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When a credit calls for "one copy of surrendered bill of lading" without further explanation, it creates ambiguity, particularly in the examination of documents under UCP 600 sub-article 14 (a), which requires banks to assess documents on their face. ISBP 821 paragraph A6 adds that a copy of a transport document is only to be examined "to the extent expressly stated in the credit," otherwise the standard rules of sub-article 14 (f) apply. In this instance, the absence of clarity rendered the credit unworkable from the outset.

Industry feedback was obtained from leading figures involved in the issuance and handling of bills of lading. Their consensus is that the term "surrendered" in this context refers to the act of the shipper returning at least one original bill of lading to the carrier or their agent in order to allow release of the goods without the need for an original at destination. This practice is common in short-sea shipping or where documents are expected to arrive after the vessel. Once surrender is effected, any remaining original bills of lading become void in accordance with the carriage terms stated on the bill of lading itself. However, banks are not required to examine these underlying contractual clauses, as clarified in UCP 600 sub-article 20 (a) (v).

A key difficulty lies in the evidencing of surrender. While it is commonly understood that to surrender means to relinquish possession, the issue in trade finance is how this act is to be substantiated in the presentation. In the absence of a defined evidencing method in the credit itself, such as a stamp or annotation by the carrier, the bank cannot conclusively determine from a mere copy whether the surrender has occurred. There is therefore a legitimate risk of abuse if a shipper were to retain all originals and simply present a copy bearing the word "surrendered". ISBP 821 Preliminary Consideration (v) acknowledges that the applicant bears the risk of ambiguity in the terms of a credit. Nevertheless, in practice, this risk should not excuse vague or misleading conditions, particularly those that may be easily misused.

The conclusion reached is threefold. First, a copy of a bill of lading may indeed be required where the credit so stipulates, but one or more originals must have been surrendered to the carrier, thereby voiding the rest. Secondly, it is incumbent on the issuing bank to specify within the credit how the act of surrender is to be evidenced, failing which, the requirement is open to interpretation and potential dispute. Thirdly, while the discrepancy for not showing surrender may be considered valid given the lack of evidence, a further discrepancy raised in this case was not justified, as no clear instruction had been provided in the credit. Ultimately, greater care and precision are required at the credit issuance stage to avoid ambiguous and commercially problematic conditions.

Nevertheless, the Opinion was withdrawn by the initiator, and will now be handled as a Technical Advisory Briefing. 

TA.950rev

In this case, a documentary credit subject to UCP 600 was issued in December 2023 and later confirmed by the nominated bank following the beneficiary's request. The original credit carried an expiry date of 6 December 2024 and a latest shipment date of 15 November 2024. 

A second amendment, issued by the issuing bank on 11 November 2024, extended the shipment date to 30 November 2024 and the expiry to 21 December 2024. 

However, the confirming bank declined to advise this amendment to the beneficiary on the basis that it did not intend to extend its confirmation. Although the applicant separately provided a scan of the amendment to the beneficiary, the nominated confirming bank proceeded to examine documents under the terms and conditions that prevailed prior to the second amendment and refused the presentation for late shipment.

The issuing bank argues that the decision of the confirming (nominated) bank not to advise amendment number 2 relied on UCP 600 sub-article 9 (e) which, from their understanding, is inaccurate as sub-article 9 (e) is to be read in conjunction with sub-article 9 (f) and deals with a situation where the advising bank is unable to authenticate the message received.

In the analysis, the confirming bank elected not to advise a second amendment to a documentary credit, citing only that it was not in a position to extend its confirmation. No further explanation was provided. As a result, the bank examined the beneficiary's presentation based solely on the terms of the original credit and the first amendment, both of which had been confirmed. 

Under UCP 600 sub-article 9 (e), a bank that chooses not to advise an amendment must notify the issuing bank of its decision without delay, though it is not required to disclose the reason. In this instance, there is no indication that the amendment's authenticity was in question, which would have invoked sub-article 9 (f).

While the confirming bank declined to add its confirmation, UCP 600 sub-article 10 (b) still permitted it to advise the amendment without confirmation, informing both the issuing bank and the beneficiary accordingly. However, the confirming bank was not obligated to do so. The analysis notes that the issuing bank remains bound by the terms of the second amendment, regardless of whether or not it was advised to the beneficiary by the confirming bank. This distinction is crucial in maintaining the separation of obligations between issuing and confirming banks under the doctrine of independence in letter of credit transactions.

