their acceptance of the discrepancy. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.



Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,




Ms. Christy Li, International Chamber of Commerce 1201, 12/F., Bank Centre, 636 Nathan Road, Mongkok, Kowloon Hong Kong 3 November 2008

Subject: Document 470/TA.659rev (UCP 600) Dear Ms. Li, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE

We, at the request of the beneficiary, would like to seek ICC’s opinion in relation to the following case: BACKGROUND L/Cs issued by: Bank M, Country H (Bank I) Favouring: Company T, Country H (beneficiary) For account of: Company F, Country T Subject to UCP600 Presenting Bank: Bank F, Country H (Ourselves) CIRCUMSTANCES Bank I issued several L/Cs amounting to about USD500,000.00 each, with the following terms: “All banking charges except L/C opening charges are for beneficiary’s account” No other reference to bank charges was made except for the above. We, acting as presenting bank, presented the documents to Bank I for payment, as requested by the beneficiary. When we received the payment, there were some



charges deducted named as payment commission, handling charges and commission in lieu for over USD1000.00 per payment. Beneficiary could not understand the reasons for Bank I collecting such a huge amount of commission, except their cable charges, when not so stipulated in the L/C. We understand from ICC opinion R380-1998/99 that the issuing bank should clearly indicate the amount or percentage of charges that they wish to make even if the L/C stipulates that all charges outside the country of the issuing bank are for beneficiary’s account and to be deducted from the proceeds. As such, we have sent a SWIFT message to the bank drawing its attention to the opinion. However, Bank I still refuses to refund the charges to the beneficiary with their reasons as below: QUOTE We would like to point out that your assertion seems not the case. The term in our L/C is ‘all banking charges except L/C opening charges are for beneficiary’s account’, whereas the ICC opinion R380 you quoted is about cases when L/C is stipulated ‘all charges outside issuing bank’s counter are for beneficiary’s account’. It is very different with the stipulations of our L/Cs. We totally agree with you that if a L/C is stipulated as the latter and not mentioned otherwise somewhere else on said L/C, it is not proper for an issuing bank to charge beneficiary any charges incurred in their own bank upon payment. It is therefore, we regret to inform you that we have to turn down your request and close our file at our end. UNQUOTE ANALYSIS The credit stated that all banking charges except L/C opening charges were for the beneficiary’s account. This would mean that the applicant was only responsible for the fees associated with the issuance of the credit. The beneficiary would be responsible for any other fees incurred by the issuing bank including amendment and costs associated with the examination of documents together with the fees incurred in the country of the beneficiary. Where one or more charges of the issuing bank are to be paid by the beneficiary, the credit should clearly indicate the amount or percentage amount that will be deducted in order that the beneficiary and any nominated bank are aware of the level of deductions to be made from the proceeds of a complying presentation.



CONCLUSION The credit stated that all banking charges except those related to the opening were for the account of the beneficiary. If the issuing bank wishes to make a deduction from the proceeds in respect of their fees, then the credit should clearly indicate the amount or percentage of charges that will be deducted. It will then be for the beneficiary to decide whether it will perform under the credit with such a charge for its account. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,




Ms. Marlén Sandvik ICC Denmark Boersen 1217 Copenhagen K. Denmark 3 November 2008

Subject: Document 470/TA.660rev (UCP 500) Dear Ms. Sandvik, Thank you for your query regarding UCP 500. Please find below the opinion of the Banking Commission.

QUOTE We are seeking the Banking Commission's official Opinion regarding a dispute between the issuing bank and ourselves, as confirming bank, regarding an alleged discrepancy in a certificate of origin presented under a documentary credit subject to UCP 500. The issuing bank has refused to effect payment and claims that it has been unable to obtain the applicant's acceptance of the documents. In its refusal of the documents the issuing bank gave as the reason: "C.O.Origin: Gross Weight shown as Net Weight" The weights in the certificate of origin were stated as follows: "78880 kg.Net/71920 kg.Gross" which is obviously wrong. In other documents presented under the credit the weights are stated correctly as: "71920 kg.Net/78880 kg.Gross"



In our view this mistake is not a discrepancy which should warrant a refusal of payment as it is obvious that this is a simple mistake which cannot cause any confusion. We believe the mistake should be treated like a simple misspelling or typing error as described in paragraph 28 of ICC Publication no. 645. An official Opinion would be highly appreciated. ANALYSIS You indicate that you consider the transposing of the weights as being a typographical error as described in paragraph 28 of the International Standard Banking Practice, ICC publication no. 645. The paragraph in question refers to misspellings or typing errors that do not affect the meaning of a word or sentence in which it occurs. Clearly, weights that differ between documents will create an inconsistency as referred to in sub-article 13 (a). Whilst paragraph 28 will help serve in determining compliance in a number of transactions, it should be noted that it will not cover every circumstance. Also, it is not possible to have a net weight that is greater than the gross weight of the same goods. CONCLUSION The transposing of the weights should not be seen as a discrepancy. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.




