The controversial "Weight Opinion"
The recent ICC Banking Commission meeting in Johannesburg ended - as usual - with a discussion regarding the "Draft Opinions."
A total of 4 hours (including a 30 minutes break) was allocated to the 11 Draft Opinions to be discussed at the meeting. The first Draft Opinion on the agenda took almost 1 hour. And that was even a Draft Opinion that was held over from the previous meeting, and had been commented upon by the National Committees twice.
Well actually - it was on the agenda for the technical meeting in Paris that was cancelled due to the awful terrorist attacks on Paris November 2015. The other Draft Opinions to be discussed in Paris were agreed upon by e-mail comments; but not this one. It was not possible to reach consensus by e-mail and therefore the ICC decided that it should be discussed at the Johannesburg meeting.
And it was indeed!
I am talking about Opinion TA.832rev2 (which I guess will be the reference number for the final approved Opinion).
As such it is kind of a trivial case. The core details are:
* NON-NEGOTIABLE COPY OF OCEAN BILL OF LADING. MARKED FREIGHT PAID CONSIGNED TO (applicant's name)
* ORIGINAL OF THE PACKING LIST
The packing list indicated the following “weight details”:
“Total Net Weight: 630000 kg
Total Gross Weight: 630360 kg”
The copy of bill lading (which included an attachment containing specifications of the containers) stated:
1: as part of goods description:
"Net Weight: 630.000 Kos"
2: Under the heading "Gross Wgt./Nett Wgt.”:
3: On the attachment:
(As part of goods description:) "Net Weight: 630.000 Kgs"
(Under the heading “Gross weight in kilos”:) 630.000 Kos”
Bill of lading: Gross weight in the specification to B/L not as per packing list
(In all fairness; the case is a bit more complex, as it includes a re-presentation of documents. I think however that the above captures the issue.)
The Draft answer from the ICC was that the details of weight stated in the bills of lading and the attachments are not in conflict with those stated in the packing list. I.e. the discrepancy is not valid.
This question (as well as the answer from the ICC) seems to have split the Trade Finance community in two. It simply challenges how UCP 600 article 14(d) is to be interpreted.
The discussion about the Opinion opened with an (unusual) long introduction by the Technical Advisers. The Senior Technical Adviser David Meynell did not participate in the meeting - but he had sent the following statement that was read by Technical Adviser Nicole Keller:
"A conflict of opinion continues to exist for this query.
I urge you all to remember that documentary credits exist to facilitate trade and not to hinder it.
The question of ‘strict compliance’ has often been raised with regard to documents presented under documentary credits and a number of ICC Opinions and DOCDEX decisions have dealt with this issue. It is important to note that circumstances can change with each individual query and much depends on the actual context. Each case has to be considered on its own merits.
Checking documents is not a matter of applying a computer algorithm or mathematical formula. It goes beyond strict compliance and, in certain circumstances, requires judgement based on experience.
Applying common sense is an essential factor in protecting the integrity of the documentary credit."
When they opened the floor I (on behalf of ICC Denmark) was the first to comment. The following comprises my comment:
"There is a line from a Classic Danish play going something like this (it is a son talking to his mother)
A rock cannot fly
You, Mother cannot fly
Ergo, you Mother are a rock
I came to think about this line when I first read this Opinion; or rather the Analysis to this Opinion. It basically says:
The packing list is okay
The bill of lading and attachment is okay
Ergo, the packing list and bill of lading with attachment are okay
I am sure that all can agree, that for the first one (mother and the rock) - although the facts are correct - the conclusion is wrong. Very wrong actually. In fact the same applies to the second one. The facts are correct - and the conclusion is wrong:
The position of the UCP 600 regarding this is that:
The data must be compared between the documents; the data need not be identical - but must not conflict. And then it must be read in context.
The key here in fact is "context".
We have discussed this issue intensively in ICC Denmark. We are sure that there is a conflict. And we simply fail to see the context that would deem this compliant.
The UCP 600 analysis is simple: This is a discrepancy according to article 14(d).
That said, we appreciate the attempt made by the ICC Technical Advisers to avoid refusals such as this one. However, this Opinion is not the right "tool" for that!
It simply contradicts UCP 600 article 14(d) - and will only add confusion for the document examiners.
This can only be "fixed" via a change to the UCP 600.
So for the record: We do not agree to this Draft Opinion"
This was the first comment to a long debate.
The National Committees in favour of the Opinion expressed the following (main) arguments:
> That the weight is labelled wrong; I.e. It is clearly a mistake
> That in order to preserve the integrity of the LC instrument it is important to discourage refusals such as this one
> That the UCP 600 does not cater for a mirror image examination
The National Committees against the Opinion expressed the following arguments:
> That this Opinion makes it impossible for the document examiners to determine whether or not a conflict of data is a discrepancy (what if the difference in weight was not 360 kg - but 10 tons?)
> That in order to preserve the integrity of the LC instrument it is important that the ICC Banking Commission is true to the rules they created themselves.
At the end of the discussion - status was that nothing was changed: There was a majority in favour of the draft Opinion - and it was accepted!
So that was that: Please take care of yourself and the LC ...
Ps. The text by David Meynell is used with his kind permission.
Pss. The line I (casually) have translated from Danish and quoted is from the classic Danish play Erasmus Montanus written by Ludvig Holberg. More information here:
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