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Commission on Banking Technique and Practice

Draft Opinions of the ICC Banking Commission


Attached are part 1 of the consolidated Draft Opinions for discussion at the
September 2010 Banking Commission meeting to be held in Orlando. These Draft
Opinions are those that were scheduled to be discussed in Beijing (please also refer
to the separate document containing the Draft Opinions that were specifically
submitted for consideration at the Orlando meeting). Please note that a number of
these Draft Opinions have been amended since they were first distributed in
February - (denoted by the addition of "rev" after the reference number. Please also
note: TA690 is now rev3 and TA708 is now rev2).
Included with this document is a summary paper outlining the changes that have
been made to some of the Draft Opinions. This document should aid National
Committees in their review. Revised drafts have been created with the assistance of
representatives of the 17 national committees that provided written comments to the
draft opinions, in advance of the planned Beijing meeting.
Please note that TA706 and 717 have separate attachments.
As established in the new opinions procedure, National Committees who indicated
that they were able to provide their own analysis and conclusion to a query have
done so and, accordingly, this has been incorporated into the text of the concerned
Draft Opinion(s).
Any comments should be sent, in a word document, NO LATER than 2 weeks prior to
the Commission meeting. National Committees are therefore requested to send their
comments by end of business day 8 September (Paris time). Please email your
comments to Gary Collyer at: email: gary@collyerconsulting.com
Please bring all documents to the meeting. They will not be re-distributed

This ICC working document is provided to you on condition that its contents remain
confidential. Distribution is restricted to ICC National Committees and Groups, and
to ICC members of the Commission on Banking Technique and Practice, and
designated ICC National Committees. Reproduction and/or dissemination in any
form and by any means are strictly prohibited.

26 July 2010/TS/wf
Document 470/1135rev

Ms. Marln Sandvik


ICC Denmark
Boersen
1217 Copenhagen K.
Denmark
8 February 2010
Subject: Document 470/TA.690rev3 (UCP 600)
Dear Ms. Sandvik,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We kindly ask your official opinion to the following issue associated with the
interpretation of UCP 600 sub-article 12(b).
UCP 600 sub-article 12(b) underlines that, by nominating a bank to accept a
draft or incur a deferred payment undertaking, an issuing bank authorizes that
nominated bank to prepay or purchase a draft accepted or a deferred payment
undertaking incurred by that nominated bank.
This sub-article is new to the UCP, and its purpose is to respond to legal
questions raised as to whether UCP 500 or the international standard banking
practice (prevailing under that regime) supported discounting of such obligations by
nominated bank obligors. As such, the obligation of an issuing bank to honour a
complying presentation is clearly expressed in UCP 600 article 7, thus it must be
expected that the main background for sub-article 12(b) is to ascertain that a
nominated bank following its nomination is protected by the UCP 600. In terms of
prepaying or purchase of a draft accepted or a deferred payment undertaking
incurred by a nominated bank, the question arises when and on which conditions
such prepayment or purchase must be effected in order to be included in the
nomination given by the issuing bank and consequently protecting the nominated
bank. In that respect please consider the following examples:
A documentary credit is available by deferred payment with a nominated bank
(which has not confirmed the credit). A complying presentation is made to the

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nominated bank, and the nominated bank does not honour upon presentation but
merely forwards the documents to the issuing bank.
a) After receiving a notice of acceptance from the issuing bank, the nominated
bank after express agreement with the beneficiary prepays.
The prepayment by the nominated bank is thereby effected after the issuing bank has
accepted to pay at maturity, but before maturity.
b) After receiving a notice of acceptance from the issuing bank, the nominated
bank sends an acceptance advice to the beneficiary to honour the presentation on its
own. Before the maturity date, the nominated bank prepays the documents when
asked to do so by the beneficiary for the sake of financing.
Does the nominated bank in the above examples act in accordance with its
nomination, and is thereby protected by the UCP 600?
ANALYSIS & CONCLUSION
In both examples, the credit was available by deferred payment and nominated a
bank to honour, by incurring their deferred payment undertaking. The nominated
bank determined that a complying presentation had been made but was not willing
to incur their deferred payment undertaking at that time. Subsequently, the issuing
bank agreed that a complying presentation had been made and gave their acceptance
and advice of maturity date.
Example (a).
The nominated bank made a prepayment to the beneficiary based on the
acceptance of the documents and advice of maturity from the issuing bank. The
nature of the express agreement between the nominated bank and the beneficiary is
unclear, particularly as to whether the nominated bank ever incurred a deferred
payment undertaking, and has been disregarded for the purposes of this opinion.
Sub-article 12 (c) states [R]eceipt or examination and forwarding of documents
by a nominated bank that is not a confirming bank does not make that nominated
bank liable to honour or negotiate, nor does it constitute honour or negotiation.
From the outline of the query, the nominated bank did not act on their nomination,
i.e, to incur a deferred payment undertaking, and therefore their actions do not
constitute honour.
Sub-article 7 (c) states [A]n issuing bank undertakes to reimburse a nominated
bank that has honoured or negotiated a complying presentation and forwarded the

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documents to the issuing bank. Reimbursement for the amount of a complying


presentation under a credit available by acceptance or deferred payment is due at
maturity, whether or not the nominated bank prepaid or purchased before maturity.
An issuing banks undertaking to reimburse a nominated bank is independent of the
issuing banks undertaking to the beneficiary. This sub-article entitles a nominated
bank to reimbursement only if it honours or negotiates, and in the case of a
nomination to incur a deferred payment undertaking, the nominated bank must do
that to obligate the issuing bank to reimburse. The issuing bank would still have an
independent undertaking to the beneficiary to honour a complying presentation.
Sub-article 12 (b) states [B]y nominating a bank to accept a draft or incur a
deferred payment undertaking, an issuing bank authorizes that nominated bank to
prepay or purchase a draft accepted or a deferred payment undertaking incurred by
that nominated bank. This sub-article specifically refers to the situation where a
nominated bank prepays or purchases a draft accepted or a deferred payment
undertaking incurred by that nominated bank. In the context of this query, the
authorization contained in sub-article 12 (b) only extends to a nominated bank that
has acted on their nomination by incurring their own deferred payment undertaking.
It does not extend to prepayment of a deferred payment undertaking given by
another bank.
This prepayment is considered not to have been effected in accordance with
sub-articles 7 (c) or 12 (b), because the nominated bank did not prepay (or pay) a
deferred payment undertaking incurred by them.
However, it should be noted that a bank may agree to provide finance to a
beneficiary outside the scope of UCP 600, subject to terms and conditions as may be
agreed between the bank and the beneficiary. .
Example (b).
Although the nominated bank did not act on its nomination at the time of
presentation, it subsequently acted by incurring its deferred payment undertaking
(the nominated bank sends an acceptance advice to the beneficiary to honour the
presentation on its own) and made a prepayment to the beneficiary prior to the
maturity date.
It should be noted that a nominated bank may act on its nomination at any time
prior to maturity and any prepayment may be made at any time up to the date
reimbursement is due from the issuing bank. The issuing bank has an obligation to
reimburse at maturity when a complying presentation has been made (sub-article 7
(c)).

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This prepayment is considered to have been effected in accordance with subarticles 7 (c) and 12 (b) because the nominated bank prepaid (or paid) a deferred
payment undertaking incurred by the nominated bank.
For the avoidance of doubt, a written communication from the nominated bank,
to the beneficiary, wherein it is indicated that the bank undertakes to pay a certain
amount of money on a specified due date, will constitute a deferred payment
undertaking for the purposes of sub-article 12 (b). This communication may be
given, and a prepayment may be effected, at any time before the specified due date.
However, it should be noted that if a beneficiary accepts a prepayment as
satisfying its right to payment at maturity, then the nominated bank may be entitled
to reimbursement under sub-article 7 (c), without regard to sub-article 12 (b), on the
basis of having incurred a deferred payment undertaking and having paid it at
maturity.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

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Document 470/1135rev

Mr. Amerigo Gori


Secretary General
ICC Italia
Via Barnaba Oriani, 34
00197 ROMA
Italy
24 February 2010
Subject: Document 470/TA.706rev2 (UCP600)
Dear Mr. Gori,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
ICC Italia submits to the ICC Banking Commission a query with a view to
receiving its formal opinion. This query is the expanded version of a previous
question withdrawn at the last ICC Banking Commission meeting. The position and
the comments of the customer are fully reported into the query.
1. Bank B receives from a foreign bank a standby letter of credit (SBLC) subject
to the UCP 600 in favour of its client. Bank B confirms the SBLC.
2. Thereafter, the SBLC is completely amended (see annex 1.1 to 1.3). As a result
of this amendment:
the field 45A description of goods is no longer included. In the amended
MT700, it read: CLOTHING ORDERS SIGNED BY [Company O];
the SBLC is available provided the following documents are presented:
A)

B)

A statement of default with the following content: WE HEREBY


CERTIFY THAT [Company O] HAS FAILED TO FULFIL ITS PAYMENT
OBLIGATION ON THE DUE DATE (I.E. 60 DAYS AFTER INVOICE
DATE WITH REGARD TO INVOICE(S) NO. DATED .
Copy of unpaid commercial invoice (s) issued by [Company G,
Country I] and made out in the name of [Company O, Country N].

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3. Within the expiry date of the SBLC, the beneficiary requests payment from the
confirming bank by presenting the two requested documents (see annex 3.2
and 3.3).
4. The presented invoice is issued by the beneficiary and made out in the name
of the applicant, bears no. 22878BIS, is dated 12/12/08 and the description of
goods section includes only the following information: INVOICE DUE TO
CREDIT ASSIGNMENT DTD 11 DECEMBER 2008 FROM THE [COMPANY D]
TO OUR COMPANY FOR GOODS SHIPPED BY [COMPANY D] TO YOUR
COMPANY ON OUR BEHALF AS PER THE FOLLOWING DOCUMENTS:
INVOICE NO. 4317 DTD 04/08/08, INVOICE NO. 4356 DTD 18/08/08,
INVOICE NO. 4388 DTD 22/08/08, INVOICE NO. 5652 DTD 17/09/08,
INVOICE NO. 7342 DTD 20/10/08, TOTAL AMOUNT . (amount of the
claim).
5. The declaration of default contains the following phrase: WE HEREBY
CERTIFY THAT [COMPANY O] HAS FAILED TO FULFIL ITS PAYMENT
OBLIGATIONS ON THE DUE DATE (I.E. 60 DAYS AFTER INVOICE DATE)
WITH REGARD TO INVOICE (S) NO. 22878BIS DATED 12/12/08, (amount
of the claim).
6. Bank B refuses the documents and replies with a message, sent on 19
February 2009 (see annex 4), containing the following reason:
DOCUMENTATION DOES NOT COMPLY AS IT SHOWS SHIPMENT OF
GOODS AND UNPAID INVOICES ISSUED BY [COMPANY D] DIFFERENT
FROM THAT INDICATED IN THE STANDBY LC. Note that Company D is a
third party extraneous to the SBLC.
7. On the instructions of the beneficiary, the documents are sent to the issuing
bank for approval without mentioning the discrepancy stated to the
beneficiary, and the latter refuses to honour the documents stating: WE
REFUSE TO HONOUR YOUR CLAIM DUE TO THAT THE INVOICE SHOWS
THAT THE GOODS IS DELIVERED FROM [COMPANY D] TO OUR COMPANY
FOR GOODS SHIPPED BY [COMPANY D] TO OUR COMPANY ON OUR
BEHALF. OUR STANDBY LETTER OF CREDIT ONLY COVERS GOODS
DELIVERED FROM [COMPANY G] WE REFER TO ART.16C UCP 600. WE ARE
HOLDING THE DOCUMENTS FOR YOUR DISPOSAL PENDING YOUR
INSTRUCTIONS (see annex 5).
The issuing bank gives, as the reason for refusal, the same declaration in the
invoice used by the confirming bank to refuse payment.
Query
We request the ICC Banking Commission to provide an opinion on the validity
of the grounds used by the confirming bank and issuing bank to refuse payment.