Yours sincerely,




Mr. Ataur Rahman ICC Bangladesh 6/F Chandrashila Suvatsu Tower 69/1 Panthapath 1205 Dhaka Bangladesh 3 Novemer 2008

Subject: Document 470/TA.661rev (UCP 600) Dear Mr. Rahman, Thank you for your query regarding UCP 600 received from one of your members. Please find below the opinion of the Banking Commission.

QUOTE

It has become necessary to obtain an official ICC Banking Commission response from the ICC in respect of a query regarding drawing of drafts under a UCP 600 credit available by acceptance with a nominated bank (or any bank), to eliminate confusion and to develop a common understanding while handling such credits. This clarification is necessary because we observed different practices and interpretations among practitioners.

Query : Two questions regarding preparation of drafts for drawing under a documentary credit which is available with any bank or a particular nominated bank by acceptance.

We found different views and practices among practitioners in Bangladesh and found no official guidelines in respect of drafts which are to be drawn under a credit available by acceptance with any bank or a particular nominated bank. Question no: 1: If a credit is available by acceptance of beneficiary's draft at 90

days sight with any bank or a particular nominated bank, on whom should the drafts be drawn; nominated bank (or any bank, where the credit is available with any bank) or issuing bank?



Question no: 2: If a draft is drawn on the issuing bank, can a nominated bank accept such draft?

ANALYSIS & CONCLUSION Question 1. If a credit is available by acceptance with a named nominated bank, then the draft must be drawn on that nominated bank, if they agree to act on their nomination. If the credit is available with any bank by acceptance, the credit should state that the draft is to be drawn on “the nominated bank”. The nominated bank will be the bank that agrees to act upon the nomination, at the request of the beneficiary, and on whom the draft is to be drawn and their name is to be specifically stated on the draft as the drawee. Question 2. If a draft is drawn on the issuing bank, it is for the issuing bank to accept the draft. If the draft is drawn on the issuing bank, the credit should be available with the nominated bank by negotiation and not acceptance. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.




Yours sincerely,




Ms. Esther Boey ICC Malaysia c/o Federation of Malaysian Manufacturers Wisma FMM, No. 3 Persiaran Dagang PJU 9, Bandar Sri Damansara, 52200 Kuala Lumpur Malaysia 3 November 2008

Subject: Document 470/TA.662rev (UCP 600) Dear Ms. Boey, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE

Article 22 of UCP 600 begins with the wording “A bill of lading, however named, containing an indication that it is subject to a charter party (charter party bill of lading) must appear to”. [emphasis added] My questions are as follows: 1. A credit calls for a marine bill of lading and the document presented appears to comply with the requirements of the credit and article 20 of UCP 600 except that the document contains pre-printed wording “Issued pursuant to charter party dated……….” without specifying any date in the blank space. The document also contains the terms and conditions of carriage that we see on a normal bill of lading, on the reverse of the document and was titled “Bill of Lading”. Should this document be treated as a charter party bill of lading? 2. A credit calls for a marine bill of lading and the document presented appears to comply with the requirements of the credit and article 20 of UCP 600 except the document contains a stamp “Freight payable as per charter party”. The document also contains the terms and conditions of carriage that we see on a normal bill of



