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:
LC
information:
* NON-NEGOTIABLE
COPY OF OCEAN BILL OF LADING. MARKED FREIGHT PAID CONSIGNED TO (applicant's
name)
* ORIGINAL
OF THE PACKING LIST
Presentation
information:
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.”:
"630.000
Kos"
3: On the
attachment:
(As part of
goods description:) "Net Weight: 630.000 Kgs"
(Under the
heading “Gross weight in kilos”:) 630.000 Kos”
Refusal
information:
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 ...
Kind
regards
Kim
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:
https://en.wikipedia.org/wiki/Erasmus_Montanus