In 2016, the ICC Banking Commission published a paper on the subject of Strict Compliance.
The question of ‘strict compliance' had often been raised with regard to documents presented under documentary credits and, as a consequence, a significant number of ICC Opinions and DOCDEX decisions have dealt with this issue. In this particular blog, the first of three on the subject, we shall address some of the ICC rules and opinions that relate to strict compliance.
In our blog of 9 November 2015, we highlighted that checking documents, at least in the paper world, is not a matter of applying a computer algorithm or mathematical formula. It goes beyond strict compliance and, in certain circumstances, requires judgement based on experience. Applying common sense is an essential factor in protecting the integrity of the documentary credit. However, pinpointing a defined understanding of ‘strict compliance' in this perspective is not easily achievable: it is certainly not explicitly clear from a reading of UCP or ISBP.
As mentioned in the ICC paper, the fundamental question remains: exactly how strict must compliance be and can it be defined?
Relevant ICC rules: UCP 600 sub-article 14 (a); sub-article 14 (d); sub-article 14 (f); sub-article 14 (j) - all relating to the standard for examination of documents.
Relevant ICC practices: ISBP 745 Paragraph A23 - misspelling or typographical errors.
Relevant DOCDEX decisions:221 (typographical error); 249 (typographical error); 337(shipping terms).
Relevant ICC Opinions: R197 (report i/o certificate); R277 (misspelling); R289 (absence of credit number); R408 (typographical error); R559(TA.548rev) (typographical error); R757(TA.708rev) (additional character in duplicated contract number); R808 (TA.810rev) (typographical error); R809 (TA.811rev) (differing purchase order numbers); R858 (TA.814rev4) (actual currency not specified); R810 (TA.817rev) (incorrect shipping term); R826 (TA.818rev) (name and address of applicant); R813 (TA.828rev) (typographical error); R847 (TA.833rev) (net and gross weight); R856 (TA.837rev) (abbreviation).
It is clear that the conclusions in many ICC Official Opinions have not always been based on the exact same rationale, for the simple reason that there is no single answer. Each case can only be decided upon the presented facts and depending on the context of these facts.