It is important to clarify that while the Commentary on UCP 600 (ICC Publication No. 680) offers valuable insight, it is not an official ICC publication and does not carry interpretative authority equal to that of the UCP itself. Therefore, interpretations must rest strictly on the language of the UCP. In this context, the confirming bank was entitled to refuse the second amendment for internal or commercial reasons, such as credit policy, risk exposure, or compliance considerations, provided that notification was sent to the issuing bank without undue delay.

In conclusion, the confirming bank was within its rights to withhold both its confirmation and the advising of the second amendment. It had no obligation under UCP 600 to advise an amendment it did not confirm, and its responsibility was confined to informing the issuing bank of its decision. As such, the issuing bank, not the confirming bank, would remain liable for an otherwise complying presentation made under the amended terms. The confirming bank, having examined the documents strictly in line with the terms it confirmed, was not bound to honour the presentation.


TA.951rev

In this case, a confirming bank has sought the opinion of the ICC Banking Commission regarding the acceptability of electronically signed documents under two separate documentary credits governed by UCP 600 and interpreted in light of ISBP 821 paragraph A35. 

Both credits required signed documents: one required an invoice in two originals signed by the beneficiary, while the other required a certificate of conformity signed by the beneficiary. In each case, the presented document bore what appeared to be electronic signatures, one using DocuSign identifiers, and the other a combination of a typed signatory name, timestamp, and an approval statement. Neither document contained a reference to a verifiable authentication website.

The bank refused both presentations on the grounds that the electronic signatures did not constitute an acceptable method of authentication under UCP 600 article 3 or ISBP 821 paragraph A35. 

Specifically, the bank argued that the phrases used, such as "Docusigned by..." or "signed at [date/time] - Reason: I approve this document", were similar in nature to the disclaimers explicitly addressed in paragraph A35 (c), which states that such phrases alone do not fulfil the requirements for electronic authentication. 

Furthermore, the absence of any website link or reference on the documents meant that paragraph A35(d), which outlines what constitutes a valid electronic method of authentication, was also not met. On that basis, the bank deemed itself unable to determine the authenticity of the signatures and thus treated the documents as discrepant.
In this case, two separate presentations under documentary credits subject to UCP 600 raised questions about the acceptability of electronic methods of authentication. The first credit (LC1) required an invoice in two originals signed by the beneficiary, and the document presented was marked with "Docusigned by" followed by a company stamp, the signatory's name, and a unique alphanumeric key. The second credit (LC2) required a certificate of conformity signed by the beneficiary, and the document presented included a typed name, date and time stamp, and the phrase "Reason: I approve this document." 

The confirming bank refused both presentations, citing concerns under ISBP 821 paragraphs A35 (c) and A35 (d) that the statements on the documents did not conclusively establish a valid electronic method of authentication.
Under UCP 600 Article 3 and ISBP 821 paragraph A35 (a), an electronic method of authentication is acceptable in place of a handwritten signature, provided it is recognisable and appropriate for its function. In the case of LC1, the reference to DocuSign, along with a stamp and signature key, indicates that the invoice was authenticated using a recognised electronic signing system. While the invoice did not provide a URL or verification link as contemplated under ISBP 821 paragraph A35 (d), the presence of the DocuSign mark and unique identifier arguably met the general test of authenticity under Article 3. Thus, the confirming bank's refusal of this document was unwarranted. Furthermore, the bank failed to issue its notice of refusal in accordance with UCP 600 Article 16, which requires specific referencing of discrepancies under the UCP, not merely ISBP commentary.

For LC2, the situation differs significantly. The document contained a generic electronic approval statement lacking any visual signature element, stamp, or external verification reference. This format aligns closely with the cautionary examples listed in ISBP 821 paragraph A35 (c), which specifies that such statements, on their own, do not constitute valid electronic authentication. Accordingly, refusal of this presentation was justified. However, the confirming bank again failed to issue a notice of refusal in the manner prescribed by UCP 600 Article 16, undermining the formal validity of its rejection and activating sub-article 16 (f), which treats the presentation as effective if a compliant refusal is not issued in time.

In conclusion, the invoice presented under LC1 should have been accepted, as the electronic method of authentication used was facially valid. The certificate presented under LC2, by contrast, was not compliant with UCP 600 due to the absence of a definitive electronic signature or verification method. That said, in both instances, the bank's failure to comply with the procedural requirements of Article 16, particularly the need to reference UCP-based discrepancies clearly, rendered its notices of refusal ineffective. 

Finally, to meet the standard set out in ISBP 821 paragraph A35 (d), any electronic document must include a reference to a website or other verifiable source for authentication on its face; banks are not obliged to verify it, but its presence is essential.



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