Strict compliance


Not all ICC Opinions meet with universal approval. On occasion it is necessary to balance the arguments and obtain a consensus on the correct interpretation of a given situation. Circumstances can change with each individual query and much depends on the actual context.

One such query, which, at the time, generated a lot of comment and discussion, was TA809rev. This query related to one issue: whether or not an additional character relating to the goods description, in a statement within a CMR, was sufficient evidence to refuse a set of documents.

The question of ‘strict compliance' has often been raised with regard to documents presented under documentary credits and a number of ICC Opinions have dealt with this issue.

Upholding the integrity of the documentary credit product and the UCP is of value to all involved in the field of international trade finance. Therefore, before analysing this specific example it is worthwhile putting in writing our three core principles for handling documentary credits:

  • Documentary credits exist to facilitate trade, not to hinder or obstruct it.
  • It should always be noted: "Document examination is an art, not a science".
  • The art of examination is not based on finding reasons for refusing to honour or negotiate a presentation.

The second of the above principles is key to understanding a core tenet in the examination of documents. Checking documents, at least in the paper world, is not a matter of applying a computer algorithm or mathematical program. It goes beyond strict compliance and, in certain circumstances, requires judgement based on experience. In fact, one of the major reasons for introducing ISBP (International Standard Banking Practice for the Examination of Documents under UCP) was to document practice and provide guidance to practitioners.

One such example of this can be found in ISBP 745, paragraph A23. In essence, this highlights that typing or spelling anomalies that do not actually impact upon the meaning of a word or sentence are not to be considered as discrepancies.

The basic principles incorporated within UCP 600 must be observed. Sub-article 14 (a) states that a nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank must examine a presentation to determine, on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation.

Returning to TA809rev, the circumstances were that a credit required the description of goods to include a particular proforma invoice number. Such number was correctly stated on the invoice, but included one additional character when quoted on the CMR.  In all other aspects, the documents were compliant.

Under the doctrine of strict compliance, the difference of data between the credit and the documents is to be considered as a discrepancy, a fact that was mentioned by a few ICC National Committees.  It was highlighted that as the difference was in a number rather than in text, then it is a conflict of data and can no longer be considered as typographical.

Ultimately, the final revised (and approved) version of the Opinion made reference to UCP 600, specifically sub-articles 14(d) and 14(e), highlighting that the goods description in documents other than the commercial invoice should not conflict with that stated in the credit and that data in documents need not be identical provided it does not conflict. It went on to maintain that provided the purpose of a document is fulfilled, additional details (such as a proforma invoice number) amount to additional information that is not required. Provided the proforma invoice number is quoted correctly on the relevant document, i.e. the commercial invoice, any inclusion of such data on the CMR is not a conflict and can be considered as a typographical error. In summary, the document was considered as compliant.

Five comparable ICC Opinions:

  • A beneficiary certificate contained a typographical error when stating the name of the vessel. This was considered as additional information not required by the credit and therefore not a discrepancy. (R408)
  • A container number, although not required by the credit, was included on a commercial invoice. This number included one incorrect figure. This was considered as a typographical error and not a discrepancy. (R559)
  • A contract number was quoted twice on a commercial invoice, one of which included an additional character. This was seen as superfluous and did not render the document discrepant. (R757) 
  • A copy of a shipment advice was to be sent to an insurance company. The invoice amount on the shipment advice was quoted incorrectly and was an obvious typographical error. However, because the advice did not fulfil its function by providing correct information for insurance purposes, it was considered as a discrepancy. (TA810rev)
  • Documents were refused due to differing purchase order numbers being quoted on the invoice and packing list. It was opined that, in view of the fact that the credit did not stipulate a purchase order number, both numbers could actually be valid. Accordingly a conflict of data could not be determined and the documents were compliant. (TA.811rev) 

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