Recommendations in respect of the requirements for an ‘On Board' Notation
At the ICC Banking Commission meeting held in Dubai in March 2009, it was agreed that the UCP 600 Drafting Group would prepare a document outlining the requirements for an ‘on board' notation in respect of transport documents presented for examination under articles 19, 20, 21 or 22 of UCP 600. This was released on 22 April 2010 and also served as guidance for the revised International Standard Banking Practice for the Examination of Documents under Documentary Credits.
The conclusion of the paper noted as follows:
Bills of Lading
(a) where the bill of lading indicates a place of receipt that is the same as the port of loading, for example, place of receipt Rotterdam CY and port of loading Rotterdam BUT there is NO indication of a means of pre-carriage (either in the pre-carriage field or the place of receipt field) then:
(i) if the bill of lading is pre-printed shipped on board, the date of issue will be deemed to be the date of shipment and no further on board notation is required;
(ii) if the bill of lading is pre-printed received for shipment, a dated on board notation will be required and the date appearing in the notation will be deemed to be the date of shipment.
(b) where the bill of lading indicates a place of receipt that is different from the port of loading i.e., place of receipt Amsterdam and port of loading Rotterdam BUT there is NO indication of a means of pre-carriage (either in the pre-carriage field or the place of receipt field) then:
(i) if the bill of lading is pre-printed shipped on board, the date of issue will be deemed to be the date of shipment and no further on board notation is required;
(ii) if the bill of lading is pre-printed received for shipment, a dated on board notation will be required and the date appearing in the notation will be deemed to be the date of shipment.
(c) where the bill of lading indicates a place of receipt that is different from the port of loading i.e., place of receipt Amsterdam and port of loading Rotterdam AND there is an indication of a means of pre-carriage (either in the pre-carriage field or the place of receipt field) then:
(i) if the bill of lading is pre-printed shipped on board, a dated on board notation will be required indicating the name of the vessel and the port of loading. The date of the notation will be deemed to be the date of shipment;
(ii) if the bill of lading is pre-printed received for shipment, a dated on board notation will be required indicating the name of the vessel and the port of loading. The date of the notation will be deemed to be the date of shipment.
The exception to the above is where the bill of lading contains wording such as that quoted in section 2.6 or 2.7 of this paper (see link below). Where such wording is incorporated into the pre-printed wording, a dated on board notation will be required that also indicates the name of the vessel and the port of loading.
As a result of the contents of this document, the conclusion given to Opinion R.644 will be replaced by that under (b) above.
In the context of this document, "pre-carriage" refers to the carriage between a stated place of receipt and the stated port of loading on a transport document.
The flowchart in section 6 explains the requirements for an on board notation in relation to the data content of the bill of lading as may be presented.
Sea Waybills
Same position as for bills of lading.
Multimodal or Combined Transport Documents
Article 19 provides for an indication of the goods being dispatched, taken in charge or shipped on board. The applicable wording will depend upon the mode of conveyance for the first leg of the carriage. It should be noted that article 19 does not require an on board notation as a default position for most of the time. However, in line with ICC Opinion R. 641 (TA.650rev), a dated on board notation is clearly required when the credit so requests. It is also required when the credit requires shipment to be effected from a port to the place of final destination i.e. the first leg of the journey, as required by the credit, is by sea. If a multimodal or combined transport document nonetheless evidences a place of receipt that is different to the place stated in the credit, and that place stated in the credit is a port, the dated on board notation will require the addition of the name of the vessel and port of loading, unless the transport document evidences that the on board notation or pre-printed shipped on board wording applies to the named vessel and port of loading.
The key, therefore, is for the credit either:
(a) to expressly require an on board notation, or absent that;
(b) to make clear whether the place from which the goods are to be taken in charge by the carrier is a sea port.
Charter Party Bills of Lading
The content of the flowchart in section 6 (link below) will apply where the bill of lading contains an indication that it is subject to a charter party (charter party bill of lading).
Notes on the Principle of Strict Compliance
This was covered in depth in a separate blog. As a reminder, it was noted that the issue of ‘strict compliance' had continually surfaced with respect to the examination of documents presented under documentary credits and that several discussions have been generated on Internet forums and in trade finance journals in respect of the interpretation and application of this doctrine. This had also been reflected in the challenging discussions behind numerous ICC Official Opinions.
As such, a paper was released on 24 May 2016 with the following sections:
The conclusion of the paper (drafted by David Meynell) is of particular interest:
We cannot find the answer in UCP; as pointed out by Professor James Byrne, UCP has never included a definition of this term; it is a legal principle derived from contract law that has been applied by courts to documentary credits. The fact that UCP remains silent means that interpretation has been left to the courts.
So, should we look at strict compliance or substantial compliance? Or is it appropriate to take the "middle" way as mentioned by Gutteredge and Megrah; specifically, "it is impossible to generalise and each case has to be considered on its own virtues".
Whilst this does not provide us with perfect guidance, it does actually reflect the fact that the conclusions in many past ICC Official Opinions have not always been based on the exact same rationale, for the simple reason that there is no one answer. Each case can only be decided upon the presented facts and depending on context.
The introduction to UCP 600 stated: "During the revision process, notice was taken of the considerable work that had been completed in creating the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 645. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit."
ISBP, particularly the latest version ISBP 745, has made a significant impact in lessening the exactitude of the doctrine of strict compliance. In fact, it is arguable whether or not strict compliance even exists any more. A review of the General Principles section of ISBP 745 highlights numerous aspects of the document examination process that reduce the need for a literal application.
Obviously there still exists certain situations that do not readily conform to established ICC rules. A recent ICC Draft Opinion, TA832, graphically exemplifies the difference of opinion that can still exist between practitioners. However, opinions such as these can be used as indicators of international standard banking practice for future editions of ISBP.
In conclusion, I see no merit in attempting a definition of this multifaceted subject. Developments in the past have proved that, as time goes by, it is customs and practice that will provide the required clarity. And once such customs and practice have become commonplace, they will form part of a future revision of ISBP.