A credit included a pricing calculation that was to be based on a market quotation applicable on the date of the bill of lading.
Prior to the presentation of documents, and at the request of the applicant, the issuing bank sent a message to the nominated bank informing them that the value of the consignment effected under the credit was USD12,988,745.50
The nominated bank replied stating that no presentation had been made at that time and therefore the amount in the message would be disregarded, as it was not considered to be an amendment to the credit. The credit had been issued for USD14,000,000 with an automatic fluctuation clause.
A subsequent complying presentation included two bills of lading with different dates, and was for the amount of USD13,401,233.70. Documents were sent to the issuing bank and reimbursement claimed. The issuing bank insisted that the amount due was USD12,988,745.50 and arranged for the reimbursing bank to credit that amount to the account of the nominated bank. The issuing bank had used the latter date of the two bills of lading for their calculation. The issuing and nominated banks disagreed on the date to be used for the calculation, the nominated bank being of the view that each date should be used based on the quantities shipped.
Based on the wording in the credit, it was concluded in the DOCDEX decision that the date to be used to calculate the price should have been the bill of lading date for each presented set of bills of lading.
By calling for shipment from ‘any port' the credit had effectively opened the possibility that more than one bill of lading, with different dates, could be presented.
A separate discrepancy that the goods description differed was not considered to be valid.
As no refusal notice had been issued by the issuing bank, it was precluded from claiming that the documents were discrepant and the full amount of the drawing should have been reimbursed to the nominated bank. The DOCDEX decision was that the issuing bank was obligated to reimburse the difference between the amount it authorised for payment and the amount drawn.
This decision highlights the need for issuing banks to consider all possible occurrences when structuring or drafting their letters of credit and to ensure that there is no ambiguity in the instructions provided.