New Draft Opinions & North European Port & LC Radar
The ICC
Banking Commission have just circulated a new “bundle” of Draft Opinions; to be
discussed at the meeting in Dubai this April. There are a total of 11 Draft
Opinions. 2 relates to Collections – URC 522 – the rest to UCP 600 – with the
comment that one is regarding a guarantee presented under an LC.
It is clear
from the writing style that they are no longer drafted by Gary Collyer;
especially in the analysis part – where – in many cases – the “analysis” merely
consists of quotes from UCP and ISBP – and a re-statement of the facts of the
query. This for example is the case in the query I will discuss later in this
blog post, where there is no real analysis leading to the conclusion. In this
case it is badly needed.
That being
said – the majority of the Draft Opinions are well written – and answer the
query in a good way.
That being
said, when reading through these Draft Opinions there were a couple of times
where I thought: Either this is totally off-track or someone have thrown a
magnet into my “LC Radar” …. I hope it is not the latter – but in this and the
coming blog posts, I will present these to you – and hope that you will share
with me your view on this …. So that I can adjust my “LC Radar” …. If needed ….
So – here
goes:
The first
Draft Opinion I will discuss is TA796 – and is in fact a “trivial” case. The
outset is an LC that calls for a bill of lading showing shipment from “Any
North European Port.”
The
presentation showed that the goods were shipped on board in Antwerp.
And bang:
The issuing bank refused the presentation stating that Antwerp is not within
the geographical area or range stated in the LC.
In the
following communication the issuing bank referred to the internet website www.mapsofworld.com which classifies
Belgium as a Western Europe country.
In the
Draft Opinion this view is endorsed – making the document discrepant.
I do
acknowledge that Antwerp is on the Western coastline of Europe – but I would
for sure consider Belgium as a part of Northern Europe. For the purpose of LCs
it makes no sense talking about Northern, Southern, Eastern and Western Europe
– it simply is tangled together too much – and there are too many “grey zones”
where one can argue for different directions.
If one
would “divide” Europe for the purpose of LCs then the only reasonable approach
would be to do so in “Northern Europe” and “Southern Europe;” Italy and Spain
clearly falling in the latter range and Finland clearly in the first. However
even here there are borderline cases – where an interpretation is required.
There simply are no clear cuts here….
Since the
requirement (as argued above) clearly is open to interpretations, it is
ambiguous, and such ambiguity falls back on the applicant (as per ISBP 745
paragraph v).
For this
reason I think that the conclusion reached are 180 degrees wrong: For the
purpose of the LC requirement “Northern European Port” – shipment from Antwerp
is close enough. I surely hope that the conclusion will be changed.
The lesson
learned here is that the higher degree of precision in drafting the LC – the
higher the chance that the transaction will not be “interrupted” by trivial
disputes, loose interpretations …. and in fact silly and pointless discussions
like the above.
Anyway:
What do you think?
Take care
of each other and the LC.
Best
regards
Kim