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We ask, in particular, what importance, if any, and if so to what extent, should


be given to the declarations in the invoice that, in lieu of the description of goods
invoiced, state that the goods were sent and invoiced to the applicant by a supplier
other than the beneficiary and that the related right to the credit has been assigned
by the supplier to the beneficiary of the SBLC.
We ask, therefore, if this information is an element of non-compliance with respect
to conflicts between data according to the UCP and international standard banking
practices.
Analysis
The beneficiary analysis of the case at hand is reported below in full:
QUOTE
In order to guarantee a commercial transaction, the [Country N]
subject/customer [Company O] issued on the 04/02/2008 a standby L/C to [Company
G] through our bank, Bank B.
This first issue was not respecting at all the existing commercial agreements. So,
following the tip of Bank B, it has been asked to completely modify the text of the
guarantee, and - on the 14/02/2008 - we received again the modified text (REF. 1.1 to
1.3) clearly stating in field 79 to cancel all the previous text and all the previous
amendments and clearly stating to change them with the new text issued.
We remark that this standby L/C was regularly confirmed by Bank B (item 49), so
Bank B became directly responsible for the payments to us in case of claim.
To be as clear as possible, we wish to inform about what exactly the text
required as necessary documents to do the claim for such standby L/C:
- Statement purportedly signed by beneficiary and authenticated by Bank B worded
as follows: we hereby certify that [Company O] has failed to fulfil its payment
obligations on the due date (i.e. 60 days after invoice date with regard to invoice(-s)
no....... dated ......
- Copy of unpaid commercial invoice (s) issued by [Company G] and made out in the
name of [Company O].
Just to specify and in order to show a complete outline of what happened, we
inform that company D did a few deliveries of goods to company O on our behalf
(operation normally allowed and not forbidden by the text of the standby L/C).
Following such shipments, company D made an assignment of its credit against
company O in our favour (REF. 2). The credit assignment was also regularly notified

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to company O. After this, we issued a regular commercial invoice (as pointed out in
the text of the standby L/C) to debit company O (REF. 3.3).
Unfortunately, at the expiry date company O has not settled the due amount.
So, within the written deadline on the text, we gave our claim request (REF. 3.1 to
3.4) to Bank B, giving them all the documents required in the standby L/C
(documents above mentioned listed).
Only at that time, Bank B - instead of proceeding to refund us within 5 working
days as specified in field no. 78 - began (leaving that the standby expire) to raise
problems, absolutely not relating to the standby, concerning the documents we gave
them to obtain the payment.
We wish to provide a short summary of what resulted from the correspondence
that occurred with Bank B:
We sent to Bank B the correct documents to cash the invoice within the necessary
required deadline and there is no one formal irregularity or mistake on what was
produced.
Following the referring rule, we know that the bank must be bound by his
checking activity only to the correct (or less) formal aspect of the documents given
for the claim, using as comparison the instructions written on the text of the same
standby L/C.
In this case, the text of the standby L/C stated to present the commercial invoice (s)
issued by us to company O without any other characters. So, from the text of the
standby L/C it is not resulting that the invoice should have contained any further
element.
The text of the standby is fully respecting the elements named in article 18 of
UCP 600 which in facts says:
I - that the invoice must be issued from the beneficiary of the standby
(OK, company G)
II -that the invoice must be addressed to the applicant of the standby
(OK, company O)
III - that the invoice must be issued with the same currency of the credit (OK, Euro)
The presence on the invoice of further details not required from the rule or
from the text of the standby L/C (in this case the name of company D as reference for
the shipped goods) is absolutely not influential for the final conformity declaration of
the documents, because that presence is not forbidden by any rule.

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Moreover, in the same article 18, it is written that "[T]he description of the
goods, services or performance in a commercial invoice must correspond with that
appearing in the credit". So, the description stated in our invoice is perfectly in line
and corresponding to what article 18 requires.
The further objection concerning the fact that "the invoice is not referring to a
commercial sale operation between the two parties" is totally not considerable
because it's a particular not recalled by the rule. Article 18, often used by Bank B to
justify its position, only asks that the commercial invoice is issued, respecting the
above mentioned elements (I) (II} and (III) and this was regularly made by us.
Moreover, article 4 of UCP 600 says that "[A] credit, by its nature, is a separate
transaction from the sale or other contract on which it may be based" and this totally
confirms the full validity of our documents.
UNQUOTE
ICC Italia provides the following remarks on the issue under discussion.
A) We are dealing with a beneficiary that is requesting payment of the SBLC
following the assignment of the credit in his/her favour that a third party has against
the applicant of the SBLC. Assignment of this credit is something extraneous to the
SBLC, but it is significant (and cant help but be significant) only and to the extent
the invoice presented explicitly uses it as the grounds and reasons for its issuance.
Therefore, a bank cannot ignore this fact. Based on this information, one must
conclude that this is not a copy of an unpaid invoice, but a completely different
document. This is simply a copy of a request for payment addressed to the debtor as
a consequence of the underlying credit assignment, while the real (unpaid) invoices
are those that the real supplier (assignor of the credit) sent to the
purchaser/applicant of the SBLC. This is evidenced by the initial wording in the
declaration in the so called invoice, which reads: INVOICE DUE TO CREDIT
ASSIGNMENT DTD 11 DECEMBER 2008 FROM [COMPANY D] TO OUR COMPANY
(See Annex 3.3). Since the SBLC in question requires the presentation of a
declaration of default accompanied by a copy of the unpaid invoice for a supply
made by the beneficiary, the presented document does not comply as it is not a copy
of the unpaid invoice connected to the claim contemplated by the SBLC but, as
stated above, a wholly different document.
Accordingly, the documents do not constitute a complying presentation since a
necessary document is missing; thereby the conditions under sub-articles 7 (a) and 8
(a) of the UCP have not been met.
B) We consider that the SBLC, as amended, did not determine the basis of the
content of the invoice in relation to the shipments and/or goods which were to be

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covered therein.
This merely means that any description of goods and or services appearing in the
invoice should be acceptable as there is no data to be compared. However note that
UCP sub-article 18 (c) applies and a "description of the goods, services or other
performance" must appear in any case as legitimate content of a "commercial
invoice", not as a description of whatever nature.
In this case a statement appears - instead of a description of goods or services - which
shows three main reasons not to accept the document.
1) The statement in the invoice that the goods were shipped by company D on
behalf of the beneficiary is in conflict with the issuance of the invoices by same
company D and not by the beneficiary, as should be the case. If company D is
an agent of the beneficiary the latter is entitled to issue its invoice, correctly
specifying that the goods were shipped by its agent and not mentioning other
invoices issued by the agent.
2) If the document presented is considered an invoice we are dealing with a
supply invoiced twice in the name of the same buyer (applicant).
Consequently, either the invoice presented or the ones issued by company D
are not invoices.
3) The situation is clarified by the statement that the beneficiary is the assignee of
the credit coming from the (unpaid) invoices issued by company D listed in
the document. For this reason, the document presented is not the "copy of
commercial unpaid invoice" requested by the SBLC; such unpaid invoices
being those issued by company D.
The document presented is not an invoice neither under a commercial point of
view (same supply invoiced twice) nor under a legal point of view (payment
requested under credit assignment and not under a credit coming from a supply of
whatever nature).
C) As the SBLC was issued in order to protect a credit coming from a supply
made by the beneficiary towards the applicant, the absence of this event expressly
declared by the beneficiary on the presented document is sufficient reason to
refuse payment. It is not the banks responsibility to verify the validity of the credit
assignment; this is especially true if the assignee (beneficiary) provides evidence that
the debtor was notified or proves the latter accepted it. The two banks (confirming
and issuing), on the basis of the information set out in the invoice, and therefore on
the incongruity between the identity of the actual creditor (supplier) and the party
requesting the claim (beneficiary / assignee), legitimately refuse to pay for a claim
arising from a transaction different from that for which the SBLC was issued. It is as
though banks were dealing with paying a promissory note.

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Since the declaration evidences that the party who signed the document
presented is not the issuer of the unpaid invoices (the SBLC requires COPY OF
UNPAID COMMERCIAL INVOICE ISSUED BY [COMPANY G]), this presentation is
not in compliance as a conflict exists between the identity of the beneficiary required
under the SBLC and that of the issuer of the unpaid invoice. Sub-article 14 (d) of the
UCP applies.
Conclusion
ICC Italia deems that the discrepancy raised by the two banks is valid on the
grounds of A), B) and C) above. The wording of the refusal messages of both the
confirming and issuing bank is deemed correct under C).
ANALYSIS & CONCLUSION
The standby letter of credit required the presentation of an unpaid invoice of
the beneficiary (made out in the name of the applicant) and a statement of default
certifying as to the non-payment of that invoice (or other invoices) on the due date of
60 days after the date of the invoice(s). The standby letter of credit, as amended, did
not determine the basis for the content of the invoice in relation to the shipments
and/or goods which were to be covered therein. The invoice was dated 12 December
2008 and the claim was made on 18 February 2009 (68 days after the date of the
invoice).
The absence, in the standby, of a description to appear on the invoice(s) would
allow the beneficiary to submit an unpaid invoice that otherwise complies with the
terms and conditions of the standby.
The only unpaid invoice that has been presented is the invoice of the beneficiary
that is made out in the name of the applicant. In this context, the refusal notice of
Bank B is incorrect in stating that unpaid invoices were issued by company D. In
addition, the refusal notice of the issuing bank refers to the standby only covering
goods delivered from the beneficiary, when this is not evident from the wording of
the standby, as re-issued. Both refusal notices are not valid for the reasons stated.
It is the responsibility of the beneficiary to ensure that their invoice meets the
requirements of their local law. A bank's responsibility is to examine the invoice
according to the requirements of the credit, the UCP and international standard
banking practice.
It is agreed that any assignment that may exist between the beneficiary and
company D is a matter between those parties, outside the scope of the standby and

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UCP, given that the beneficiary has presented the required documents and,
presumably, payment having been requested by the beneficiary is to be made to their
account. It should be noted that the wording of the invoice indicates that although
company D shipped the goods to the named applicant, such shipments were made
on behalf of the named beneficiary.
CONCLUSION
The conclusion of the national committee is not agreed.
In the context of the wording of the standby and the documents presented, we
can find no reason to refuse the presentation. Although one would not expect the
invoice to be issued in the manner of completed by the beneficiary or for the form of
transaction that the invoice is professing, the standby did not give an indication of
the underlying transaction(s) to which it was subject or prohibit an invoice being
issued in the manner that has been made by the beneficiary.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

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Document 470/1135rev

Mr. Ashok Ummat


ICC India
Federation House
Tansen Marg
New Delhi - 110 001
India
and
Ms. Svetlana Derkach
Director
ICC Russia
21 build 1 Bolshaya Polyanka Street
Moscow 119180
Russia
8 February 2010
Subject: Document 470/TA.708rev (UCP600) (Joint Submission)
Dear Mr. Ummat and Ms. Derkach,
Thank you for your joint submission of a query regarding UCP 600. Please find
below the opinion of the officers of the Banking Commission.

QUOTE
We have received a query from two of our member banks Bank V (the issuing
bank) and Bank S (bank of the beneficiary), presenting a case for an opinion of the
Banking Commission regarding the practical application of UCP 600. The same is
reproduced below:
Bank V issued three L/Cs that are available with them. Beneficiary has presented
documents under all three L/s and they were forwarded to the issuing bank by
Bank S. After examination of the documents, the issuing bank determined that they
did not constitute a complying presentation because of the discrepancies stated
below:

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L/C No.1 discrepancies:


Quote
1. Port of Discharge in B/L does not correspond with LC terms, Field 44F. As per
L/C terms port of discharge was stated as Tallinn port, Estonia, but in the B/L
presented it was indicated as Tallinn only.
2. Seal Nos in comm invoice and packing list do not correspond with seal nos in
B/L. The B/L evidenced seal nos, for example 903236, 903233. In the
enclosure Chassis list for final bill of lading to the commercial invoices and
packing lists seal numbers were indicated as MSC903236, MSC903233.
3. Certificate of origin presented under L/C was issued and stamped by ABC LTD,
although as per L/C terms Certificate of origin must be issued by beneficiary
that is ABC LTD, INTERNATIONAL BUSINESS.
Unquote
Comments of Bank S:
1. As per LC: Tallinn Port, Estonia. As per Bill of Lading: Tallinn
Not mentioning the name of the country does not in any way make the B/L
discrepant.
2. The Seal Nos in the B/L did not show the Prefix MSC which is an
abbreviation of the shipping companys name. The B/L is on the shipping
companys letterhead. The prefix MSC i.e., abbreviation of shipping companys
name, is mentioned in invoice and packing list. ISBP, Publication 681
paragraph 35, explains that additional information may not be construed as a
discrepancy
3. Name and address of the company has been mentioned correctly in the
certificate of origin. In the exporters name column of certificate of origin,
name of division International Business is appearing. The certificate has
been correctly signed for the company - ABC LTD.
Issuing banks comments:
1. According to sub-article 20 (a) (iii) of UCP 600, a B/L must appear to indicate
shipment from the port of loading to the port of discharge stated in the credit.
Thus the port of discharge should be indicated in strict compliance with L/C
terms i.e., Tallinn port, Estonia. In the B/L it was indicated the name of the
city and that it is a port (by the pre-printed wording in the B/L), but the name
of the country is missing. This is a discrepancy.
2. The B/L evidenced seal nos, for example 903236, 903233. In the enclosure
Chassis list for final bill of lading to the commercial invoices and packing
lists the seal numbers were indicated as MSC903236, MSC903233. The issuing