lading, on the reverse of the document. Should this document be treated as a charter party bill of lading? 3. The document contains the title “Charter Party Bill of Lading” and there is no other reference to charter party on the bill of lading. The document otherwise complies with the requirements of the credit and article 20 of UCP 600 and also contains the terms and conditions of carriage that we see on a normal bill of lading on the reverse of the document for a marine bill of lading. Should this document be treated as a charter party bill of lading? If so, what meaning can be attributed to the words “however named” in article 22? All 3 documents were signed by an agent as agent for the named carrier. Chamber of Commerce l ICC Malaysia My comments, for your information, are as follows: 1. Just because the document has pre-printed wording “Issued pursuant to charter party dated……….”, I would not treat this document as a charter party bill of lading unless the sentence is completed with the date. 2. I would not treat the documents referred to in questions 2 and 3 above to be charter party bills of lading. ANALYSIS In addition to the wording that appears in sub-article 22 (a) and shown at the beginning of this query, sub-article 20 (a) (vi) states, in relation to bills of lading, “contain no indication that it is subject to a charter party.” The requirement in sub-article 20 (a) (vi) is for the document examiner to be able to determine whether or not the bill of lading has been issued with a view that it be used in conjunction with a charter party. CONCLUSION 1. The document contains the following wording “Issued pursuant to charter party dated…..”. For the purposes of sub-articles 20 (a) (vi) and 22 (a), this represents an indication that it is issued subject to a charter party. 2. Although the content of the bill of lading complies with the requirements of article 20, the inclusion of “freight payable as per charter party” is an indication that the bill of lading was issued subject to a charter party. This document would be



considered to be a charter party bill of lading for the purposes of examination under UCP. 3. The document is titled “Charter Party Bill of Lading”. For the purposes of sub-article 20 (a) (vi) and 22 (a), this represents an indication that it is subject to a charter party. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,




ICC Turkey Atatürk Bulvari N° 149 06640 Bakanliklar-Ankara Turkey 3 November 2008

Subject: Document 470/TA.663rev (UCP 600) Dear Sirs, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE A credit includes a documentary condition reading “Rice Inspection Services Certificate in one original issued by USDA-FGIS final at the time and place of loading also indicating Crop Year 2007.” The presented certificate includes the statement reading “Applicant states that this is from the crop year 2007”. The issuing bank treats the document as discrepant for the reason that the statement in question must be that of the issuer, i.e., all issues of certification of findings must come from the party who issues the respective certificate. Since the nominated bank has contested the issue we shall appreciate your opinion. ANALYSIS & CONCLUSION An inspection certificate that otherwise complies with the terms and conditions of the credit and sub-article 14 (f) would be acceptable bearing the statement indicated above. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.



If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,





Subject: Document 470/TA.664rev (UCP 600) Dear Sirs, Thank you for your query regarding UCP 600 & ISBP. Please find below the opinion of the Banking Commission.

QUOTE One of the special conditions of the credit stated “All corrections must be authenticated by the issuer of the respective document.” Since we, as the nominated bank received contestations from the issuing bank on the following issues we shall appreciate your opinion as to whether these contestations were justified. UCP’s signing requirements were satisfied.

• The credit called for an invoice legalized by the chamber of commerce. The presented invoice showed some corrections bearing authentication by the chamber of commerce. Relying on ISBP paragraph 9 we accepted the document as complying, but the issuing bank stated that the corrections should have been authenticated by the beneficiary since the special condition overruled ISBP paragraph 9.

• The B/L showed a correction authenticated by the agent of the carrier who signed the document. But the issuing bank stated that the correction should have been authenticated by the carrier whose name appears at the heading, because the issuer of the document was the carrier, not the agent.

• Similar to the case with the B/L, as above, the issuing bank stated that the correction on the insurance policy should have been authenticated by the insurance company whose name appears at the heading, not by the agent who signed it since the issuer was the insurance company.



ANALYSIS ISBP paragraph 9 reads “Corrections and alterations of information or data in documents, other than documents created by the beneficiary, must appear to be authenticated by the party who issued the document or by a party authorized by the issuer to do so. Corrections and alterations in documents which have been legalized, visaed, certified or similar, must appear to be authenticated by the party who legalized, visaed, certified etc., the document. The authentication must show by whom the authentication has been made and include the signature or initials of that party. If the authentication appears to have been made by a party other than the issuer of the document, the authentication must clearly show in which capacity that party has authenticated the correction or alteration.” The context in which “All corrections must be authenticated by the issuer of the respective document” is written, should be understood to apply to the entity that issued, or completed and signed the document. It therefore follows that the ‘issuer’ (as referred to in the special condition) may or may not be the entity that is named in the heading of the document. It could be the company or person that is completing and signing the document on behalf of the named entity. For bills of lading and insurance documents it is common practice that they be completed and signed by the agent of the carrier or agent of the insurance company. It should be noted that the paragraphs of ISBP apply to the extent that the credit does not modify or exclude their application. CONCLUSION Let us take each document in turn: Invoice – the special condition would require the beneficiary and the Chamber of Commerce to authenticate any correction or alteration. This is in addition to the requirements expressed in ISBP paragraph 9. Bill of lading – the special condition would allow for the correction or alteration to be completed by the named carrier or the entity that completed and signed the bill of lading on behalf of the carrier i.e., their agent. Insurance policy - the special condition would allow for the correction or alteration to be completed by the named insurance company or the entity that completed and signed the insurance policy on behalf of the insurance company i.e., their agent (or proxy).



