The Istanbul Draft Opinions has landed


Beginning November the ICC Banking Commission will meet in Istanbul. A “fixed” item on the agenda is “DRAFT OFFICIAL OPINIONS OF THE BANKING COMMISSION AND LATEST DOCDEX DECISIONS” – a one and a half hour slot in the afternoon of 6 November.

 

This time there are 8 Draft Opinions in the sequence 806-813 to be discussed.

 

For me the first read-through these 8 Draft Opinions left a somewhat “empty” impression. What is there to discuss here in one and a half hour? However after the second read-through a picture is drawn. A number of the Draft Opinions (3 in particular) closely examines UCP 600 article 14(d) – i.e. when is a “conflict” of data a discrepancy? … and suddenly it seems as if we are at a crossroad:

 

When I started working with LCs a main discussing was if the documents presented under an LC should comply “strict” or “substantial.”

With the Opinions this time we take it one step further: The document examiner need to carefully understand the date in the documents – and the context in which it appears. We can call it “evaluated compliance” ….

 

Personally I am really in doubt about a number of these. On one hand I really appreciate that refusals are not based on nitty-gritty details with no relevance to anything. On the other hand – the UCP 600 makes no distinction between “important” and “unimportant” data. In fact article 14(d) reads:

 

Data 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 ALL data that should be compared to ALL data!

 

It is unsure if the Technical advisers have had same doubt – at least you will find some parts of the analysis that seems to totally disregard the content of 14(d).

 

Let’s take a look:

 

ICC Opinion TA.809

LC goods description: “As per proforma invoice n. 104 dated 12/12/1012”

CMR evidence proforma invoice number as 1074

 

I.e. 1074 instead of 104.

 

The conclusion is that this is NOT a discrepancy. That conclusion is reached using the following arguments:

 

* The CMR included all other information as required by the terms and conditions of the LC and was compliant in all aspects.

* The addition of one character to the proforma invoice number within the CMR is not sufficient grounds for refusal, particularly when the correct proforma invoice number was stated in the invoice.

* Information in respect of, for example, a proforma invoice number, is additional information over and above that required by this document and its purpose.

* The reference to the CMR number on the CMR is superfluous.

 

Further the Draft Opinions makes reference ISBP 745 and quotes paragraph A3: “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.”

 

What is “forgotten here is the examples used in this paragraph, i.e.:

 

For example, a description of the goods shown as “mashine” instead of “machine”, “fountan pen” instead of “fountain pen” or “modle” instead of “model” would not be regarded as a conflict of data under UCP 600 sub-article 14 (d). However, a description shown as, for example, “model 123” instead of “model 321” will be regarded as a conflict of data under that sub-article.

 

So to analyse the analysis:

 

* ALL the arguments found the “Analysis” supporting that this is not a discrepancy is actually NOT in line with UCP 600 article 14(d) – e.g.:
- There is no such thing as “additional information”!

- There is no such things as superfluous data!

* Taking outset in ISBP 745 paragraph A3 – this example is closer to “model 123” versus “model 312” than it is to the misspelling of “machine.”

 

 

ICC Opinion TA.810

Amount of the drawing: USD 54.000.00

Amount stated in required “Copy of Shipment Advice sent to the insurance company” USD 54.00,00

 

This one is interesting! The analysis goes:

 

* As such this is clearly a typing error, as “54.00,00” as is not a correct way to state any amount.

* However for this particular case – where the amount is in the shipment advise the document fails to “fulfil” its function.

 

For that reason the document is deemed discrepant.

 

For this case what is interesting is that this – at the outset – is deemed a spelling error; that would be accepted if it were in another document (the Draft opinion is not specific in this respect – but that would be the only logical conclusion).

 

Again taking outset in ISBP 745 paragraph A3 – this example is clearly closer to “model 123” versus “model 312” than it is to the misspelling of “machine.”

 

 

ICC Opinion TA.811

Invoice: “PO # SOL140430-01”

Packing list: “PO #SOL140”

 

The conclusion is that this is NOT a discrepancy. The analysis includes the following statement:

 

The credit did not stipulate a PO number nor any requirement for mentioning the PO number in any of the documents.

 

This statement leads to:

 

Based on the information given in the query a conflict between the two PO numbers cannot be determined.

 

Hmmm. The first statement is NOT in line with UCP 600 article 14(d) (date need no be required in order for it to be examined on the basis of 14(d)).

Secondly there are no arguments bridging the first statement – and the conclusion: Why is there no conflict? Surely there is a conflict! So what “context” deems this not to be a discrepancy?

 

Also here it seems that taking outset in ISBP 745 paragraph A3 – this example is clearly closer to “model 123” versus “model 312” than it is to the misspelling of “machine.”

 

 

So, although I have sympathy with these 3 examples – it seems to me that they are clearly NOT in line with UCP 600. And what is really troublesome, is that they place the document examiner in a very very difficult position. I.e. when is “model 123” versus “model 312”  a discrepancy – and when is it not?

 

It will be very interesting to hear the discussions in Istanbul on these 3 Draft Opinions. They may materially change the practical application of UCP 600 article 14(d) – i.e. ISBP 745 paragraph A3 can no longer be used after this.

 

Is that what we want? 

 

Take care of each other and the LC.

 

Best regards

Kim

 



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