This blog provides a brief overview of all the Opinions that were approved by the ICC Banking Commission at its meeting held in October 2013. The full text of each opinion should be reviewed to fully understand all the issues.
TA.786rev2 - Commercial Weight
This draft opinion had been held over from the April 2013 meeting and re-drafted on the basis of comments made in the discussion session.
The issue, which was heavily debated in both the April and October meetings, centered on a credit that made reference to two types of goods with a unit price and quantity stated to be 500,000kgs - but without indicating the basis for the quantity.
In normal circumstances, one would be looking at either a gross or net weight. In this case, whilst the bill of lading, certificate of origin and weight list, which covered a partial shipment, showed a gross weight of 504,402kgs and net weight of 501,604.80kgs, the invoice (and therefore the basis upon which payment was to be made) showed a ‘commercial weight' and this was stated to be 513,828kgs. The commercial weight was also shown on the weight list.
The question asked was, absent any indication in the credit of the weight basis, was a commercial weight acceptable? It should be noted at this stage that the shipment covered Viscose Staple Fiber.
The analysis made reference to UCP 600 sub-article 14 (d), and made the point that there was no conflict of data between the documents and the credit. It went on to say that the quantity of goods to be supplied, as indicated in the credit, was stated in kilograms without any additional qualification. The commercial invoice and the weight list both indicated a "commercial weight" whilst the weight list, bill of lading and certificate of origin also showed a gross and net weight which differed from the commercial weight.
The analysis emphasises that when a drawing amount is to be based upon the weight of the goods that are shipped, multiplied by a unit price, it is the responsibility of the issuing bank (and applicant) to ensure that the credit indicates the basis under which that amount is to be determined i.e., the net, gross, commercial weight or other formula; absent which, any basis used to determine the drawing amount is acceptable.
‘Commercial weight' is a recognised term in the fiber industry. In this respect, the answer given by the ICC Banking Commission, that an invoice showing the commercial weight as the basis for determining payment was acceptable, was made subject to a specific clause added to the analysis. This reads "Commercial weight" is a term commonly used in the determination of weight for fibers, a process that also takes into consideration the impact of moisture regain on the weight of the fiber. The incorporation of moisture regain accounts for why a commercial weight will be greater than a net weight, i.e., the moisture being taken into consideration after establishment of the dry weight.
In the fiber industry, commercial weight is an understood term. Whilst it would have been preferable for this to be stated in the credit, it does not detract from the fact that "commercial weight" is an acceptable term for the described goods. For other commodities, other practices may or will exist.
TA.787 - Bill of Lading Page Numbers
A credit contained a condition "B/L presented in incomplete number of page is not acceptable." A presentation was made, including a full set of charter party bills of lading as was permitted by the credit.
The issuing bank refused the documents due to "bill of lading presented in incomplete number of pages."
The issuing bank based its refusal on the following: "Full set charter party bill of lading presented has indicated "Page 01" at the reverse side of the B/L but the front page did not indicate "Page 02" to declare it was the 2nd page of the B/L."
The nominated bank made various arguments to counter the refusal including "On the front page of the B/L, it did not indicate wording such as ‘continuation to page 2' or ‘continue to next page' or ‘page 1 of 2' that could lead to an interpretation there would be a 2nd page or supplement/appendix attached to it." and "There is no such requirement in the credit that front page of the document is to state the page no. and marking page 01 on the back page has no meaning at all so why the front page needs to declare itself as page 02?"
The beneficiary eventually arranged for an agent to amend the document and the issuing bank honoured two weeks after the original date of negotiation.
The analysis included "The requirement in the credit for ‘B/L presented in incomplete number of page is not acceptable' is unclear as to the exact intention. There is no indication in the bill of lading that there are additional pages."
The conclusion of the ICC Banking Commission was that the document was compliant as originally presented.
TA.788rev - Vessel Under Arrest
This query focussed on an issue that is not that common. A bill of lading was issued bearing an on board notation showing "Clean on board 18 February 2013". The bill of lading also bore a clause "Vessel under arrest 18 February 2013".
Documents were found to be otherwise compliant by the nominated bank and forwarded to the issuing bank as a complying presentation. The issuing bank refused the documents for three reasons (two of which were subsequently withdrawn). The remaining discrepancy was "Bill of lading is not clean. It bears the clause as follows: Vessel under arrest 18 February 2013."
The nominated bank refuted the discrepancy arguing that UCP 600 article 27 does not extend to such clauses.
The analysis included "Arrest of a vessel, and any subsequent obligation or liability arising out of such arrest, is a matter of law and outside the remit of UCP 600." and that article 27 does not apply. The document was not unclean and the issuing bank should have taken up the documents.
TA.789rev - Presentation Period
A credit stated that documents must be presented not later than 10 calendar days after credit issuance date.
Documents were presented within 10 calendar days after the issuance date of the credit, but the bill of lading showed an on board date of 6 months previous. The issuing bank refused the documents due to them being presented later than 21 days after the date of shipment.
The issuing bank contended that although the credit contained a condition requiring presentation within 10 calendar days after the credit issuance date, the default presentation period of 21 days after the date of shipment (in UCP 600 sub-article 14 (c)) would still prevail. Also, that the clause in the credit did not waive or exclude the content of sub-article 14 (c).
The analysis quoted the content of a previous analysis given in ICC Opinion R716 (TA704rev). It made the point that if a rule in UCP 600 is to be excluded, there should be a specific statement to that effect.
The conclusion stated that the reference to presentation within 10 calendar days modified the effect of sub-article 14 (c) and the documents were compliant.
TA.790rev- Photocopy of Charter Party Bill of Lading
This query was in respect of a standby letter of credit that included a condition to the effect that if the documents show shipment effected by sea, a photocopy of an original bill of lading is to be presented. It was also stated that the document would be accepted as presented, subject to compliance with two sanctions driven requirements.
The beneficiary presented a photocopy of a charter party bill of lading. The issuing bank refused the documents. The nominated bank referred the issuing bank to the clause in the credit that the document would be accepted as presented and to ISBP 745, paragraph A20 that copies of transport documents are not transport documents for the purpose of UCP 600 articles 19-25. The issuing bank refused to change its view.
The analysis included "For a presentation of a photocopy of an original transport document UCP 600 sub-article 14 (f) applies (see also ISBP 745 paragraph A6 (a)) which determines the standard of examination of such photocopies. A photocopy of a transport document has no apparent function under a SBLC other than demonstrating that transport has taken place."
The conclusion stated that the discrepancy was not valid. This query demonstrates the need for a standby credit to be specific with regard to any documentary requirements, whether originals or copies, especially when supporting documentation is required, such as copies of transport documents and copies of invoices, etc.
TA.791rev- Signing of Bill of Lading
A bill of lading had been signed:
There was also the stamp and signature of Company A. The issuing bank had refused the bill of lading due to "The signature of agent on B/L not indicating on whose behalf it is signing."
The analysis of the opinion referred to UCP 600 sub-article 20 (a) (i) and ISBP 745, paragraph E5 (c). It also emphasised that "In this particular example, the word "By" means "For and on behalf of the above."
The document was considered to be compliant.
TA.792rev - Originality of Insurance Document
The final query referred to two insurance documents and whether they could be considered as originals under UCP 600. The two documents had been presented in exclusively ‘black on white' forms without, apparently, any additions such as stamps, symbols, marks or signatures being made.
The two documents were made available as part of the query. It is difficult here to describe the documents that had been presented, as only photocopies had been provided and, as a result, the arguments that were made to accept them as originals.
The conclusion stated that they should be treated as originals based on the text of the query and the information apparent from the copies that had been provided.
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