The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,






QUOTE We refer to the statement in the 4th paragraph of page 91 of the Commentary on UCP 600 reading, “Unless it is evident from the bill of lading that the shipped on board statement applies to the vessel and the port of loading, the bill of lading will require, as was the case in UCP 500, an on board notation showing the port of loading and the name of the vessel, even if the goods are loaded on the vessel named in the bill of lading.” In cases where the B/L contains pre-printed wording reading “Shipped on board in apparent good order and condition for carriage to the port of discharge ...........” with the fields for the name of the vessel and port of loading completed in accordance with the credit terms, with a place of receipt not mentioned in the credit and without any detail of a pre-carriage, we have observed that the above-mentioned statement in the Commentary is interpreted by document checkers differently as follows:

a) Where there is no reference to any pre-carriage (feeder vessel, rail or truck), there is no need for a separate on board notation showing the port of loading and the name of the vessel because it is evident that the pre-printed shipped on board statement clearly applies to the vessel and port of loading named in the respective fields of the B/L and not to any means of pre-carriage, since none is mentioned.



b) A separate dated on board notation showing the port of loading and the name of the vessel is required in order to see the evidence that the pre-printed shipped on board statement indeed applies to the vessel and the port of loading named in the document, regardless of the fact that there is no reference to any details of pre-carriage.

We shall appreciate your opinion as to which interpretation is correct. ANALYSIS Sub-article 20 (a) (ii) includes the following “indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by: ….”. Although the wording that appeared in UCP 500 sub-article 23 (a) (ii) – i.e., regarding the need for an on board notation including the port of loading and name of the vessel on which the goods had been loaded, where the bill of lading indicated a place of receipt or taking in charge different from the port of loading - has not been incorporated into article 20, the requirements for such an on board notation remain unchanged under UCP 600. The issues in this query have already been addressed in ICC Opinion TA.635rev (query 3) which was approved at the October 2007 meeting of the Banking Commission. The conclusion given in that opinion included: “A bill of lading is a generic term for a transport document that includes, but is not necessarily limited to, transport by sea from a port of loading to a port of discharge. It is recognized, however, that there will still be occasions when the shipping company or its agent will include reference to a place of receipt or taking in charge that is different from the port of loading. To cover this eventuality, the content of sub-article 20 (a) (ii) reads: “indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:”. The emphasis in this condition is that the document checker must be able to determine that the bill of lading appears to indicate that the shipped on board statement (pre-printed wording or by a separate notation) relates to loading on board the named vessel at the port of loading stated in the credit and not to any pre-carriage of the goods between a place of receipt or taking in charge and the port of loading. Unless it is evident from the bill of lading that the shipped on board statement applies to the vessel and the port of loading, the bill of lading will require an on board notation showing the port of loading and the name of the vessel, even if the goods are loaded on the vessel named in the bill of lading.



When a place of receipt or taking in charge is the same as the port of loading e.g., place of receipt Hong Kong CY and port of loading Hong Kong and the bill of lading does not evidence any means of pre-carriage i.e., only shows the name of the vessel, they are to be deemed one and the same place and therefore an on board notation, as described above, will not be required.” It should be noted that the Commentary on UCP 600 is not an official publication of the ICC Banking Commission. CONCLUSION If there is a place of receipt shown on the bill of lading and it is different from the port of loading stated in the credit, then (b) will apply to the extent that it is not evident from the bill of lading that the shipped on board statement applies to the named vessel and the port of loading stated in the credit. The requirements of sub-article 20 (a) (ii) are not conditioned on both the pre-carriage and place of receipt fields being completed on the bill of lading. If the place of receipt is the same as that of the port of loading stated in the credit, then any on board notation need only be dated. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,