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bank considered that all letters and figures included in the seal number
formed an integral part of the seal number and determined that data in the
commercial invoices and packing lists were in conflict with data in the B/L.
The data concerning seal numbers, if indicated in the enclosure Chassis list
for final bill of lading to the commercial invoices and packing lists should be
written as in the B/L or in a way that allows the issuing bank to determine, on
its face, that it is not in conflict with the B/L. When examining the documents,
on their face, the issuing bank could not come to the conclusion, without
additional investigation and explanations, that the seal numbers MSC903236
and 903236 mean the same. This is a discrepancy.
3. L/C required, as per Field 46A (Documents Required) certificate of origin
issued by beneficiary, as per Field 59 of the SWIFT MT700 the name of the
beneficiary is shown as ABC LTD, INTERNATIONAL BUSINESS. Certificate of
origin was issued and stamped by ABC LTD. When examining the certificate of
origin, the issuing bank could not determine on its face, and should not
investigate to determine whether the beneficiary, required in the L/C and
indicated in the certificate of origin, is the same company or two different
companies.
According to sub-article 14 (a) of UCP 600 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.
According to article 34 of UCP 600 banks assume no liability or responsibility
for the legal effect of any document, or for the general and particular
conditions stipulated in a document or superimposed thereon. The names
ABC LTD, INTERNATIONAL BUSINESS and ABC LTD, when considered in
the context of the examination of documents, on their face, belong to two
different companies. Therefore, the certificate of origin is discrepant.
L/C No. 2 discrepancies
Quote
1. Port of Discharge in B/L does not correspond with LC terms in Field 44F. Port
of discharge was stated in L/C as St. Petersburg, Russia, but in the B/L
presented port of discharge was indicated as St. Petersburg, Ru.
2. Seal Nos in comm invoice and packing list do not correspond with seal nos in
B/L. The B/L evidenced seal nos, for example 9072496, 9072464. In the
enclosure Chassis list for final bill of lading to the commercial invoices and
packing lists seal numbers were indicated as APL9072496, APL9072464.

16
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3. Certificate of origin presented under L/C was issued by ABC LTD, although as
per L/C terms Certificate of origin must be issued by beneficiary that is ABC
LTD, INTERNATIONAL BUSINESS.
4. CTR Number does not correspond with LC terms. In the commercial invoice
presented the number of contract was indicated twice and differently. In the
description of goods it was stated 0404044401, but when indicated together
with the country of goods origin the number of contract was stated: Country
of goods origin: the name of the country. Contract number 04040044401
Dt.XX.XX.2007.
5. Notify partys address does not correspond with LC terms. As per L/C terms in
notify partys address it should be stated St. Petersburg, Russia, but in the
B/L presented in notify partys address there was indicated At. Petersburg,
Russia.
Unquote
Comments of Bank S:
1. As per LC: St. Petersburg, Russia. As per BL: St.Petersburg, Ru
Short form of the name of the country does not in any way make the BL
discrepant.
2. The Seal Nos in the B/L did not have the Prefix APL, which is an abbreviation
of the shipping companys name. The B/L is on the shipping companys
letterhead. The prefix APL i.e., abbreviation of shipping companys name, is
mentioned in invoice and packing list. ISBP, ICC Publication 681, paragraph
35 explains that additional information may not be construed as a
discrepancy.
3. Name and address of the company has been mentioned correctly in the
certificate of origin. In the exporters name column of certificate of origin,
name of division International Business is appearing. The certificate has
been correctly signed for the company - ABC LTD.
4. This is a very generic discrepancy that has been pointed out. It does not state
in which document there is a discrepancy. However, we would like to
mention that in the invoice, in the description of goods CTR number and date
was given exactly as it appears in the LC. The contract no. is once again given
in the invoice where it has been mentioned as 04040044401 as against the
number 0404044401 as per LC.
5. As per LC: St. Petersburg. As per BL: At. Petersburg.
This is a typographical error and does not have any material effect on the
credit condition and should not be considered as a discrepancy

17
Document 470/1135rev

Issuing banks comments:


1. According to sub-article 20 (a) (iii) of UCP 600, a B/L must appear to indicate
shipment from the port of loading to the port of discharge stated in the credit.
Thus, the indication of the port of discharge should be in strict compliance
with L/C terms, without any abbreviations. UCP 600 and ISBP do not permit
the indication of information about the port of discharge by using codes or
short forms instead of writing out the name in full. The name of the country
should be stated as Russia or Russian Federation.
The abbreviation Ru is not the internationally applied code or short form
of the name Russia. The document is discrepant.
2. The B/L evidenced seal nos, for example 9072496, 9072464. In the enclosure
Chassis list for final bill of lading, to the commercial invoices and packing
lists, seal numbers were indicated as APL9072496, APL9072464. The issuing
bank considered that all letters and figures included in the seal number
formed an integral part of the seal number and determined that data in the
commercial invoices and packing lists were in conflict with data in the B/L.
The data concerning seal numbers, if indicated in the enclosure Chassis list
for final bill of lading to the commercial invoices and packing lists, should be
written as in the B/L or in a way that allows the issuing bank to determine, on
its face, that it is not in conflict with the B/L. When examining the documents,
on their face, the issuing bank could not come to a conclusion, without
additional investigation and explanations, that seal numbers APL9072496 and
9072496 mean the same. This is a discrepancy.
3. L/C required, as per Field 46A (Documents Required) certificate of origin
issued by beneficiary and according to Field 59 the name of the beneficiary is
ABC LTD, INTERNATIONAL BUSINESS. Certificate of origin was issued and
stamped by ABC LTD. When examining the certificate of origin the issuing
bank could not determine, on its face, and should not investigate to
determine whether the beneficiary, required in the L/C and indicated in the
certificate of origin, is the same company or two different companies.
According to sub-article 14 (a) of UCP 600 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.
According to article 34 of UCP 600 banks assume no liability or responsibility
for the legal effect of any document, or for the general and particular
conditions stipulated in a document or superimposed thereon. The names
ABC LTD, INTERNATIONAL BUSINESS and ABC LTD, when considered in
the context of the examination of documents, on their face, belong to two

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Document 470/1135rev

different companies.
Therefore, the certificate of origin is discrepant.
4. L/C stipulated, in field 45A (description of goods) number of contract as
0404044401 and also the indication of the country of goods, origin and
number of contract in the commercial invoice (Commercial invoice for the
full value of the actually shipped goods, signed by the beneficiary indicating
the country of goods origin, number of the contract and number of the letter
of credit).
In the presented commercial invoice, the number of the contract was
indicated twice and differently. In the description of goods it was stated as
0404044401 (as per L/C), but when indicated together with the country of
origin the number of the contract was stated not as per L/C: Country of goods
origin: the name of the country. Contract number 04040044401
Dt.XX.XX.2007.
According to sub-article 14 (d) of UCP 600 data in the document must not
conflict with each other or the credit. The number of the contract, if stipulated
by the L/C and stated in the commercial invoice more than one time, should
be written as per L/C terms and should not be indicated differently. It is a
discrepancy.
5. The indication of the address is the significant part of the information
concerning the notify party. L/C terms do not stipulate that misspellings are
acceptable. Thus notify partys address should be stated as in L/C: St.
Petersburg, Russia.
In the B/L, the notify partys address was indicated as At. Petersburg, Russia
that does not allow the issuing bank to identify the name of the city.
The document is discrepant.
L/C No. 3 discrepancies:
Quote
1. Port of Discharge in B/L does not correspond with LC terms, Field 44F. Port of
discharge was stated in L/C as St. Petersburg, Russia, but in the B/L
presented port of discharge was indicated as St. Petersburg, Ru.
2. Seal Nos in comm invoice and packing list do not correspond with seal nos in
B/L.
The B/L evidenced seal nos, for example 9105045, 9105028. In the enclosure
Chassis list for final bill of lading to the commercial invoices and packing
lists seal numbers were indicated as APL9105045, APL9105028;
3. Certificate of origin presented under L/C was issued by ABC LTD, although as
per L/C terms certificate of origin must be issued by beneficiary that is ABC
LTD, INTERNATIONAL BUSINESS.

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Document 470/1135rev

4. L/C stipulated DHL courier receipt evidencing dispatch of one original


commercial invoice and 1/3 original B/L document to consignee (Company T.
H. DEF). DHL courier receipt evidenced dispatch of the set of original invoice
and 1/3 B/L to CJSC DEF.
Unquote
Comments of Bank S:
1. As per LC : St. Petersburg, Russia. As per Bill of Lading : St. Petersburg, Ru
Short form of the name of the country does not in any way make the BL
discrepant.
2. The Seal Nos in the B/L did not have the Prefix APL, which is an abbreviation
of the shipping companys name. The B/L is on the shipping companys
letterhead. The prefix APL i.e., abbreviation of shipping companys name, is
mentioned in the invoice and packing list. ISBP Publication 681, paragraph 35
explains that additional information may not be construed as a discrepancy.
3. Name and address of the company has been mentioned correctly in the
certificate of origin. In the exporters name column of certificate of origin,
name of division International Business is appearing. The certificate has
been correctly signed for the company - ABC LTD.
4. The DHL courier receipt is consigned to the exact address as mentioned in the
credit and was consigned to CJSC DEF.
Issuing banks comments:
1. According to sub-article 20 (a) (iii) of UCP 600, a B/L must appear to indicate
shipment from the port of loading to the port of discharge stated in the credit.
Thus, the indication of the port of discharge should be in strict compliance
with L/C terms, without any abbreviations.
UCP 600 and ISBP do not permit the indication of information about the port
of discharge by using codes or short forms instead of writing out the name
in full. The name of the country should be stated as Russia or Russian
Federation. The abbreviation Ru is not the internationally applied code or
short form of the name Russia. The document is discrepant.
2. The B/L evidenced seal nos, for example 9105045, 9105028. In the enclosure,
Chassis list for final bill of lading to the commercial invoices and packing
lists, the seal numbers were indicated as APL9105045, APL9105028. The
issuing bank considered that all letters and figures included in the seal
number formed an integral part of the seal number and determined that data
in the commercial invoices and packing lists were in conflict with data in the
B/L.
The data concerning seal numbers, if indicated in the enclosure Chassis list

20
Document 470/1135rev

for final bill of lading to the commercial invoices and packing lists, should be
written as in the B/L or in a way that allows the issuing bank to determine, on
its face, that it is not in conflict with the B/L. When examining the documents,
on their face, the issuing bank could not come to the conclusion, without
additional investigation and explanations, that the seal numbers APL9105045
and 9105045 mean the same. This is a discrepancy.
3. L/C required, as per Field 46A (Documents Required) certificate of origin
issued by beneficiary. According to Field 59, the name of the beneficiary is
ABC LTD, INTERNATIONAL BUSINESS. Certificate of origin presented under
the L/C was issued and stamped by ABC LTD. When examining the certificate
of origin, the issuing bank could not determine on its face, and should not
investigate to determine, whether the beneficiary required in the L/C, and
indicated in the certificate of origin, is the same company or two different
companies.
According to sub-article 14 (a) of UCP 600 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.
According to article 34 of UCP 600 banks assume no liability or responsibility
for the legal effect of any document, or for the general and particular
conditions stipulated in a document or superimposed thereon. The names
ABC LTD, INTERNATIONAL BUSINESS and ABC LTD, when considered in
the context of the examination of documents, on their face, belong to two
different companies. Therefore, the certificate of origin is discrepant.
4. A DHL courier receipt, to fulfill its function, is to confirm the dispatch of
documents as indicated in the L/C, to the consignee stipulated in the L/C.
According to L/C terms consignee was indicated as Company T. H. DEF. When
presented, the DHL courier receipt evidenced dispatch of the documents to
CJSC DEF. The name of the consignee in the DHL courier receipt differs from
the name of the consignee required by the L/C. L/C terms concerning the
dispatch of the documents to the named consignee were not fulfilled. DHL
courier receipt evidenced that documents were sent to a party not stipulated
in the L/C and that makes the document discrepant.
We will greatly appreciate receiving your opinion on the above at the earliest.
ANALYSIS

L/C Nos. 1, 2 and 3:

21
Document 470/1135rev

Discrepancy 1 As stated in the analysis to ICC Opinion TA.701, there is no


requirement in the UCP or international standard banking practice for the country
name to appear against a stated city shown as the place of receipt, port of loading,
port of discharge or place of delivery. Absence of the country name is not a reason
for refusal, notwithstanding that such words are stated in the credit. In respect of
L/Cs 2 and 3, the use of ISO country code RU instead of Russia does not create a
conflict of data.
Discrepancy 2 The seal numbers were those of the shipping company that

issued the bill of lading i.e., MSC or APL. Sub-article 14 (d) states [D]ata in a
document, when read in context with the credit, the document itself and
international standard banking practice, need not be identical to, but must not
conflict with, data in that document, any other stipulated document or the credit. In
the context of the documents presented, the data relating to the seal numbers is not
identical, but there is no conflict with the number itself. The insertion of MSC or APL
in front of the seal number, on the commercial invoices and packing lists, should not
be seen as a reason for refusal.

