This blog provides a brief overview of all the Opinions that were approved by the ICC Banking Commission at its meeting held in April 2013. The full text of each opinion should be reviewed to fully understand all the issues.
TA.761rev - Application of URDG & Applicable Law
This draft opinion had been withdrawn at the Mexico City meeting (November 2012) in order to be re-written. However, it had been re-submitted in the same form as originally presented
The question raised was probably more appropriate for SWIFT than the ICC Banking Commission as it focused on the structure of an MT760 message and the interpretation of code words inserted in field 40C to indicate the applicable rules, or whether no rules will apply.
An MT760 had been issued and field 40C indicated "NONE". According to the SWIFT handbook this means that the guarantee and counter-guarantee, to which the query referred, would not be subject to any rules.
However, field 77C gave details of the guarantee text and indicated that it was to be subject to URDG 758 with the exception of articles 16, 22 and 35. The counter-guarantee that followed was subject to English law and the jurisdiction of the English courts.
Despite the content of the SWIFT handbook, the initiator requested confirmation that the guarantee would be subject to URDG and the counter-guarantee subject to the applicable law.
The analysis and conclusion supported the view of the initiator.
TA.770rev2 - Any Chinese Port vs. Hong Kong Port
This query was also held over from Mexico City whilst further discussions could be held to ascertain the scope of any ICC response to the question "If a credit required shipment to be effected from "any Chinese Port", and where the shipment has been effected from Hong Kong, would that comply with the requirement of the credit?"
The analysis and conclusion stated that when a credit indicates that shipment is to be effected from "Any Chinese Port" (or to "Any Chinese Port"), it is recognised that in the context of examination of documents on their face, in accordance with UCP 600 sub-article 14 (a), this would include Hong Kong being shown as the port of loading (or port of discharge).
The analysis and conclusion went on to state that it is advisable for applicants and beneficiaries to be specific as to a port of loading or discharge. This is mainly due to the different customs systems and regimes that operate in Hong Kong and at ports in the Chinese Mainland.
Although the question referred to shipments from any Chinese port, the answer would equally apply to shipments that are to be made to "any Chinese port".
TA.775rev - Signing of Charter Party Bills of Lading
An initiator requested the views of the ICC Banking Commission in respect of what was stated to be an increasingly common practice of charter party bills of lading being signed in the name of a carrier or as agent for a named carrier.
The analysis stated that when a credit allowed for a charter party bill of lading to be signed by or for [or on behalf of] the carrier it would modify the content of UCP 600 sub-article 22 (a) (i).
The conclusion stated that sub-article 22 (a) (i) does not permit a charter party bill of lading to be signed in the manner stated.
In the discussion that took place it was agreed that this issue would be revisited if it became apparent that there was a growing and widespread trend for charter party bills of lading to be signed by a carrier or its agent.
TA.776rev - Language of Documents
A confirming bank had stipulated that its confirmation would be null and void if any wording appearing on a presented document was not in English, except for the description of the goods indicated in the credit. The credit contained no restriction on the applicable language of documents and only the applicant's name and address and the goods description were not in English (they were given in Spanish).
Documents were presented and the confirming bank noted that the shipping marks contained wording that was not entirely in English (some wording was given in Spanish).
The confirming bank declined to act under its confirmation due to these shipping marks in Spanish. They also refused to claim reimbursement under the credit, even though the documents were compliant with the terms and conditions of the credit as issued by the issuing bank.
Questions focused on two issues (1) whether the confirming bank was able to refuse to handle the documents and (2) were they in a position to claim reimbursement even though the documents did not comply with its own requirements?
In the analysis it is highlighted that a confirming bank may qualify its confirmation. However, for this case it did not change the fact that the documents complied with the credit as issued.
The confirming bank, as nominated bank, could have agreed to claim reimbursement and act under its nomination, by effecting settlement upon receipt of funds or effecting settlement to the beneficiary on a with recourse basis, but they were under no obligation to do so.
TA.777rev & TA.778rev - Discrepancies in documents
These queries were very similar in that the same countries were involved and the issue concerned the validity of numerous discrepancies observed by an issuing bank under separate credits. TA.777rev related to 6 discrepancies including "an inconsistency between weights on the documents", "different port of discharge on documents (effectively omission of ‘South' in ‘South Korea', although the correct port name was shown)" and "packing details different on bill of lading and packing list."
The nominated bank offered a full rebuttal to each discrepancy and the ICC Banking Commission agreed that the documents were not discrepant.
Similar to TA.777rev, TA.778rev covered a presentation that resulted in 9 discrepancies being reviewed, including those that are highlighted under TA.777rev above.
Once again, the nominated bank offered a full rebuttal to each discrepancy and the ICC Banking Commission agreed that the documents were not discrepant.
TA.779rev - Delivery Terms, Insurance Policy, Refusal Notice, Fees
This request focused on four issues.
(1) Whether a delivery term CIF (named port) allowed for a line item charge covering "SASO Certification" to be included within that Incoterm;
(2) An insurance policy was issued in two originals and sent to the issuing bank in separate mails (according to the credit terms) and the issuing bank refused for absence of one original. Also, the insurance policy referred to General Insurance Terms and Clause Nos., which were stated to have been received by the policyholder but not presented with the policy;
(3) A refusal notice indicating that the documents were being held pending instructions from the presenter and also that the issuing bank was contacting the applicant for a waiver; and
(4) Whether the issuing bank was entitled to charge a SWIFT fee in respect of messages relating to the payment under the credit.