QUOTE We refer to the approved ICC Opinion TA.650rev which states in its conclusion that a dated on board notation is required when a MMTD evidences the first leg of the carriage as a sea shipment from the port stated in the credit, i.e. there is a need for evidence of the date the goods were shipped on board by means of pre-printed wording or an added notation. Since the pre-printed wording of the transport document mentioned in the above-mentioned query was not given we shall appreciate a clarification as to whether the above-mentioned statement is applicable also for the four cases containing pre-printed wording with the respective fields of the MMTDs as shown below: (In all cases, the credits require shipment from X port to the inland place M). Case A:

Pre-carriage by

Place of Receipt X Port

Ocean Vessel Vessel V

Port of loading X Port

Port of Discharge R

Place of Delivery M



Pre-printed wording : “Taken in charge in apparently good condition herein at the place of receipt for transport and delivery as mentioned above, unless otherwise stated. The MTO/Carrier in accordance with the provisions contained in the MTD undertakes to perform or to procure the performance of the multimodal transport from the place at which the goods are taken in charge, to the place designated for delivery and assumes responsibility for such transport.” ....... (Surrender clause) ............ Case B: (The document is a FBL)

Pre-printed wording: “Taken in charge in apparent good order and condition, unless otherwise noted herein, at the place of receipt for transport and delivery as mentioned above. ..... (Surrender clause)......... Case C: (The document is a FBL)

Pre-printed wording: “Taken in charge in apparent good order and condition, unless otherwise noted herein, at the place of receipt for transport and delivery as mentioned above. ..... (Surrender clause).........

Pre-carriage by

Place of Receipt X Port

Ocean Vessel Vessel A

Port of loading Y Port

Port of Discharge F

Place of Delivery M

Pre-carriage by

Place of Receipt

Ocean Vessel Vessel B


Port of Discharge G

Place of Delivery M



Case D:

Pre-printed wording : “Received in apparent good order and condition except as otherwise noted the total number of containers or other packages or units enumerated below for transportation from the place of receipt or port of loading whichever applicable to the place of delivery or port of discharge whichever applicable subject to terms hereof”. ........... (Surrender clause) .................. ANALYSIS In all the cases that have been quoted, the credit required shipment from a port to an inland destination. The conclusion to ICC Opinion TA.650rev included “A dated on board notation is clearly required when the credit so requests. It is also required when the document evidences the first leg of the carriage as a sea shipment from the place stated in the credit.” To this extent, sub-article 19 (a) (ii) includes “indicate that the goods have been dispatched, taken in charge or shipped on board at the place stated in the credit…” thereby providing the various options depending on the type of transport document presented. The query refers to different forms of transport documents but the same conclusion will apply notwithstanding the type or title of document presented. CONCLUSION Case A. The transport document requires a dated on board notation.

Pre-carriage by

Place of Receipt

Ocean Vessel Vessel C


Port of Discharge K

Place of Delivery M



Case B. The transport document requires a dated on board notation showing the name of the vessel that sailed from X Port and port of loading ‘X Port’. Case C. The transport document requires a dated on board notation. Case D. The transport document requires a dated on board notation. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,




Ms. Marlén Sandvik ICC Denmark Boersen 1217 Copenhagen K. Denmark 21 August 2008


QUOTE A documentary credit issued subject to UCP 600 calls for a bill of lading showing shipment from “Hamburg Port” to “Hong Kong Port”. The bill of lading presented included the following information: Place of Receipt:

“Hannover by truck” Ocean Vessel: “Vessel XX”

Port of Loading: “Hamburg”

Port of Discharge: “Hong Kong”

Place of Delivery:

The bill of lading did not include a separate on board notation – but did include pre-printed wording indicating that goods are “shipped on board” as well as a “date of issue”. Kindly advise if the above is in compliance with UCP 600 sub-article 20 (a) (ii) and (iii) ANALYSIS Sub-article 20 (a) (ii) includes “indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:….” and sub-article