Discrepancy 3 The name of the beneficiary is ABC Ltd. International Business


is a designation of a division and not necessarily part of the name of the company.
The certificate of origin is signed by ABC Ltd. The document was issued by the
beneficiary and there is no discrepancy.
L/C No.2:
Discrepancy 4 The contract number was quoted twice on the commercial

invoice, once incorrectly (by the addition of an extra 0). The contract reference was
stated correctly in relation to, and describing, the description of the goods.
Sub-article 14 (d) states [D]ata in a document, when read in context with the
credit, the document itself and international standard banking practice, need not be
identical to, but must not conflict with, data in that document, any other stipulated
document or the credit.
ISBP Publication 681, paragraph 25 states [A] misspelling or typing error that
does not affect the meaning of a word or the sentence in which it occurs does not
make a document discrepant. In the context of this discrepancy, it is clearly a
typographical error that has occurred.
Whilst the additional insertion of the contract number was incorrect, in the
context of the commercial invoice the information had been stated correctly and the
second reference to the contract number was somewhat superfluous.

22
Document 470/1135rev

Discrepancy 5 Sub-article 14 (j) includes [H]owever, when the address and


contact details of the applicant appear as part of the consignee or notify party details
on a transport document subject to articles 19, 20, 21, 22, 23, 24 or 25, they must be
as stated in the credit.
Issues relating to the application of sub-article 14 (j) were covered in ICC
Opinion TA.696 which included in its analysis [T]he first sentence of sub-article 14
(j) allows some latitude when the address of the [beneficiary and/or] applicant
appear on documents i.e., that it may be the same address as that which is stated in
the credit or a different address but within the same country. The position in the last
sentence is that the address of the applicant must be that which is stated in the credit
when it appears, as in this case, as part of the notify party detail. However, this does
not mean that it must be identical but merely that it must not appear to conflict.
In this particular issue, there can be no doubt that the address, whilst not
exactly that which is stated in the credit, is the same. ISBP Publication 681, paragraph
25 would also apply here. Therefore, there is no discrepancy.

L/C No. 3:
Discrepancy 4 The credit required an original commercial invoice and 1/3 bill
of lading to be sent to the named consignee. Whilst the documents were couriered to
the correct address, the name of the company on the courier receipt was not the
named consignee. The courier receipt is discrepant.
CONCLUSION
L/C No. 1 - The documents are compliant and the issuing bank must honour.
L/C No. 2 - The documents are compliant and the issuing bank must honour.
L/C No. 3 The documents are discrepant in respect of discrepancy 4 only.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.

23
Document 470/1135rev

If this query relates to a matter currently under consideration by the


courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

24
Document 470/1135rev

Mr. Wilko Gunster


Secretary General
ICC Netherlands
Postbus 95309, 2509 CH Den Haag
Bezuidenhoutseweg 12, 2594 AV Den
Haag
The Netherlands
4 January 2009
Subject: Document 470/TA.709
Dear Mr. Gunster,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We would like to seek an official opinion from the Banking Commission on the
acceptability of insurance documents with a date of issuance which is later than the
date of shipment, that indicate cover from warehouse to warehouse and no further
indication of a date as to when the cover is effective.
Within our National Group of Experts there is a difference of opinion whether
such an insurance document is acceptable or not.
UCP 600 sub-article 28 (e) reads The date of the insurance document must be
no later than the date of shipment, unless it appears from the insurance document
that the cover is effective from a date not later than the date of shipment.
Some opine that such an insurance document is acceptable, based on unless it
appears from the insurance document that the cover is effective from a date not later
than the date of shipment of the afore-mentioned sub-article. Under a warehouse
to warehouse cover the goods are so covered from the time they leave the shippers
warehouse to the time of arrival at the warehouse of destination.

26 July 2010/TS/wf
Document 470/1135rev

This opinion is also supported by Official Opinion R234 (issue 2) which states
under its analysis: The so-called "Transit Clause" indeed covers the goods,
uninterruptedly, from end-to-end until the final point of destination, not later than
60 days after being unloaded from the carrying ship. Therefore, it is only the date of
the taking charge of risks that should be considered, and not the date of the
cessation of risks at the place of destination. (emphasis added).
Others opine that such an insurance document is not acceptable based on the
same UCP 600 sub-article: The date of the insurance document must be no later
than the date of shipment, and UCP 600 sub-article 14 (a) which reads that a
presentation must be examined, on the basis of the documents alone, to determine
whether or not the documents appear on their face to constitute a complying
presentation. Meaning, that a document checker is not expected to examine details
of cover to ascertain the effective date of cover.
It is recognized that ICC Publication No. 680 (Commentary on UCP 600) is a
publication not approved by the Banking Commission, but it seems that there was
also a discussion about this topic within the Drafting Group as evidenced by the text
on page 132 Some ICC national committees suggested that the date of an insurance

document which is later than the date of shipment should be acceptable, since the
Institute Cargo Clauses cover the "Transit Clause" as indicated in the policy. The
insurance attaches from the time the goods leave the warehouse or place of storage
at the place named therein for the commencement of the transit. However, the
principle of examining 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, applies. In respect of sub-article (e), a document examiner is not
expected to check details of the specific Institute Cargo Clauses to ascertain the
effective date of cover.
ANALYSIS
Sub-article 28 (e) contains a fundamental rule that is to be applied, amongst
others, to the examination of an insurance document i.e., that the date of the
insurance document must be no later than the date of shipment. However, this rule
is qualified to the extent that an insurance document dated later than the date of
shipment is acceptable, if it appears to indicate that cover was effective from a date
no later than the date of shipment.
An insurance document dated after the date of shipment will be acceptable if
the insurance document indicates that cover has been effected from warehouse to
warehouse. For example, an insurance document indicating from Warehouse
London to Warehouse Hong Kong or insurance effected warehouse to warehouse

26
Document 470/1135rev

or similar wording, evidences that the goods have been insured from the moment
that they were delivered into the stated warehouse. In these circumstances, it
matters not as to when the insurance document was dated, as the coverage
commenced prior to the date of shipment.
Document examiners are not required to know whether specific insurance risks,
such as Institute Cargo Clauses (A), contain warehouse to warehouse provisions. An
insurance document must clearly indicate that coverage has been made warehouse
to warehouse to be compliant under sub-article 28 (e), when the date of the
insurance document is later than the date of shipment.
It should also be noted that an insurance document can also appear to indicate
that cover is effective from a date no later than the date of shipment, by specific
wording to this effect. For example:
A bill of lading is dated 22 December 20xx and the insurance document is dated
23 December 20xx. However, the following data (or wording of similar effect) is
indicated on the insurance document Insurance effective as of 22 December 20xx.
CONCLUSION
An insurance document that is dated later than the date of shipment, but clearly
indicates that coverage has been effected on a warehouse to warehouse basis is
acceptable.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.

27
Document 470/1135rev

Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

28
Document 470/1135rev

Mr. Ahsan Aziz


Chairman
ICC Pakistan Banking Commission
V.M. House, West Wharf Road
P.O. Box 4050
Karachi 74000
Pakistan
4 January 2010
Subject: Document 470/TA.711rev
Dear Mr. Aziz,
Thank you for your query regarding URC 522. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We have an issue regarding non-payment against our export collection
documents.
Export documents for USD11,200.00 were sent for collection by one of our
branches, to Bank A in Country K. Documents were dispatched to the bank on July
17, 2009. Meanwhile, the buyer approached Bank A for issuance of a delivery order
against a copy of an air waybill faxed to them by our client (exporter). The goods
were consigned to Bank A. Bank A issued the delivery order and the goods were
released.
Later, the original documents were returned by Bank A, unpaid, under
instructions of their client/buyers. However, we are insisting that Bank A make
payment against our documents on the plea that as the buyer has received the goods
then what is the justification for returning the documents? Since Bank A has been
instrumental in releasing the goods to the drawee, we hold them responsible for
making payment. The actions of the bank in returning the documents are totally
wrong, unjustified and against international banking rules. This is especially so when
the buyers have taken delivery of the goods against a delivery order issued by Bank A.
It is true that under URC 522 banks are not liable to make payment against collection
documents, yet in this case Bank A has involved itself in the transaction by issuing the
delivery order and has become directly responsible for making payment against the

26 July 2010/TS/wf
Document 470/1135rev

documents. We request you to examine this issue and intimate to us if our stance is
correct. Bank A is not responding to any of our communications in this respect.
ANALYSIS
Unless the consigning of the goods to the bank was agreed with Bank A, this
should not occur (URC 522 sub-article 10 (a)).
The buyer approached Bank A for the issuance of a delivery order based on the
fact that the goods were consigned to Bank A. Bank A was not in possession of the
collection instruction at that time, but should have enquired as to the nature of the
transaction before agreeing to the request for issuance of a delivery order. Bank A
had the option of declining the request and to await the receipt of the collection
instruction before proceeding further.
The URC do not include any rules relating to the release of cargo through a
shipping guarantee, delivery order or the like. However, article 9 does require that
the banks involved in the collection instruction act in good faith.
When issuing a delivery order or shipping guarantee and the like, the collecting
bank should, as a matter of best practice, simultaneously take an instruction, from
the buyer, to the effect that the collection will be honoured upon presentation
notwithstanding any errors or defects in the documents or contestation of the buyer.
CONCLUSION
The collecting bank having issued a delivery order, without taking an instruction
from the buyer to honour the underlying collection instruction may be liable under
the applicable law.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.

30
Document 470/1135rev

Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

31
Document 470/1135rev

Mr. Ahsan Aziz


Chairperson
ICC Pakistan
V.M. House, West Wharf Road
P.O. Box 4050
Karachi 74000
Pakistan
26 January 2010
Subject: Document 470/TA.712rev
Dear Mr. Aziz,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
1. Bank E, Country R issued thirteen (13 ) irrevocable documentary credits,
subject to UCP 600, for various amounts totalling USD1,786,207.00 through
Bank D, Country G to advise through Bank A, Country P. Bank A was a
nominated bank. Despite this request, Bank D forwarded the credits to their
Country P Office who advised them directly to the beneficiary.
Payment terms were deferred payment at 60 days from B/L date, for eleven
L/Cs and 90 days from B/L date for the other two.
2. Beneficiary presented to Bank A 13 sets of shipping documents totaling USD
1,736,609.44 which were forwarded to Bank E who accepted the documents
and advised the due dates. Due to non-receipt of funds on the due dates Bank
A sent reminders to Bank E by SWIFT and e-mail for which no response was
received.
3. In December 2008, in response to a telephone call, Bank E informed Bank A
that Country R Central Bank had placed Bank E under Temporary
Administration for six months, with effect from October 29, 2008. The above
conversation was followed by a SWIFT message dated December 18, 2008
confirming that the Regulator had appointed a State Agency for stabilization of
the Banks financial situation and overseeing the use of credit funds provided
by the Central Bank. They also mentioned that the temporary administration
was carrying out a revision of outstanding obligations and other banking

26 July 2010/TS/wf
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activities and a positive decision on all L/C payments will be made shortly in
our favor.
4. We strongly believe that Bank E should honour its obligation / liability under
the documentary credits and, as such, we made constant and protracted
follow-up through reminders by SWIFT messages and letters to Bank E, the
Central Bank and the State Agency. We requested them to expedite payment
of our export proceeds with good value as per their Advice of Payment,
reminding them about their liability under UCP 600 and not to defer with
the future strategy. Bank A received some messages including the following:

SWIFT message dated January 29, 2009 from Bank E mentioning that
they have already informed us of the reasons for non-payment on
18.12.08, since then there was no change in the present state of affairs
in the bank.

SWIFT message dated February 19, 2009 from the State Agency
informing Bank A that the Temporary Administration will perform its
duties until April 29, 2009 and thereafter a possible change of
shareholder structure is expected in the following 1-2 months. L/C
settlements with the concerned applicant were the reasons for the
economic losses of Bank E. They advised Bank A that Bank E has
suspended all current payments under the L/Cs. However, they assured
us of the true intention of the Bank to solve this problem, considering
interests of all parties involved. After the changes in investors / new
shareholders they will define their future strategy and they might take a
decision on settlement of outstanding obligations under the L/Cs. They
requested Bank As understanding and patience and expressed
commitment to a positive resolution of the present situation.

SWIFT message dated June 11, 2009 from Bank E informing Bank A of
the new management taking over and that they are carrying out a
revision of outstanding obligations and claims under L/Cs. They assured
Bank A of their commitment to settle the matter of payments under the
L/Cs in Bank As favour at the earliest possible date.

