ISBP 745 Paragraphs A21-A41: selected ICC Opinions
The content of ISBP 745 is based on a number of previously approved ICC Opinions. Below, we highlight some of the Opinions that have helped to develop international standard banking practice. Some have been the catalyst for the highlighted paragraphs of the ISBP publications, whereas a few offer an alternative stance.
A22 - R775 (TA754rev): This opinion related to a presentation that had been refused by the issuing bank for two reasons (1) Invoice evidences multiplication of quantity 27181 pcs x 1,874 = 50937 instead of 50937.194 and (2) CMR does not evidence "Expeditor" as beneficiary, as required by the credit.
It would seem that for discrepancy (1), the beneficiary rounded down the amount of the invoice to EUR50937. In respect of the refusal, the EUR currency is only calculated to 2 decimal places and therefore the beneficiary would not issue its invoice for EUR50937.194. For discrepancy (2), the CMR showed the field tag "Sender" and the nominated bank had considered "Sender" to be the same as "Shipper", "Consignor" and, the credit requirement of "Expeditor" to be of the same meaning. In respect of discrepancy 2, the ICC Banking Commission agreed with the nominated bank.
For discrepancy 1, there were issues discussed relating to whether the calculation should have been made i.e., was it a detailed mathematical calculation and the effect of the rounding down of the amount. The analysis and conclusion reflected that the invoice was also compliant.
The initiator raised a further issue relating to whether the issuing bank should have honoured its claim for reimbursement. The credit allowed the nominated bank to claim reimbursement, by SWIFT, from the issuing bank. There was no indication in the credit of a notice period required by the issuing bank. The nominated bank provided 3 banking days notice, which is in line with the established standard under URR725. It should be noted that this reimbursement was not subject to URR725. On the day that the payment was due, the issuing bank received the documents but the examination process was not concluded until after that date and they refused for the two reasons quoted above without having honoured the claim. The initiator asked whether the issuing bank should have honoured in the first instance, and then, if necessary, requested a refund at a later date if the discrepancies were proven and not accepted by the applicant.
The conclusion stated that whilst the issuing bank was entitled to send a refusal notice after the completion of its examination of the documents, absent any indication in the credit as to a notice period it should have honoured the claim on the requested value date. The issuing bank bore the consequences of the ambiguity in its instructions.
A22 - TA778rev: An issuing bank refused documents for a variety of reasons including a statement that the total amount on the commercial invoice differed from the "quantity x unit price" calculation. The opinion concluded that banks are not required to carry out such mathematical calculations and that the discrepancy was not valid.
The nominated bank offered a full rebuttal to each discrepancy and the Banking Commission agreed that the documents were not discrepant.
A23 - R757 (TA708rev): This Opinion represented a joint submission on behalf of both parties involved in a dispute.
A bank issued 3 letters of credit that were available with them. Under each credit, the issuing bank found discrepancies. Three discrepancies were the same under each LC, and two of the LCs contained one and two more additional discrepancies respectively.
One discrepancy, consistent across all three LCs, was whether the port of discharge stated in the credit "Tallinn Port, Estonia" was to be stated in full in the respective field of the bill of lading i.e., Tallinn Port, Estonia. The bills of lading under all three LCs only stated Tallinn. The conclusion was that there is no requirement for the country name to appear and that the bills of lading are not discrepant in this respect.
Another discrepancy consistent across the LCs related to the seal numbers on the bills of lading, when compared to those stated on the invoices and packing lists. The numbers were exactly the same but the invoices and packing lists showed a prefix of MSC or APL (MSC and APL being the shipping lines that were used). Again, the conclusion reflected that there was no conflict of data. The last discrepancy for all 3 LCs related to the name of the beneficiary on the Certificate of Origin. It was shown as ABC Ltd on the document, but in the LC it was shown as "ABC Ltd, International Business". The conclusion reflected that the reference to ‘International Business' was not part of the name of the beneficiary, merely an expression of the division or unit of the company. Again, the conclusion was that the document was not discrepant in this respect.
An additional discrepancy in one of the other LCs included the contract number being shown twice on the commercial invoice (once incorrectly). The Banking Commission saw this as being a typographical error and not a discrepancy. Another discrepancy under the same LC was that the notify party address contained an error "At" instead of "St" and a country code instead of the full name of the country. Again, these discrepancies were not found to be valid.
The remaining LC contained a discrepancy that the DHL receipt, evidencing dispatch of an original invoice and bill of lading, was addressed to the wrong party (but at the same address as given in the LC). The conclusion stated that this was a discrepancy. Therefore, of the three LCs, the conclusion was that the issuing bank must honour under two of them and they were correct to refuse under the other, but only in respect of the discrepancy relating to the DHL receipt.
A26 - R743 (TA689): This Opinion covered a shipment
of fresh ginger. The nominated bank had negotiated documents on the basis that
they were compliant. The issuing bank received the documents on 13 December
2008. On 27 December, some 14 days after the receipt of the documents, the
issuing bank sent a refusal notice. The refusal notice referred to two alleged
discrepancies: (1) that a non-documentary condition in the credit had not been
complied with, and (2) that the goods had not been shipped in the correct form
of container (although the credit was silent in respect of the type of
container or packaging to be used). Towards the end of January 2009, the
issuing bank further informed the nominated bank that an injunction had been
issued to stop payment as half the consignment had now been destroyed due to it
being considered unfit for human consumption.
Clearly, the refusal notice was sent beyond the five banking days allowed for
in sub-article 16 (d) and the issuing bank is therefore precluded from claiming
that the documents were discrepant under sub-article 16 (f). The conclusion to
the Opinion states that the documents were compliant at the time of
presentation of the documents and that the issuing bank must reimburse the
nominated bank. The issuing bank was recommended to approach the court and
explain its responsibilities under the credit and the UCP with a view to the
lifting of the injunction.