20 (a) (iii) includes “indicate shipment from the port of loading to the port of discharge stated in the credit.” Although the wording that appeared in UCP 500 sub-article 23 (a) (ii) – i.e., regarding the need for an on board notation including the port of loading and name of the vessel on which the goods had been loaded, where the bill of lading indicated a place of receipt or taking in charge different from the port of loading - has not been incorporated into article 20, the requirements for such an on board notation remain unchanged under UCP 600. The issues in this query have already been addressed in ICC Opinion TA.635rev (query 3) which was approved at the October 2007 meeting of the Banking Commission. The conclusion given in that opinion included: A bill of lading is a generic term for a transport document that includes, but is not necessarily limited to, transport by sea from a port of loading to a port of discharge. It is recognized, however, that there will still be occasions when the shipping company or its agent will include reference to a place of receipt or taking in charge that is different from the port of loading. To cover this eventuality, the content of sub-article 20 (a) (ii) reads: “indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:”. The emphasis in this condition is that the document checker must be able to determine that the bill of lading appears to indicate that the shipped on board statement (pre-printed wording or by a separate notation) relates to loading on board the named vessel at the port of loading stated in the credit and not to any pre-carriage of the goods between a place of receipt or taking in charge and the port of loading. Unless it is evident from the bill of lading that the shipped on board statement applies to the vessel and the port of loading, the bill of lading will require an on board notation showing the port of loading and the name of the vessel, even if the goods are loaded on the vessel named in the bill of lading. CONCLUSION The bill of lading will be discrepant unless it is evident that the shipped on board statement applies to the named vessel and the port of loading stated in the credit. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.



If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,






QUOTE A documentary credit issued subject to UCP 600 calls for “Beneficiary’s certificate along with relevant courier receipt certifying that one set of non-negotiable documents have been sent to the applicant within 3 working days after shipment date.” After presenting the documents to the issuing bank, the nominated bank received a notice of refusal from the issuing bank indicating the following discrepancy: “The presented courier receipt was not signed”. The courier receipt was not signed. It did however include a barcode, and there was no signature space included on the document. Is the refusal of the issuing bank correct? ANALYSIS By requiring a courier receipt and not a copy of a courier receipt, an original courier receipt was required according to sub-article 17 (a). As mentioned in ICC Opinion TA.654rev, which was approved at the April 2008 Banking Commission meeting, an original courier receipt should be signed. However, the document in question has no signature space. The structure of a courier receipt is not governed by the UCP; this is for each courier company to determine. The ICC Banking Commission cannot dictate that a signature is required where the courier company’s document does not require such evidence.



CONCLUSION The courier receipt is acceptable. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,






QUOTE

ICC Opinion TA.572 – Issue No. 1 (October 2004) describes the situation where the documentary credit states that “Transport document issued by Freight Forwarder not acceptable”. The conclusion of the opinion was that “..the bank would be obliged to accept a bill of lading that was signed “as carrier” irrespective of any knowledge they may have as to the capacity of the issuer” – i.e., even where the transport document was titled “FBL BIFA Negotiable FIATA Multimodal Transport Bill of Lading”.

a. The above opinion was given subject to UCP 500, and we ask you kindly to inform us if the same position would apply under UCP 600.

b. Also kindly advise if the conclusion above would be the same had the documentary credit stated that “House bill of lading not acceptable” or similar.

ANALYSIS One of the reasons behind conditions such as “freight forwarder bills of lading are not acceptable” or “house bills of lading not acceptable” is to require the issuance of a bill of lading by the carrier, albeit that the freight forwarder or agent could sign the bill of lading according to the requirements expressed in sub-article 20 (a) (i). If a freight forwarder or agent signs as carrier, the bill of lading becomes a carrier document.



CONCLUSION (a) The same position applies under UCP 600. (b) If the credit states “house bill of lading not acceptable” or similar, the same

position will apply. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,





Subject: Document 470/TA.670 final (UCP 600) Dear Ms. Sandvik, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE A documentary credit issued subject to UCP 600 requires a “Vessel certificate issued by Shipping Company or their agents.” Would a “Vessel Certificate” issued by either “the carrier” or “the agent for the carrier” be acceptable? – i.e., a party that appears on the bill of lading (part of the same presentation) – but not specifically “identified” in the documents as “Shipping Company” or “Agent for the Shipping Company”? ANALYSIS & CONCLUSION Yes. A vessel certificate issued by the carrier indicated on the bill of lading, or an agent signing on their behalf, would comply. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.




Yours sincerely,




Mr. Tell Hermanson Secretary General ICC Sweden Västra Trädgårdsgatan 9 P.O. Box 16050, 103 21 Stockholm Sweden 3 November 2008

Subject: Document 470/TA.671 final (UCP 600) Dear Mr. Hermanson, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE One of the members of ICC Sweden has submitted the following query (as negotiating and confirming bank) regarding the interpretation of the terms of the letter of credit. On March 19, 2008 the issuing bank issued a credit stipulating: In the swift message MT 700: Field 43P Partial shipments allowed for two lots Field 45A Description of goods: … total quantity 3385 cbm will be shipped in two lots. Each of 1.692 cbm. and Field 47A: additional conditions point 9) Shipment of the quantity of this L/C is to be effected in two lots. On March 27, 2008 the credit terms were amended as follows: Field 43P to read allowed without mentioning two lots Field 45A amend total quantity to read 3385 and whole quantity to be shipped in two lots without mentioning the quantity of each lot of the two lots.