Letter dated July 15, 2009 and SWIFT message dated July 16, 2009 from
State Agency and Bank E, respectively, with almost the same text. They
mentioned that L/Cs opened by the applicant with them were of an
unsecured type without any collateral or liquid pledge, nor did the
bank carry out qualitative or quantitative risk assessment of the effected
transactions. About half of overdue debt will likely not be repaid. They

33
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believe that L/C transactions of the applicant represent a scheme for


stealing the banks money. They reiterated that criminal charges against
some ex-managers of the bank were filed with investigations also on
money laundering and terrorist financing. They concluded that
repayment of the banks obligations under the L/Cs is possible only after
the legal review on the concluded transactions is carried out.
5. Bank A totally disagrees with their intention for deferring the payment for an
indefinite period due to any mismanagement or unlawful activities in their
bank by some ex-managers. Bank A has nothing to do with any default by their
customer. As it is purely their internal affair Bank A kept on reminding all
concerned parties in Country R of their obligations under UCP 600, but to no
avail. It appears that they are trying to avoid their liability by using delaying
tactics. On August 27, 2009, the new management and / or stakeholders of
Bank E changed the name of the bank and re-named it Bank P. Needless to
mention that Bank E was originally established in 1990 with the same name.
6. Bank A therefore seek your kind assistance in helping us by using your good
offices to convince the management / owners of Bank E now renamed as
Bank P and the Central Bank of Country R to honour their obligations under
their documentary credits. They should immediately arrange to remit
proceeds, with interest at prevailing rate, losses and out of pocket expenses to
Bank A, without further delay.
ANALYSIS
Bank E, now known as Bank P, confirmed that the documents complied with
the terms and conditions of the 13 credits and advised the due dates in respect of
each drawing made thereunder. As a consequence, Bank E had an obligation to
honour on the due dates that were advised to Bank A.
Issues relating to the circumstances under which the credits were issued and the
seemingly lack of controls that existed in Bank E, are outside of the scope of UCP but
do not detract from the obligations of Bank E that are created within the UCP and, in
particular, article 7. It should also be noted that legal and regulatory issues are
outside the control of the ICC and the ICC cannot offer any position in this respect.
Despite the above, it must be recognized that the involvement of the Central
Bank and an appointed State Agency, to oversee the banks affairs will, as a matter of
necessity, postpone or at the very least defer the payments that are due under these
credits, pending finalization of their investigation.

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Document 470/1135rev

CONCLUSION
Bank E issued 13 documentary credits and Bank A apparently acted in good
faith in handling those transactions. There is no inference in the query that Bank A
were aware of any issues such as those discussed in the query i.e., money laundering
and terrorist activity.
Bank E (now Bank P) has an obligation to honour the drawings and it must be
hoped that the Central Bank and the State Agency of Country R will do everything in
their power to bring this matter to a swift conclusion recognizing the responsibilities
that befall an issuing bank under the UCP and the credit itself.
The actions of the applicant and/or the previous management of Bank E should
not be an influence or deciding factor over whether Bank A receives the proceeds of
the 13 drawings. Presuming that Bank A acted on their nomination, Bank A should
be reimbursed for the drawings, plus delayed payment interest at the prevailing
rates. If Bank A did not act on their nomination, Bank E is obligated to pay the
beneficiary who has presented complying documents.
The question of and determination of, losses and out of pocket expenses, will
need to be proven and agreed between Bank E (now Bank P) and Bank A.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.

35
Document 470/1135rev

Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

36
Document 470/1135rev

Mr. Pavel Andrle


Secretary
Banking Commission ICC CR
Thunovska 12,
118 00 Prague 1
Czech Republic
26 January 2010
Subject: Document 470/TA.713
Dear Mr. Andrle,
Thank you for your query regarding URC 522. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We are repeatedly acting as a remitting bank under documentary collections
documents against acceptance drawn by the same drawer, on the same drawee,
and being subject to URC 522. The collections are sent through Bank B, Country G
acting both as collecting and presenting bank. Regarding payment of charges, the
collection instructions expressly state the following:
Your charges and settlement charges of all banks involved are for drawees
account. These charges may not be waived, if refused, do not deliver documents.
The collection instructions also contain the following clause:
Please confirm acceptance of the bill by authenticated swift as soon as it is
accepted.
Following acceptance tracer repeating the request (Pls inform us by return if a/m
bills of exchange were accepted.) we received acceptance by MT412 SWIFT.
Upon payment, the proceeds were subject to deduction of SWIFT charge GBP
15.00 (each collection). We demanded that collecting bank refund the SWIFT charge,
reminding them that the collection instruction expressly stated that all their charges
were for account of drawee and they were not allowed to waive these charges.
Collecting bank replied as follows: You stated all our charges for drawee which we
have. GBP 15.00 is your charge, as you requested a SWIFT reply when acceptance
actioned. This incurred a charge of GBP 15.00 for the SWIFT. We will not be
refunding this. We replied that our collection was subject to URC 522 and under

26 July 2010/TS/wf
Document 470/1135rev

sub-article 26 (c) (ii) The collecting bank must send without delay advice of
acceptance to the bank from which the collection instruction was received. We
argued consequently that sending acceptance advice is a standard of collection
processing under URC 522 and that we requested nothing beyond a requirement
that is already contained in URC 522. We insisted that all charges under our
collection were for drawees account and were not allowed to be waived, hence all
charges connected with standard processing of the collection must be claimed from
drawee, the deduction was not authorised and the amount must be returned. The
collecting bank replied, inter-alia that Under URC 522 this charge is for your
account, not the drawee, we will therefore not be refunding the charges and our files
remain closed. URC 522 sub-article 26 (c) does not expressly require that these
advices be sent by SWIFT, however, we expressly requested SWIFT advice because we
must consider this to be the most convenient, efficient and cheapest advising method
in this case.
We would like to seek your opinion on the following question:
Was the collecting bank entitled to deduct their SWIFT charge, although all
charges were for account of the drawee and were not allowed to be waived, i.e. is the
request for SWIFT advice of acceptance to be considered as a request by a remitting
bank for an additional service chargeable to the remitting bank, although URC 522
expressly state that collecting bank must send advice of acceptance? This question
would also apply to payment advice under URC 522 sub-article 26 (c) (i) where the
collecting bank is also required to send a payment advice.
ANALYSIS
Sub-article 21 (b) states Where the collection instruction expressly states that
charges and/or expenses may not be waived and the drawee refuses to pay such
charges and/or expenses, the presenting bank will not deliver documents and will
not be responsible for any consequences arising out of any delay in the delivery of
the document(s). When payment of collection charges and/or expenses has been
refused the presenting bank must inform by telecommunication or, if that is not
possible, by other expeditious means without delay the bank from which the
collection instruction was received.
Sub-article 26 (c) (1) reads The collecting bank must send without delay advice
of payment to the bank from which the collection instruction was received, detailing
the amount or amounts collected, charges and/or disbursements and/or expenses
deducted, where appropriate, and method of disposal of the funds. and sub-article
26 (c) (2) The collecting bank must send without delay advice of acceptance to the
bank from which the collection instruction was received.

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Document 470/1135rev

CONCLUSION
An advice of payment or acceptance of a collection is required to be sent
according to sub-articles 26 (c) (1) or (2) of the rules. In most circumstances, the
sending of this advice by SWIFT is the most common, efficient and cost effective
manner.
Given the instructions to the collecting / presenting bank in relation to the
charges, and the express indication that if refused documents were not to be
released, the collecting / presenting bank has a choice to charge the SWIFT fee to the
drawee or advise the remitting bank that the charges are refused and that the
documents remain with the collecting / presenting bank pending further
instructions.
Having released the documents to the importer, the collecting / presenting bank
has indicated their willingness to comply with the instructions in the collection
schedule and the rules contained in URC 522.
The SWIFT charge of GBP15.00 should not have been deducted from the
proceeds.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.

39
Document 470/1135rev

Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

40
Document 470/1135rev

Ms Elena Filatova
Policy Director
ICC Russia
21/1 Bolshaya Polyanka Str.
119180 Moscow
Russia
26 January 2010
Subject: Document 470/TA.714rev
Dear Ms. Filatova,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
A problem has occurred between our bank and Bank M, Country I. We appeal
for your help in this matter and to provide us with your opinion as to which bank is
correct. We are pleased to present the following facts:
On 20.12.07 we issued an irrevocable L/C, subject to UCP latest version, for EUR
14,656,000.00 under the instructions of Company S, Country R in favour of
Company I, Country I.
Field 41A: Available with Bank M by payment
Field 46A (as amended on 27.12.07) included:
1. 60 PCT of contract value (EUR10,992,000.00) payable at sight against
presentation of a set of documents (commercial invoice, packing list,
original bill of lading);
2. 20 PCT of contract value (EUR3,664,000.00) payable against a
Provisional
Acceptance
Certificate
attesting
completion
of
commissioning and start-up. In case such certificate is not presented
within 12 months from last shipment date the amount will be payable
against Beneficiarys Declaration in which they confirm that they have
completed in full their obligations under Contract dd 16.04.2007 with
the applicant

26 July 2010/TS/wf
Document 470/1135rev

Field 47A: A post financing facility to be granted by Bank M for EUR


14,656,000.00
Field 49: Confirm
Field 31D: (as amended on 22.02.08): 090430, City M, Country I.
30.04.08 was the date of the last shipment under the L/C.
On 20.04.09 Bank M emailed us a scanned copy of Beneficiarys Declaration
dated 16.04.09 in which the beneficiary confirmed that they had completed in full
their obligations under Contract dd 16.04.2007 with the applicant. The Declaration
was issued well before the period stipulated in the L/C for the presentation of the
Provisional Acceptance Certificate had elapsed. On our request, Bank M tried, but
failed to get any comments from the beneficiary and just advised us by e-mail letter
that the beneficiary insisted on payment.
On 29.04.09 we sent the following SWIFT message to Bank M: We are informed
that beneficiary presented Declaration claiming on 30 April 2009 payment of EUR
3,664,000.00 being 20 PCT of LC amount designated for payment of commissioning
and start up. This Declaration contains statement that Company I have completed in
full their obligations under the Contract dd 16.04.2007 with Company S. In this
regard we officially state that this Beneficiarys Declaration contains false statement.
The Contract as well as LC terms envisage that this payment should be made upon
completion of commissioning and start up. We have full evidence that these services
are not completed. More than that, they have not even been initiated. As a proof of
our statement we have sent to Mr. C by electronic mail a set of photos made on the
construction site on 14.04.2009. In this situation, we see claim for payment of
EUR3,664,000.00 as an act of fraud. Our decision about honoring this presentation
will be based on this argument. Also we reserve the right to initiate appropriate legal
procedures against the beneficiary in accordance with Country R law. We also think
that formal approach in this situation cannot be applied
Later the same day (i.e., 29.04.09) we received SWIFT message MT 799 from
Bank M stating: PLS be informed that on 29/04/09 we sent you complying
presentation for EUR 3,664,000.00 (20 PCT of Contract payable under the L/C). We
pay benef. at sight for EUR3,664,000 financing you as per L/C terms
On 04.05.09 we received the original Beneficiarys Declaration and on 07.05.09
we sent our SWIFT message to Bank M with the following wording: Hereby we
refuse to honor the presentation called complying in your MT799 DD 29/04/09 which
reached us on 04/05/09. Our refusal is based on the following discrepancies:

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Document 470/1135rev

1. Beneficiarys Declaration, which is a single document in the presentation,


could not be deemed complying on 29/04/09 since according to Field 46A
Point 2 of the L/C it can be presented only in case if Provisional Acceptance
Certificate (PAC) is not presented within 12 months from last shipment date.
Last shipment date is 30/04/008, whence 12-month period for PAC
presentation was not expired until close of your banking day 30/04/09.
2. The Declaration is dated 16.04.2009 and was received by you on 20/04/09, i.e.
well before the end of 12-month period for PAC presentation.
3. The Declaration becomes effective only after the end of 12-month period for
PAC presentation, i.e. starting from 01/05/09. Under current L/C terms the
Declaration remains inoperable thus making the presentation non-complying.
We are returning the documents to you
Besides that, we insist that the Declaration itself is fraudulent, of which we kept
you posted in advance by sending you on 22/04/09 a set of photos clearly showing no
traces of installation or start-up activities on construction site. The Applicant also
agrees with our conclusion that installation and start-up works have not yet been
started
On 08/05/09 we received MT 799 from Bank M with the following wording: We
totally disagree with your arguments for the following reasons:
1) The presentation of Beneficiarys Declaration was effected in accordance
with the 12-month period provided for in the L/C and within L/C validity being
30.04.2009.
2) As for the date of the Declaration (16.04.09), in view of the fact that the L/C
does not require any specific date of issuance of the document, but only a
presentation period, the document is fully complying with L/C terms and with
sub-article 14 (i) of UCP 600. You are requested to revise immediately your
position which is in contrast with the principles of UCP 600
On 15.05.09 in reply to the above message we sent MT 799: We would like to
stress the following points: your cover letter with enclosed Beneficiarys Declaration
is dated 29.04.2009. We also received from you MT799 on 29.04.2009 informing us
about Beneficiarys presentation. We conclude from this that the presentation was
made on 29.04.2009. We consider this presentation as premature and consequently
non-complying. We also think that Beneficiarys Declaration could not be dated
16.04.2009 when the period of presentation of PAC was not yet over.
On 01.06.09 Bank M sent Beneficiarys Declaration back to us stating that they
cannot accept our refusal of their presentation as well as our arguments due to the
following reasons:

