This blog provides a brief overview of all the Opinions that were approved by the ICC Banking Commission at its meeting held in November 2014. The full text of each opinion should be reviewed to fully understand all the issues.
TA.806rev - Endorsement of credit
A credit included a condition that the negotiating bank must confirm on the remittance letter / covering schedule that the amount of the drawing had been endorsed on the reverse of the credit.
A number of banks presented documents to the issuing bank with no notification regarding the endorsement.
It was highlighted in the analysis that this is a practice more suited to credits in paper format sent by mail, which is no longer the norm. In view of the fact that most credits are now sent by SWIFT, the beneficiary will only receive a copy of the credit, many of which may be in existence. In fact, many credits are now advised electronically, so a physical ‘copy' does not exist.
It was stated that such a condition is not one that needs to be attended to by the beneficiary in order to complete a complying presentation.
As such, there is no need for a notification of endorsement and an issuing bank should honour or negotiate provided the documents comply.
TA.807rev - Reimbursement under a credit not subject to URR 725
An issuing bank claimed that reimbursement was subject to URR 725 despite this not being stated in the credit. It was questioned whether or not the confirming bank was entitled to claim ‘delay' interest.
The analysis confirmed that, according to UCP 600 sub-article 13 (b), if a credit is silent with regard to URR 725 then UCP 600 sub-articles 13 (b) and (c) apply.
In line with UCP 600 sub-article 13 (b) (iii), issuing banks are responsible for any delay in payment and any associated interest claim.
TA.808rev - payment subject to receipt of funds from the applicant
A transferable credit available by deferred payment included a condition stating that payment would only be forthcoming provided compliant documents were presented and that funds were received from the applicant.
Discrepant documents were presented and, in due course, accepted by the issuing bank with the statement that payment would be made on the maturity date with the qualification ‘as received funds from applicant'.
At maturity and despite numerous chasers, payment was not received from the issuing bank.
The response highlighted that this was not an instrument that fitted the definition of a credit as stated in UCP 600. Banks should, in fact, refrain from issuing such instruments if subject to UCP 600 as it is considered to be bad banking practice. In this particular instance, the advising bank should again contact the issuing bank in order to obtain more clarity on the issue.
TA.809.rev - Incorrect proforma invoice number on CMR
This query revolved around whether or not the inclusion of an additional character within the proforma invoice number appearing on the CMR, would be sufficient evidence to refuse to honour the presentation of documents i.e., proforma number 1074 dated 12/12/2012 instead of 104 dated 12/12/2012 as stated in the credit.
All other information on the documents was compliant, including the description of goods. Furthermore, the specified proforma invoice number was correctly stated on the invoice. It was stated that the reference on the proforma invoice expanded, but did not contradict, the actual number.
In summary, the additional character on the CMR was to be handled as a typographical error which, based on ISBP 745 paragraph A23, does not make the document discrepant.
TA.810rev - Incorrect amount on the shipment advice to insurance company
The credit called for a copy of a shipment advice to be sent to the insurance company. However, it was noted that the advice showed the invoice amount as USD 54,00.00 instead of 54,000.00.
The analysis mentioned that the function of such a document is to provide shipment information for the purpose of arranging relevant insurance cover. In view of the fact that the amount was incorrectly stated, this cannot be considered as a compliant document.
A corrected document was presented and was subsequently refused by the issuing bank due to late presentation. It was stated that the new discrepancy was valid as it related to the re-presentation of documents and not the original presentation.
TA.811rev - Difference between PO numbers on documents
The issuing bank refused documents on the basis of a single discrepancy, i.e. a difference existed in the PO number stated on the invoice (PO No. SOL140430-01) and the packing list (PO No. SOL140).
The credit itself had not included a condition that the PO number was to be added to any document.
In view of the fact that it is quite possible that both PO numbers could be valid, this issue was considered to be a discrepancy.
TA.812.rev - Refund under a price fluctuation clause in a documentary credit relating to oil, subject to UCP 600.
The credit included a condition that a drawing would initially be made against presentation by the beneficiary of a provisional invoice subject to specific pricing restrictions. However, the credit indicated that any balance payment would be effected against the presentation of a final invoice whether the amount is owed to the beneficiary or the applicant.
In the event that the final price is for a lower amount, this would require the exact handling mechanism to be outlined in the credit. UCP 600 does not provide a solution to this issue, which, in effect, modifies UCP 600.
The opinion indicated that by not including details of the method by which a lower price should be handled, this is bad banking practice.
In this instance and bearing in mind that UCP 600 does not cover payment obligations of the beneficiary, handling of the final invoice must be covered outside the terms and conditions of the credit.
TA.813rev - Signing of a combined transport bill of lading
The issuing bank stated that documents were non-compliant due to the signature of the issuing party on the bill of lading being inconsistent with that of the carrier.
It was signed by the master but, in addition, included a stamp providing evidence of the name of a shipping company and the name of the carrier.
The response concluded that, as the document was signed by the master, and such signature was identified as that of the master, then it complied with UCP 600 sub-article 19 (a) (i). The stamp was considered to be what is commonly referred to as the ‘ship's stamp'.
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