Field 47A: completely delete clause 9. First shipment for 1.629,138 cbm was shipped on March 19, 2008. Documents were sent on April 8, 2008 and the documents were accepted. Second shipment for 720,070 cbm was shipped on April 10, 2008. Documents were sent on April 24, 2008 and the documents were accepted. Final shipment for 217,473 cbm was shipped on May 14, 2008. Documents were sent on May 30, 2008. The documents were refused by the issuing bank on June 3, 2008, due to shipment in three lots. In a message on June 4, 2008 to the issuing bank, the confirming bank argued that since the credit was amended under Field 43P and Field 47A point no. 9, part shipments are allowed. On June 5, 2008 the issuing bank reverts, and states that the documents are discrepant and that their amendment does not mean acceptance of more than two lots as the description of the goods read “total quantity to read 3 385 cbm and whole quantity is to be shipped in two lots” without mentioning the quantity of each lot of the two shipments. The confirming bank would like to have your opinion on whether it is correct for the issuing bank to maintain its position and that the mentioning of two lots in the goods description in fact overrules the information given in Field 43P and emphasised by the deletion of the additional conditions mentioned in Field 47A point no. 9; “shipment of the quantity of this credit is to be effected in two lots”. ANALYSIS Sub-article 31 (a) provides the rule for partial drawings or shipments – they are allowed. Article 1 states that the rules of UCP 600 are binding on all parties thereto unless expressly modified or excluded by the credit. If partial shipments are to be allowed, the credit could remain silent on this issue and the rule in sub-article 31 (a) will automatically apply. A credit stating that partial shipments are allowed permits any number of shipments to be made. For the credit in question, the issuing bank has modified the rule by the reference to shipment in two lots. The credit, as issued, required two shipments of an equal quantity of goods.



By an amendment, the reference to “in two lots” was deleted from field 43P and field 47A clause 9. However, field 45A still required shipment to be effected in two lots but without the restriction that shipments of an equal quantity be made. Qualification as to the number of shipments to be made can be stated anywhere on the credit and not just in field 43P or 47A. In effect, the second drawing was discrepant for the reason that the balance of the goods was not shipped at that time. The query reflects that the documents were accepted. It is not clear whether the acceptance was by waiver of the applicant to the discrepancy that not all the goods had been shipped or error on the part of the issuing bank in not observing the discrepancy. CONCLUSION The issuing bank was entitled to refuse the documents presented as a third drawing. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,




M. Burger-Scheidlin ICC Austria - International Chamber of Commerce Wiedner Hauptstrasse 73 1040 Vienna, Austria 3 November 2008

Subject: Document 470/TA.672rev Dear Mr. Burger-Scheidlin, Thank you for your query regarding UCP 600. Please find below the opinion of the Banking Commission.

QUOTE On behalf of an Austrian bank, ICC Austria is seeking an opinion of the Banking Commission to the following dispute under UCP600 between a confirming bank and an issuing bank. Subject issue concerns pre-payment of a confirming bank against credit conforming documents under a deferred payment credit and non reimbursement at maturity by the issuing bank due to a court order but in violation to sub-article 12 (b) and consequently sub-article 7 (c). Query Kind of transaction: Irrevocable confirmed, deferred payment letter of credit (‘LC’) Issuing bank: IB Nominated confirming bank: CB Applicant: Subsidiary of a Multinational Beneficiary: Trader Payment terms: Available by 90 days deferred payment at the counters of

CB Confirmation instructions: CONFIRM Underlying transaction: Delivery of Steel LC subject to: UCP600



CB purchased the deferred payment undertaking resulting from documents presented in full conformity with the terms and conditions of the LC and effected payment to the beneficiary on a without recourse basis. IB confirmed, by authenticated SWIFT, the acceptance of documents and the remittance of funds with value maturity date. One day before maturity date IB informed CB by two subsequent authenticated SWIFT messages as follows:

Message 1: Please be informed that as per court order payment of this credit has been stopped. Message 2: According to the order dated May 14, 2008 issued by the Court of First Instance in the preliminary cautionary measures the planned payment is stopped. Because of this judicial order we cannot effect the above mentioned payment. You are requested to inform immediately the beneficiary in order to contact urgently the applicant.