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Document 470/1135rev

1) The content of the document is in full compliance with the requirement of L/C
2) The L/C does not require any specific date of issuance of the document, but
only a presentation period. Therefore the document presented is fully
complying with L/C terms and with sub-article 14 (i) of UCP 600.
3) The presentation has been effected at the end of the 12-month period
provided for the presentation of Provisional Acceptance Certificate.
Bank M insists on the compliance of their presentation. We object to it.
ANALYSIS
There are comments made within the query, in relation to photographs of the
construction site, that purport to reflect that the statements made in the beneficiary
declaration could not be true as of the date of its issuance or presentation. Whilst
this may be the case, the content of article 5 and sub-article 14 (a) provide the basis
under which a bank is to determine compliance.
Article 5 states banks deal with documents and not with goods, services or
performance to which the documents may relate and;
sub-article 14 (a) enhances this position by stating 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. [emphasis
added]
A banks determination of compliance of the documents must be based on the
data appearing in the document or documents before them and not in respect of any
external factors or information that is made available to them. If the applicant has
concerns with the status of the transaction or the goods, then it is for them to seek
an appropriate solution with the beneficiary or, as a last resort, via the courts.
In addition to the above articles, article 4 includes [B]anks are in no way
concerned with or bound by such contract, even if any reference whatsoever is
included in the credit.
The last shipment date of the goods is stated to be 30 April 2008. The credit
provided for the beneficiary to draw 20% of the credit amount i.e., EUR3,664,000.00
against presentation of a Provisional Acceptance Certificate. This certificate was to be
presented at any time following the date of the last shipment, subject to it being
presented no later than the expiry date of 30 April 2009. The credit also provided for
the beneficiary to present their own declaration, if within 12 months from the date of

44
Document 470/1135rev

the last shipment the Provisional Acceptance Certificate is not presented, but again,
subject to presentation no later than the expiry date of 30 April 2009.
The beneficiary declaration (dated 16 April 2009 and sent as an attachment to an
email on 20 April) was clearly discrepant as it was not the original document and was
seemingly being accepted by Bank M prior to the conclusion of the 12 month period
from the last date of shipment. There is no indication in the query that Bank M
intended the document to represent a presentation under the credit.
The presentation consisting of the original beneficiary declaration (dated 16
April 2009 and sent to the issuing bank on 29 April) was received by the issuing bank
on 4 May and a refusal message was sent on 7 May.
The credit used the terminology is not presented within 12 months from last
shipment date. Article 3 of UCP 600 states [T]he words from and after when
used to determine a maturity date exclude the date mentioned. In the context of
this query, we are determining a maturity date after which presentation of the
beneficiary declaration may be made.
ISBP, publication 681, paragraph 17 states [T]he term within when used in
connection with a date excludes that date in the calculation of the period.
CONCLUSION
The question before the Banking Commission is whether a document dated 16
April and forwarded by Bank M on 29 April complied with the requirement in the
credit for the presentation of the beneficiary declaration?
Notwithstanding the comments in paragraph 6 of the analysis, the terms of the
credit allowed the beneficiary to present a declaration on or before the expiry date
i.e., 30 April 2009, being the day after the date falling 12 months from the date of the
last shipment. Bank M was not correct in determining that the document complied
on 29 April, but as of 30 April it was complying and the issuing bank must honour.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.

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Document 470/1135rev

If this query relates to a matter currently under consideration by the


courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

46
Document 470/1135rev

Ms. Jenny Yuen


Chairman of the ICC Banking Committee,
International Chamber of Commerce
of Hong Kong, China
Unit 1201 Bank Centre
636 Nathan Road
Mongkok, Kowloon
Hong Kong
26 January 2010
Subject: Document 470/TA.715
Dear Ms. Yuen,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We are writing to seek an opinion from the ICC Banking Commission on a point
regarding article 35 of UCP 600.
Background
1.

We have encountered certain L/Cs (subject to UCP 600) in which article 35 was
neither specifically excluded nor modified. However, the issuing banks have
included special instructions such as only upon receipt of documents at our
counters constituting a complying presentation, at maturity, we will effect
payment as per your payment instruction and instructions in similar
wordings (the Documents-Handling Instructions).

Issue
2.

We would like to seek your opinion on the following issue:


For the following two types of L/Cs, whether the Document-Handling
Instructions, without any express exclusion or modification of article 35 of
UCP 600, would exclude or modify the liability of the issuing bank and/or
confirming bank for documents lost in transit:
(a) L/Cs available with the issuing bank; and

26 July 2010/TS/wf
Document 470/1135rev

(b) L/Cs available with any bank, i.e. a nominated bank other that the
issuing bank.
Our view
3.

Article 35 of UCP 600 states that:

If a nominated bank determines that a presentation is complying and


forwards the documents to the issuing bank or confirming bank, whether
or not the nominated bank has honoured or negotiated, an issuing bank or
confirming bank must honour or negotiate, or reimburse that nominated
bank, even when the documents have been lost in transit between the
nominated bank and the issuing bank or confirming bank, or between the
confirming bank and the issuing bank.
[emphasis added]
4.

In respect of the first type of L/C, i.e. L/Cs available with the issuing bank, it is
clear and unequivocal that the issuing bank is the only nominated bank involved
and article 35 would not be applicable in such circumstances. Accordingly, the
issue would not arise in such a situation.

5.

In respect of the second type of L/C, i.e. L/Cs available with a nominated bank
which is not the issuing bank, ICC had decided in its Official Opinion R548 that
a nearly identical document-handling instruction did not exclude, modify or in
any way affect the liability of the issuing bank and/or confirming bank for
documents lost in transit under article 16 of UCP 500 (equivalent to article 35 of
UCP 600):

Notwithstanding the fact that the reimbursement instruction in the credit


reads: Upon receipt of full set of documents in conformity with the L/Cs
terms, we will effect payment as per your instruction, by virtue of Article 16
the issuing bank would be obliged to honour a compliant presentation that
had been negotiated by a nominated bank but lost in transit.
The reimbursement obligation under a credit, as outlined above, is not
subject to the receiving of documents by the issuing bank, but only to a
compliant presentation being made to the nominated bank. The
reimbursement clause in the credit does not make the reimbursement
subject to the receiving of documents. [emphasis added]

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Document 470/1135rev

6.

Although the Document-Handling Instructions differ from the instruction above


in that the word only has been inserted, the two instructions are, in substance,
the same.

7.

Moreover, if issuing banks are able to walk away from their undertaking when
documents are lost in transit by merely inserting the Document-Handling
Instructions, very few nominated banks would agree to act under their
nomination until they are certain that the documents have arrived at the issuing
banks counter. In the end, it would defeat the whole purpose of nominating
banks to facilitate any honour or negotiation that may be requested or required
by the beneficiaries.

8.

Accordingly, we are of the view that the Document-Handling Instructions,


without any express exclusion or modification of article 35 of UCP 600, should
not exclude or modify the liability of the issuing bank and/or confirming bank
for documents lost in transit under article 35.

Conclusion
9.

In summary, it is clear and unequivocal that when an L/C is available with a


nominated bank, which is not the issuing bank, the Document-Handling
Instructions, without any express exclusion or modification of article 35 of UCP
600, would not exclude or modify the liability of the issuing bank and/or
confirming bank for documents lost in transit.

ANALYSIS
In addition to the wording that appears in article 35 and which is quoted above,
sub-article 7 (c) includes the following [A]n issuing bank undertakes to reimburse a
nominated bank that has honoured or negotiated a complying presentation and
forwarded the documents to the issuing bank.
CONCLUSION
We would agree with your view and conclusion.
Wording in a credit to the effect that the issuing bank will reimburse only upon
receipt of documents at our counters constituting a complying presentation . or
similar such wording, does not modify the content of article 35 or the
reimbursement undertaking that exists in sub-article 7 (c).

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Document 470/1135rev

The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

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Document 470/1135rev

Mr. Jordi Sellars Serra.


Vicesecretario
Comit Espaol de la CCI
Avda. Diagonal 452-454
08006 Barcelona
Spain
26 January 2010
Subject: Document 470/TA.716rev
Dear Mr. Serra,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
In a documentary credit, the beneficiary is required to present, among other
documents, an invoice. The presented invoice states just the name of the applicant,
with no address or country stated. Based on article 18, sub-article 14(j) and article 2
of UCP 600, the points at stake in this case, in relation to the invoice, would be the
following:
1) Definition of applicant, in article 2, means both the name as well as all the other
data mentioned in field 50 of the SWIFT MT700 (i.e., including address, country, etc,
when they so appear) or should it be understood to refer just to the name of the
applicant with no need to compulsorily include other data such as the address,
country, etc?
2) Sub-article 18 (a) (ii) states that a commercial invoice must be made out in the
name of the applicant. Bearing this article in mind, can it be considered that an
invoice that only mentions the name of the applicant - with no further detail
regarding its address or country- is acceptable, even if that data were indicated in
field 50 of the SWIFT MT700, as data of the applicant?
3) Sub-article 14(j) states When the addresses of the beneficiary and the applicant
appear in any stipulated document, they need NOT be the same as those stated in
the credit or in any other stipulated document, but must be within the same country
as the respective addresses mentioned in the credit. Contact details (telefax,
telephone, email and the like) stated as part of the beneficiarys and the applicants

26 July 2010/TS/wf
Document 470/1135rev

address will be disregarded. However, when the address and contact details of the
applicant appear as part of the consignee or notify party details on a transport
document subject to articles 19, 20, 21, 22, 23, 24 or 25, they must be as stated in the
credit.[emphasis added]
(a) Can this rule be interpreted that the address of the beneficiary and/or the
applicant is not necessary as far as the commercial invoice is concerned?
(b) Can it be interpreted as asking, at least, that the country of the applicant
should appear in the commercial invoice?
ANALYSIS & CONCLUSION
1. The definition of applicant, in article 2, is confined to the name of the party upon
whose request the credit was issued.
2. Under international standard banking practice, it is expected that an invoice will
include the name and address of the applicant. However, an invoice that only
quotes the name of the applicant, without any address (including reference to
their country), would be acceptable under sub-article 18 (a) (ii).
3. (a) Sub-article 14 (j) refers to when the address of the beneficiary and the
applicant appear in any stipulated document. Again, there is no requirement in
sub-article 14 (j) for an address of the beneficiary and the applicant to appear.
(b) There is no requirement in sub-article 14 (j), even as a minimum, for the
country of the applicant to appear on a stipulated document.
Where local regulations require an address to appear, an issuing bank should
ensure that the credit clearly reflects those requirements.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.

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Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

53
Document 470/1135rev

Ms. Jenny Yuen


Chairman of the ICC Banking Committee,
International Chamber of Commerce of
Hong Kong, China
Unit 1201 Bank Centre
636 Nathan Road
Mongkok, Kowloon
Hong Kong
26 January 2010
Subject: Document 470/TA.717rev
Dear Ms. Yuen,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We are writing to check with ICC HQ whether our opinions in column F of the
attachment are correct. As we know, an LC may be available with a particular bank,
any bank or the issuing bank. It may expire in the beneficiarys country, at the
counters of a particular bank, in the confirming banks country, at the counters of the
confirming bank, in the issuing banks country or at the counters of the issuing bank.
There are many possible scenarios and we are sometimes confused. As issuing bank,
confirming bank or nominated bank, we have to understand when exactly the
documents must be presented so as not to raise such discrepancies as LC expired
and/or Late presentation.
We have drawn up the attached table to cover various scenarios and would
appreciate it very much if ICC would indicate whether our opinions in column F are
correct or incorrect. We would also appreciate the ICCs opinion as to whether our
assumption below is correct or not.
If the documents are lost in transit before being presented to a party in column
F, the sender of the documents bears the mailing risk and no party in column F is
obligated to negotiate or honour. Is this assumption correct?

