Whenever a documentary credit is issued covering a shipment or dispatch of goods, a form of transport document will be required to evidence the occurrence of that event. Each form of transport document will have its own characteristics with regard to function and content. A number of transport documents have their own applicable rules in the UCP.
From the perspective of an applicant and issuing bank, it is imperative that the correct type of transport document is requested for the carriage envisaged under the documentary credit. For example, an applicant (in an application form) or an issuing bank (in the documentary credit itself) incorrectly indicating a requirement for a bill of lading (that would be subject to examination under article 20) when the routing described in fields 44A, 44E, 44F and/or 44B of an MT700 indicates that a multimodal transport is to occur (with a multimodal transport document to be presented that will be subject to examination under article 19).
It is for the reason stated above that a new paragraph was added to ‘International Standard Banking Practice for the Examination of Documents under UCP 600' (ISBP 745). Paragraph D1 (c) states "When a credit requires the presentation of a transport document other than a multimodal or combined transport document, and it is clear from the routing of the goods stated in the credit that more than one mode of transport is to be utilised, for example, when an inland place of receipt or final destination are indicated, or the port of loading or discharge field is completed but with a place which is in fact an inland place and not a port, UCP 600 article 19 is to be applied in the examination of that document."
When referring to "transport documents", in the context of a documentary credit and, in particular, when interpreting the rules in UCP 600, it is important to recognise that we are talking about the type of documents that appear in the heading of UCP 600 articles 19-25.
Any other form of document, even though it may be described as a transport document, i.e., a forwarders certificate of receipt, warehouse receipt or certificate of shipment etc. is not a transport document as far as UCP 600 is concerned. Absent any specific instructions in the documentary credit with regard to the issuer, signing requirements and/or content, it will be examined under UCP 600 sub-article 14 (f).
It has been known for some banks to try and turn a ‘non-UCP transport document' into a transport document that is recognised by the UCP. For example, a bank will issue a documentary credit requesting the presentation of a "Forwarders certificate of receipt evidencing shipment from A to B no later than 31 December 20xx". First of all, a forwarders certificate of receipt is not a document that is intended to evidence shipment. It is a document that evidences receipt of goods for a future shipment according to the requirements of the applicant. Therefore, there is no A to B with regard to shipment and certainly no latest shipment date (only a receipt date). If a bank, or an applicant, require a document to evidence receipt of the goods and shipment thereof, then it should request the presentation of a document such as a bill of lading, air transport document, truck consignment note, etc.
It is important that you understand which type of transport document conveys title to the goods and those that do not. However, it should be noted that neither UCP 600 nor ISBP 745 refer to "documents of title" or "negotiability of a transport document"; this is left to the applicable local law.
The applicable UCP transport articles by means of conveyance, are as follows:
More information can be found in the CDCS, ISBP and Document Preparation modules at www.tradefinance.training