These messages were followed by a telefax copy of the court order and a SWIFT request to inform IB whether CB has already (pre)paid to the beneficiary, which was confirmed by CB. On May 21, 2008 following SWIFT was sent by CB to IB (extract), which remained unanswered up to date of writing:

We wish to draw your attention to the following facts: 1. The Court Order dd. May 14, 2008 of the Court of First Instance is

addressed to your bank, in order to proceed with the suspension of payment according to the instructions of applicant of lc.



This court order forbids you payment to be effected to the beneficiary.

2. According to Art. 7c of the UCP 600 of ICC a) your bank is obliged to reimburse the nominated bank, i.e. CB, at

maturity

b) your undertaking to reimburse us is i n d e p e n d e n t of your undertaking to the beneficiary

3. According to Art. 12b of the UCP 600 you authorized us to prepay or

purchase a deferred payment undertaking incurred by us 4. As you are aware we prepaid the deferred payment undertaking to the

beneficiary.

As a matter of fact we, CB are the owner of the receivables and entitled to receive the counter-value without any further delay.

Summarizing the above we regard you as a highly reputable bank with an excellent standing and experience in the international business, including documentary credits, and thus anticipate your assistance in solving the pending problem by appealing against the court order and to immediately remit funds in favour of our bank.

Information with regard to the underlying transaction: Applicant’s reason for obtaining court order was due to quality claims. Beneficiary’s offer to reduce the purchase price was waived. The applicant wanted to unwind the whole transaction. By the way, the steel prices were rising during the period from concluding the contract/fixing the purchase price and maturity date. It is the opinion of the Austrian banks that a pre-paying nominated bank has an independent reimbursement claim against the issuing bank in accordance with sub-article 7 (c) of UCP 600 as a consequence of the authorization given to the nominated bank under sub-article 12 (b) of UCP 600. Therefore the issuing bank will be obliged to honour the nominated bank's reimbursement claim immediately upon maturity, even if a court order issued against the issuing bank prohibits payment to the beneficiary under the letter of credit/payment under the letter of credit/recovering of funds from applicant.



What is the position of ICC concerning the issuing bank’s attitude? Have any of the member banks already faced such a problem since the implementation of UCP 600 (which puts special emphasis on implementing clauses governing prepayment with respect to purchase of deferred payment undertakings incurred)? ANALYSIS Sub-article 12 (b) states “By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank.” Sub-article 7 (c) includes “Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity.” The confirming bank determined that the documents complied, based upon their examination according to the requirements of sub-article 14 (a). It should be noted that whilst the court order forbid the issuing bank from making payment to the beneficiary, payment had already been made and it was the reimbursement from the issuing bank that was due to the confirming bank. By issuing a credit available with a nominated bank by deferred payment, the issuing bank is authorizing (according to sub-article 12 (b)) that bank to incur their deferred payment undertaking and to effect prepayment or purchase thereunder provided a complying presentation is made. The issuing bank accepted the documents and confirmed the due date Clearly, an issuing bank cannot ignore a court injunction and their defence for not reimbursing will be based upon the terms of the injunction. However, the basis for the injunction being issued seems to be related to the quality of the goods and therefore a nominated bank that acted in good faith should be protected. Such issues should not affect the right of the nominated bank to receive reimbursement from the issuing bank. In this respect reference should also be made to UCP 600 articles 4 and 5. CONCLUSION The general principle, as stated in the conclusion to ICC Opinion R.519, is that local law will prevail over the transaction.



However, the credit was subject to UCP 600 and apparently contained no exclusion to the rule appearing in sub-article 12 (b). Due to the content of sub-article 12 (b) and sub-article 7 (c), the issuing bank should seek to resist such an injunction in order to preserve the integrity of its credit and the UCP. It must be expected that the issuing bank will seek to have the injunction removed by referring the court to the appropriate articles of UCP 600 and the terms and conditions of the credit. The issuing bank would also be well advised to inform their applicant(s) of the content and effect of sub-article 12 (b) for this and any future transactions. It is the responsibility of the applicant to cover any issues of quality of goods in the documents called for and the data content required to appear on those documents and not to seek redress that affects the right of a nominated bank to receive reimbursement in respect of a complying presentation. We cannot comment with regard to any other member banks, but at the time of issuance of this opinion no similar issues had been raised with the Banking Commission. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,