26 July 2010/TS/wf
Document 470/1135rev

ANALYSIS & CONCLUSION


The list attached to this query covers a number of different options for the
expression of expiry place and place for availability. A number of these do not reflect
good banking practice owing to the fact that the place of expiry and the place of
availability are stated to be in different countries. It would not, therefore, be
appropriate for the ICC to offer any opinion as to whether the assumptions that have
been made are correct when some of the examples do not reflect the expectation
under the UCP.
The establishment of a credit which contains an expiry in one place (i.e., Paris)
and the availability with a bank located in another (i.e., London) causes unnecessary
and, often, unwarranted complications for the beneficiary, in determining to whom,
where and by what date the documents must be presented. For the nominated bank,
if any, this may seriously affect their ability to act under their nomination by
honouring or negotiating. It is recognised that some transactions may require
different locations to be stated, but these should be the exception rather than the
rule and these differences should be clearly indicated in the credit.
The basis for the UCP, in article 6, and international standard banking practice is
that the expiry place and place for availability are the same. In this way, the
beneficiary knows that they can present their documents to the bank with whom the
credit is available (or any bank, where the credit is available with any bank) within
the stated expiry date and presentation period. The nominated bank, and the
beneficiary, will then have the support of article 35 in the event that a complying
presentation is lost in transit between the nominated bank and the issuing bank or
confirming bank.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser

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Document 470/1135rev

shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

56
Document 470/1135rev

Ms. Jenny Yuen


Chairman of the ICC Banking Committee,
International Chamber of Commerce of
Hong Kong, China
Unit 1201 Bank Centre
636 Nathan Road
Mongkok, Kowloon
Hong Kong
26 January 2010
Subject: Document 470/TA.719rev
Dear Ms. Yuen,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
We have opened a sight letter of credit in favour of a beneficiary in Country P.
Subsequently, documents were received from the beneficiary's bank and we noted
various discrepancies. A refusal notice was sent to the bank in accordance with article
16 of UCP 600. Thereafter, the discrepancies were accepted by the applicant but they
requested a reduction of 90% of the drawing amount. (i.e., applicant agreed to pay
only 10% of the drawing amount).
Unfortunately, we wrongly interpreted the applicant's instructions and sent a
SWIFT message to the beneficiary's bank for the acceptance of a reduction in the
drawing amount of only 10%. Upon receipt of beneficiary's bank acceptance, by
return SWIFT message, we paid 90% of the drawing amount in settlement.
Questions:
1. Do we have the right to recall the overpaid amount from the beneficiary
and/or beneficiary bank?
2. Do the beneficiary and/or beneficiary bank have any responsibility to return
the overpaid amount to us?

26 July 2010/TS/wf
Document 470/1135rev

ANALYSIS
Under the UCP, a payment made by the issuing bank is final and considered to
be without recourse to the party to whom payment was made. A refund of the
amount wrongly advanced may be possible through mediation of the parties and/or
the applicable law in relation to a payment being made by a mistake of fact.
CONCLUSION
1. Any bank has the right to request a refund of an amount overpaid. However,
under the UCP the receiver of those funds may consider the payment to have
been made on a without recourse basis.
2. This is a legal question, outside the UCP, that will depend upon the
knowledge and understanding of the beneficiary and/or their bankers at the
time the payment was made and how the applicable law deals with
overpayments and payments made by mistake.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

58
Document 470/1135rev

Mr. Ahsan Aziz


Chairman
ICC Pakistan Banking Commission
V.M. House, West Wharf Road
P.O. Box 4050
Karachi 74000
Pakistan
15 February 2010
Subject: Document 470/TA.720 (UCP600)
Dear Mr. Aziz,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
Two L/Cs were issued for USD 585,000.00 (+/- 10%) (LC1) and USD 565,000.00
(+/- 10%) (LC2) by Bank A, Country C and advised through Bank S, Country P. The
L/Cs were available with Bank A by payment.
Amongst other documents, these credits required presentation of:
Insurance Document
LC1 and LC2:
Insurance Policy/Certificate in full set for 110 percent of the provisional invoice value
indicating that the risks are covered at least between port of loading and destination,
showing claims payable at destination in the same currency of the invoice value
covering all risks, war risks and SRCC as per Institute Cargo Clause.
Certificate of Quality
LC1 and LC2:
Certificate of Quality in 1 original and 3 copies issued at loading port by the
Independent Survey Company [Company K] showing actual result of the test of
Chemical Composition and all other tests called for in the Contract and
indicating Contract No., L/C No., [Company K], sealing No., supervision of
container stuffing and loading supervision.

26 July 2010/TS/wf
Document 470/1135rev

Certificate of Quantity and Weight


LC1 and LC2:
Certificate of Weight in 1 original and 3 copies issued at loading port by the
Independent Survey Company [Company K].
Goods Description
LC1:
CONTRACT NO. ABC123456
COMMODITY: LUMPY CHROME ORE OF [COUNTRY P] ORIGIN
PACKING: BULK IN CONTAINER
QUANTITY: 1,000 MT (+/- 10PCT ON SELLERS OPTION)
SPECIFICATIONS (ON DRY BASIS)
CR2O3:
38PCT BASIS, 36PCT MIN REJECTION BELOW 36PCT
SIO2:
14PCT MAX
AL2O3:
18PCT MAX
P:
0.007PCT MAX
S:
0.03PCT MAX
MGO:
21PCT MAX
CR:FE RATIO:
2.3:1 MIN
SIZE:
10MM-300MM 70PCT MIN BELOW 10MM 30PCT MAX
UNIT PRICE: USD565.00/DMT CIF [PORT X, COUNTRY C] ON BASIS OF CR2O3
38PCT WITH PREMIUM OF USD 14.87/DMT FOR EACH 1PCT UNIT OF CR2O3
ABOVE 38PCT AND BELOW 39PCT, AND PENALTY OF USD 14.87/DMT FOR
EACH 1PCT UNIT OF CR2O3 BELOW 38PCT AND ABOVE 36PCT, FRACTIONS
PRORATE MIN 36PCT.
THE ISSUING BANK HAS RIGHT TO REJECT THE DOCUMENTS IF THE CR2O3
AT THE LOADING/DISCHARGING PORT ANALYSIS IS BELOW 36PCT OR THE RATIO
OF CR:FE IS BELOW 2.3:1.
LC2:
Contract No. ABC987654
Commodity: LUMPY CHROME ORE OF [COUNTRY P] ORIGIN
PACKING: BULK IN CONTAINER
QUANTITY: 1,000 MT (+/- 10PCT ON SELLERS OPTION)
SPECIFICATIONS (ON DRY BASIS)
CR2O3:
40PCT BASIS, 38PCT MIN REJECTION BELOW 38PCT
SIO2:
12PCT MAX
AL2O3:
14PCT MAX
P:
0.007PCT MAX
S:
0.05PCT MAX

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Document 470/1135rev

MGO:
22PCT MAX
CR:FE RATIO:
2.5:1 MIN
SIZE:
10MM-300MM 70PCT MIN BELOW 10MM 30PCT MAX
UNIT PRICE: USD585.00/DMT CIF [PORT X, COUNTRY C] ON BASIS OF CR2O3
40PCT WITH PREMIUM OF USD 14.63/DMT FOR EACH 1PCT UNIT OF CR2O3
ABOVE 40PCT AND BELOW 41PCT, AND PENALTY OF USD 14.63/DMT FOR
EACH 1PCT UNIT OF CR2O3 BELOW 40PCT AND ABOVE 38PCT, FRACTIONS
PRORATE MIN 38PCT.
THE ISSUING BANK HAS RIGHT TO REJECT THE DOCUMENTS IF THE CR2O3
AT THE LOADING/DISCHARGING PORT ANALYSIS IS BELOW 38PCT OR THE RATIO
OF CR:FE IS BELOW 2.5:1.
LC1:
Invoice issued at 95% of the value of goods as provisional invoice as per Field
46A (1) and Field 47A (6) of the SWIFT MT700 amounting to USD 583,956.83 (95%
amount). Total value of LC as per port of loading analysis was USD 614,691.40.
The Insurance amount, to be 110% of the provisional invoice value, was issued
for USD 642,352.51 as provisional invoice drawn at 95% of the total value of the
contract.
Wordings from LC1:
i. In Field 46A (1), it states Signed provisional invoice in 3 originals based on
Certificate of Quality and Weight issued at loading port indicating the Contract
No. ABC123456 and L/C No.
ii. As per Field 47A (6) 95% of the Contract value will be settled at sight against
the shipping documents required in 46A which should be presented within 21
days after shipment date but within the validity of the credit
LC2:
Invoice issued at 95% of the value of goods as provisional invoice as per Field
46A (1) and Field 47A (6) of the SWIFT MT700 amounting to USD 611,713.15 (95%
amount). Total value of LC as per port of loading analysis was USD 643,908.58.
The Insurance amount, to be 110% of the provisional invoice value, was issued
at USD 672,884.47 as provisional invoice drawn at 95% of the total value of the
contract.

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Document 470/1135rev

Wordings from LC2:


i. In Field 46A (1), it states Signed provisional invoice in 3 originals based on
Certificate of Quality and Weight issued at loading port indicating the Contract
No. ABC987654 and L/C No.
ii. As per Field 47A (6) 95% of the Contract value will be settled at sight against
the shipping documents required in 46A which should be presented within 21
days after shipment date but within the validity of the credit
LC1 and LC2:
Invoice displays details as per LC description of goods in various parts of
invoice.
The specifications are cross referenced by specifically stating [Company K] Certificate
ref. No. on the invoice.
The goods description as shown in the invoices
LC1:
Applicable Penalty:

USD 14.87 per percent CR2O3 Fractions Pro-rata

Net Weight:
1100.00MT
Dry Weight:
1095.16DMT (Company K Ref.:50451/18489-B/CR/KAR/EB)
Cr2O3 Content:
37.75%
(Company K Ref.:50450/18489-A/CR/KAR/EB)
Packing:
Packed in Bulk in Containers
Price Calculations:
Price per DMT less penalty (565.00-(0.25 x 14.87)): USD 561.28 per DMT
Price:
USD 561.28 x 1095.16 DMT =
614,691.40
95% value for provisional invoice:
=
583,956.83
Rounding off
=
583,956.83
LC2:
Applicable Premium:
above 40% and below 41%.

USD 14.63/DMT for each 1 percent unit of CR2O3

Net Weight: 1097.11MT


Dry Weight: 1092.50 DMT
(Company KRef.:50489/18658-B/CR/KAR/EB)
Cr2O3 Content:
40.30%
(Company K Ref.:50489/18658-A/CR/KAR/EB)
Packing:
Packed in Bulk in Containers

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Price Calculations:
Price per DMT plus premium (585.00+(0.30 x 14.63)):
Price:
USD 589.39 x 1092.50 DMT
95% value for provisional invoice:
Rounding off

=
=
=

USD 589.39 Per DMT


643,908.58
611,713.15
611,713.15

Discrepancies:
LC1:
Issuing Bank pointed out following discrepancies and did not accept advising /
negotiating banks counter arguments even when with reference to UCP and ISBP.
1.
2.
3.

Less insured.
Goods specification in INV not shown as per L/C stipulation.
Less copy of C/QL and C/Q and W.

LC2:
1.
2.
3.

Less insured.
Goods specification in INV not shown as per L/C stipulations.
Less page 3 of Cert. of Quality.

Bank S confirms that the Certificates of Quality and Certificate of Quantity and
Weight were dispatched with the other documents, in the correct number of copies
and pages.
This fact is also evident from the schedule of Bank S sent with the documents.
Can you please advise whether the discrepancies are valid or not?
Bank S act of negotiating LC documents confirms that the advising bank
ascertained a complying presentation. There has also been a series of SWIFT
messages for each LC, through which Bank S advised Bank A of the invalidity of their
claims.

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ANALYSIS
LC1
Discrepancy1:
On the basis that the credit required the insurance coverage to be for 110% of
the provisional invoice value, and the provisional invoice value was USD583,956.83
an insurance coverage of USD642,352.51 would be compliant.
Discrepancy 2:
The invoice omits to include details in respect of SIO2, AL203, P, S, MGO, CR:FE
RATIO and Size that were included in the goods description stated in the credit. The
description of the goods in the provisional invoice does not correspond to that in the
credit.
Discrepancy 3:
A missing copy of a document would obviously give rise to a discrepancy. It
should be noted that either the correct number of copies were included with the
other documents or they were not, and only Bank A and/or Bank S will know the
answer. It would be expected that Bank A would, if necessary, allow Bank S to
provide a further copy to supplement those already received and which otherwise
comply with the credit. It is the responsibility of the sending bank to ensure that the
correct number of originals and copies and their respective pages are enclosed with
the schedule.
LC2
Discrepancy1:
On the basis that the credit required the insurance coverage to be for 110% of
the provisional invoice value, and the provisional invoice value was 611,713.15 an
insurance coverage of USD672,884.47 would be compliant.
Discrepancy 2:
The invoice omits to include details in respect of SIO2, AL203, P, S, MGO, CR:FE
RATIO and Size that were included in the goods description stated in the credit. The
description of the goods in the provisional invoice does not correspond to that in the
credit.