In respect of (1) the conclusion given indicated that the additional charge created no conflict with the content of ISBP 681, paragraph 61 and the discrepancy was not valid.
For (2), the credit required documents to be sent in two mails and sending an original in each mailing would be the expected outcome. There was no requirement for the terms and clauses to be presented unless specifically required by the document.
Under (3), although UCP 600 sub-article 16 (c) (iii) (a-d) requires only one of the options to be stated, the use of two does not in itself create preclusion against the issuer. The issuing bank would be required to obtain instructions regarding the disposal of the documents, if a waiver was received prior to instructions of the presenter.
(4), an issuing bank is not entitled to make a SWIFT charge in respect of the effecting of any payment or the advice of payment to a presenter.
TA.780rev - Additional Conditions
This was a joint submission and referred to the acceptability of an advising bank inserting a condition into its advice of a credit, requiring additional documents or conditions to be met as a basis for it agreeing to honour or negotiate, or even to handle documents, under the credit i.e., where the underlying goods may breach such bank's policies or be subject to government control and authorisation.
There was also the issue of whether an advisory group that operates within an ICC national committee may make recommendations to that advising bank for them to remove or change the text.
The analysis and conclusion indicate that a bank may incorporate or add its own conditions, i.e., where its ability to perform according to the nomination given by an issuing bank is subject to certain criteria being met or there is a need for presentation of evidence of compliance with local regulations i.e., an export licence for shipment of certain goods.
An ICC national committee may offer informed and ‘unofficial' opinions based on a submission made to it by one of its members, but compliance therewith would be subject to the concurrence of the ICC Banking Commission by way of the issuance of a formal opinion.
TA.781rev - Discrepancies
A credit required the presentation of a truck consignment note. The presented document was issued on the letterhead of a named carrier and signed, but was marked ‘duplicate'. The issuing bank refused the document.
The initiator, the nominated bank, made certain statements in support of its position to accept the document. However, the ICC Banking Commission determined that the issuing bank was correct to refuse the document.
TA.782 Refusal Notice
Documents were presented to a confirming bank and found to be discrepant (charter party bill of lading presented). The beneficiary requested that the documents be sent to the issuing bank on approval basis. The documents had initially been received within the expiry date, but were sent to the issuing bank three days after that date and were received seven days later. The issuing bank did not issue a refusal message.
After a number of follow up messages, the issuing bank responded stating that as documents were received after the expiry date, it had no obligation to examine them and that article 16 did not apply.
The ICC Banking Commission noted that the credit expired at the counters of the confirming bank and documents had been received within the expiry date.
As the issuing bank had not issued a refusal notice within 5 banking days following the day of its receipt of the presentation, they were required to honour the drawing.
TA.783 - Certificate of Quality
This query referred to a requirement in a credit that a certificate of quality be ‘based on EN15376 specifications'.
A certificate of quality was presented and bore the statement "based on EN15376 specifications'. However, the content of the document showed a breakdown of various specifications, one of which - electrical conductivity - showed a result that was greater than the maximum percentage given i.e., 3.1 against "max 2.5".
However, the results also showed that it was under a reference method ‘EN15938' - a different standard to that which the inspection of the goods were subject. However, the issuing bank refused the documents for this reason.
The conclusion to the opinion stated that as the document bore the required statement "based on EN15376 specifications" it is not for a bank to know the relevance of any other referenced standard and there was no basis for any comparison between the stated specifications. The discrepancy was not valid.
TA.784rev - Insurance Documents
This query related to insurance documents and the need to identify whether all originals have been presented given certain circumstances.
UCP 600 sub-article 28 (b) states, "When the insurance document indicates that it has been issued in more than one original, all originals must be presented."
There is no requirement in UCP 600 article 28 for an insurance document to indicate the number of originals that have been issued.
Although the query, analysis and conclusion refer to insurance policy, the analysis and conclusion will apply to any form of insurance document.
Scenario A - The credit is "silent" as to the number of originals and / or copies to be presented (e.g., "Insurance certificate for 110 per cent of CIF value")
Scenario B - The credit requires "Insurance policy in original and duplicate"
Scenario C - The credit requires "Insurance policy in duplicate"
Scenario D - The credit requires "Insurance policy in 2 originals
Scenario E - The credit requires "Full set Insurance policy".
TA.785 - Documents in Two Mails
The credit in question expired at the counters of the issuing bank. It required the beneficiary to forward documents in two mails. The first mail was received within the credit validity; the second was received after this date. The question asked was whether the issuing bank was obliged to examine the documents based on the first mailing.
The conclusion stated that as the credit expired at the counters of the issuing bank, they should receive all documents within the expiry date and the presentation period.
The conclusion also stated that a request to send documents in two mailings, where the credit is available with the issuing bank, is bad practice. The choice of mailing method should be that of the beneficiary as it is they that must ensure that the documents reach the issuing bank within the required timeframes.
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