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Discrepancy 3:
A missing page to a document would obviously give rise to a discrepancy. Bank
S could have provided a further copy of the missing page to be attached to the
documents already received. It should be noted that either the correct number of
pages was included with the other documents or they were not, and only Bank A
and/or Bank S can know the answer. It is the responsibility of the sending bank to
ensure that the correct number of originals and copies and their respective pages are
enclosed with the schedule.
CONCLUSION
LC1
Discrepancy 1 is not valid.
Discrepancy 2 is valid.
Discrepancy 3 is valid to the extent of the comments in the analysis.
LC2
Discrepancy 1 is not valid.
Discrepancy 2 is valid.
Discrepancy 3 is valid to the extent of the comments in the analysis.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.

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Document 470/1135rev

Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

66
Document 470/1135rev

Emmanuelle Nussbaum
Secrtaire gnrale adjointe
ICC Switzerland
Hegibachstrasse 47
CH-8032 Zurich
Switzerland
8 February 2010
Subject: Document 470/TA.722rev
Dear Ms Nussbaum,
Thank you for your query regarding UCP 600. Please find below the opinion of
the officers of the Banking Commission.

QUOTE
A documentary credit issued by Bank A required the following documents (only
the documents which are relevant for this case are listed):

Signed commercial invoice in 3 originals and 3 copies indicating L/C no. and
contract no. 09ICDINTL0804A.

Beneficiarys certified copy of fax dispatched to the applicant within 10


working days after shipment advising name of vessel, shipment date,
quantity, weight and value of shipment.

There was no requirement for the contract number to appear on any other
document except the invoice, nor was the number mentioned anywhere else in the
L/C.
The beneficiary presented documents. The invoice showed Contract no.
09ICDINTL0804A. Additionally, all the documents that were issued by the
beneficiary, such as invoice, packing list, certificate of quantity/weight, certificate of
origin, beneficiarys certificate, etc. indicated our ref. 746293-SEG or simply
746293-SEG.
Only on beneficiarys certified copy of the fax did this reference appear as
contract no. 746293-SEG. There was no requirement in the L/C for any contract or
reference number to be mentioned in the fax.

26 July 2010/TS/wf
Document 470/1135rev

The issuing bank refused payment as follows:

We refuse to honor according to UCP article 16 due to the following


discrepancies:
1. contract no. on shipping advice differ from that on invoice
We are holding the documents until we receive a waiver from the applicant and
agree to accept it, or receive your further instructions prior to agreeing to accept a
waiver.
We rejected this refusal on the following grounds:
The L/C required that the contract no. of the applicant is shown in the invoice.
This requirement was fulfilled. The fact that the other documents showed
beneficiarys reference, which was named in the fax message as contract number,
does not render the documents discrepant.
The issuing bank insisted that the documents were discrepant and refused to
pay. Ultimately, the documents were accepted, but only at a reduced price.
We would appreciate receiving your opinion whether the mentioning of
beneficiarys reference number as contract number is really a discrepancy or not.
ANALYSIS
Sub-article 14(d) states [D]ata in a document, when read in context with the
credit, the document itself and international standard banking practice, need not be
identical to, but must not conflict with, data in that document, any other stipulated
document or the credit.
It is recognized that the number shown on the certified copy of the fax was the
same number that the beneficiary had inserted on other documents as our ref or
merely by insertion of the number.
However, the credit did not require the contract number to appear on the
certified copy of the fax. Nevertheless, the beneficiary inserted contract number and
quoted a number that was not the contract number stated in the credit or the
number appearing as the contract number on the invoice. By inserting data on a
document, the beneficiary is inviting the bank to examine that data for compliance
with the credit and the UCP. According to sub-article 14 (d), the data shown as the
contract number is in conflict with that shown on the invoice and in the credit.

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CONCLUSION
The refusal was correct.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

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Document 470/1135rev

Mr. Wilko Gunster


Secretary General
ICC Nederland
Bezuidenhoutseweg 12
2594 AV DEN HAAG
The Netherlands
8 February 2010
Subject: Document 470/TA.723rev
Dear Mr. Gunster
Thank you for your query regarding UCP 600 and including your national
committee analysis and conclusion. Please find below the opinion of the officers of
the Banking Commission.

QUOTE
We kindly ask your opinion regarding the following matter.
LC issued by Bank A (subsidiary of Bank B), confirmed by Bank B and advised by
Bank C (us). The SWIFT advice of Bank B stated, amongst other conditions, In case
of presentation of discrepant documents, Bank B will send them on an agreement
basis to issuing bank unless otherwise specified on your cover letter.
The required documents in the L/C included the following document:

Freight invoice dated and signed in original plus 2 copies issued by the
shipping company or its agent.
Latest presentation date was 15 April 2009.

26 March, exporter presented documents for EUR345,369.58


We presented documents to Bank B, for negotiation, with the stipulation that
documents should remain at our disposal until taken up by them. Among the
documents was the freight invoice which mentioned also the name of the vessel, port
of loading, port of discharge, date and B/L no. (in consecutive order on top of the
page).

26 July 2010/TS/wf
Document 470/1135rev

2 April, we received a refusal message from Bank B stating that the freight
invoice was not dated and that the cubage between B/L and packing list differed.
Furthermore, the confirming bank informed us that documents had been sent to the
issuing bank for approval.
7 April, we objected to the discrepancies as we are of the opinion that the
freight invoice is dated. Although it is not dated separately on the bottom of the
page, it is dated on the aforementioned top of the invoice. We were able to explain
the difference in the cubage between B/L and packing list (we explained that the B/L
also included the actual container cubage) referring to sub-article 14 (d) of UCP 600.
Furthermore, we raised our objection to the fact that documents, against our
instructions, had been sent to the issuing bank.
9 April, Bank B responded by insisting on their original findings.
20 April, we informed the confirming bank, again, that we did not agree with
their findings. Furthermore, we asked for a formal response to our objection to
sending the documents to the issuing bank.
30 April, we received a message from Bank B that Bank A is returning the
documents due to the fact that the freight invoice, supposedly, was not dated (no
mention of discrepancy no 2).
6 May, we requested Bank B to respond to our earlier queries and to hold
documents at our disposal.
7 May, Bank B responded by stating that they would revert at the beginning of
next week.
12 May, Bank B informed us that documents were returned by the issuing bank
asking for instructions; the bank stated that documents were always kept at our
disposal at their subsidiarys counters.
15 May, we informed Bank B that beneficiary was not satisfied with the response
in respect of the disposal of the documents and insisted that documents were credit
conforming.
18 May, Bank B responded by maintaining discrepancy no.1 however, agreeing
that discrepancy no. 2 was indeed not a discrepancy. Furthermore, the confirming
bank agreed that documents should not have been sent to the issuing bank as per
our instructions.

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9 June, we informed the confirming bank that we would raise this issue with the
national committee as documents still remained unpaid.
We would like to have an opinion from the national committee on 2 issues:
1. Whether or not the freight invoice was indeed dated (sufficiently).
2. Whether by sending the documents to the issuing bank (against our
instructions) the confirming bank blocked our ability to have the freight
invoice amended in time. The time between being informed that documents
were being returned by the issuing bank and the message that the documents
were indeed received by the confirming bank was 12 calendar days. Latest
presentation date was 15 April in Paris and the first refusal was dated 2 April.
Bank B insists that documents were always at our disposal, even at the
counters of Bank A, something which we contest as we feel that documents
are at the disposal of the confirming bank when they present them to the
issuing bank.
Looking forward to your reply.

UNQUOTE
ANALYSIS AND CONCLUSION OF NATIONAL COMMITTEE.
The Country N Group of Experts would like to respond first on the second
issue.
From the information provided it appears that the confirming bank stated in
their advice that in case of presentation of discrepant documents, the confirming
bank would send them on an agreement basis to issuing bank, unless otherwise
specified on the cover letter of the presenter. Furthermore, the advising bank
appears to have sent the documents to the confirming bank with the explicit
stipulation that they should remain at the disposal of the advising bank until taken
up by the confirming bank. In spite of this clear statement and their own stipulation,
the confirming bank informed the advising bank on 2 April that the documents had
been sent to the issuing bank for their approval.
UCP 600 sub-article 16 (c) states [W]hen a nominating bank acting on its
nomination, a confirming bank, if any, or the issuing bank decides to refuse to
honour or negotiate, it must give a single notice to that effect to the presenter.
The notice must state:
a) that the bank is holding the documents pending further instructions from the

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presenter, or
b) that the issuing bank is holding the documents until it receives a waiver from the
applicant and agrees to accept it, or receives further instructions from the presenter
prior to agreeing to accept a waiver, or
c) that the bank is returning the documents, or
d) that the bank is acting in accordance with instructions previously received from
the presenter.
Since Bank B stated in its notice that the documents had been sent to Bank A,
for approval, Bank B failed to act in accordance with this article.
UCP 600 sub-article 16 (f) states If an issuing bank or a confirming bank fails to
act in accordance with the provisions of this article, it shall be precluded from
claiming that the documents do not constitute a complying presentation.
Since the confirming bank failed to act in accordance with UCP 600 sub-article
16 (c) (iii) they are precluded from claiming that the documents do not constitute a
complying presentation.
Whether the freight invoice was dated or not, is therefore irrelevant in this case.
We seek the agreement of the ICC Banking Commission to our findings.
ANALYSIS

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Discrepancies in relation to the freight invoice:


The credit required the presentation of a freight invoice that was both dated and
signed. The document was signed, but there is doubt that the date appearing
thereon is in respect of the document or the date of the bill of lading. The document
lists 5 items of data name of the vessel, port of loading, port of discharge, date and
bill of lading number.
It should be noted that whilst the reference to date could be construed as
being the date of the bill of lading, the document does not state this. The credit did
not require the 5 items of data to appear on the document. It would also not be
unusual for a freight invoice and bill of lading to bear the same date.
Given that the credit did not specify a requirement for the date of the bill of
lading to appear on the document, and the document bears reference to date
without indicating that it is in respect of the bill of lading date or the date of the
invoice, the date may be considered to be that of the document.
Handling of the documents by Bank B and the refusal notice:
Bank B specifically stated, in their advice of confirmation, that in the event of
discrepancies being found they would send them on an agreement basis to the
issuing bank, unless the presenter gave alternate instructions in their cover letter. By
such reference, the confirming bank is agreeing implicitly to act according to
instructions that may be contained in the presenters covering schedule or letter that
differ to the proposed action suggested by Bank B.
Bank C did provide alternate instructions by stating that the documents should
remain at our disposal until taken up [by them] (i.e., Bank B). Bank B determined
that the documents were discrepant, albeit that that is not the opinion of the ICC
Banking Commission. Despite the instructions of Bank C, Bank B sent the
documents to the issuing bank, Bank A. The refusal notice of Bank B should either
have referred to the option in sub-article 16 (c) (iii) (a) that the bank is holding the
documents pending further instructions from the presenter or sub-article 16 (c) (iii)
(d) that the bank is acting in accordance with instructions previously received from
the presenter. and the documents remain with Bank B pending further instructions.
Bank B has failed to act according to the instructions that they themselves
encouraged the presenter to provide and are therefore precluded from claiming that
the documents were discrepant and must negotiate. They released the documents to
Bank A when the clear instruction was to hold them. Bank Bs argument that the
documents remained at the disposal of Bank C, when sent to and held with Bank A,

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is incorrect as the holding and disposal facility for the documents is confined to the
counters of Bank B.
CONCLUSION
The documents were compliant and Bank B (the confirming bank) must
negotiate.
In any event, Bank B did not act according to the instructions of Bank C. Bank
Bs refusal message should have stated, as the document status, that the bank is
holding the documents pending further instructions from Bank C or the bank is
acting in accordance with instructions previously received from Bank C. As a result,
Bank B is precluded from claiming that the documents were discrepant and must
negotiate.
The opinion(s) rendered on this query reflect the opinion of the ICC
Banking Commissions officers based on the facts under QUOTE above. They
do not necessarily reflect the opinion of the ICC Banking Commission until
the Banking Commission renders its approval or disapproval of these
opinion(s) at the next scheduled meeting.
The reply given is not to be construed as being other than solely for the
benefit of guidance and there should be no legal imputation associated with
the reply offered.
If this query relates to a matter currently under consideration by the
courts, the ICC Banking Commission will refrain from considering it for
adoption as an opinion.
Neither the ICC nor any of its employees, nor any member of the Banking
Commission, including the Chairman, Vice-Chairmen or Technical Adviser
shall be liable to any person for any loss or damage arising out of any act or
omission in connection with the rendered opinion(s).
Yours sincerely,

Thierry Senechal
Policy Manager
Banking Commission

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