Overview of the draft Opinions and DOCDEX CASES discussed at the March 2012 ICC Banking Commission (Compiled

By Mamun Rashid) By Gary Collyer The ICC Banking Commission met in Doha, Qatar on 27 and 28 March. The draft opin ions for review were the final set concluded with the input of the inaugural Gro up of Experts. This Group had been appointed for a one-year tenure to work on th e draft opinions spanning 2 ICC Banking Commission meetings. A further group of 3 individuals have now been appointed to this role for the dr aft opinions that are to be considered for approval at the Autumn 2012 and Sprin g 2013 ICC Banking Commission meetings. They are: Janakiraman Hariramchakraborth y (ANZ, Australia), David Meynell (Deutsche Bank, UK) and Rene Mueller (Credit S uisse, Switzerland). As of the time of writing this newsletter, they already hav e 11 requests for opinions to be considered. The number of draft opinions for review for the Doha Meeting was one of the lowe st in many years. Only 4 new requests for opinions had been received since the m eeting in Beijing (October 2011). In addition, there was one draft opinion (refe rence TA.752rev) that had been held over from the Beijing meeting for further in put by, among others, the working group that had drafted the ICC recommendation paper on Sanctions Clauses. Before we look at the issues contained in these opinions, and the conclusions th at were reached, a further update on the work conducted for the ISBP revision The ISBP Drafting Group met for 3 days to review ICC National Committee comments that had been submitted to Draft 3 of the text. The Consulting Group also met i n Doha to discuss and agree a common viewpoint on the content of the drafting pr ocess to date and also to review a draft document relating to the handling and d etermination of original and copy documents. The intention of the Drafting Group is that Draft 4 of the revised text will be distributed to ICC National Committees by the middle or end of May 2012. Draft 4 will include a proposed text relating to how the issue of originals and copies should be addressed under UCP 600. The intention is that this document will supe rsede the ICC Decision on Original Documents that was issued in July 1999 and wh ich appears as an appendix in the current ISBP. Due to a lack of constructive input from the majority of those National Committe es that had voted for an expanded version of the ISBP, a decision was made that this revision will focus solely on updating the existing text and the addition o f new documents. The Opinions discussed, and agreed, were in the sequence TA755-758. TA755rev The first draft opinion related to a drawing where the goods descriptio n in the original credit was given in the language of the issuing bank (not Engl ish) individual items were listed. An English translation of these items gives a general description of Furniture or wooden furniture. Amongst the documents present ed was a CMR and the entire description of goods given therein was in the langua ge of the beneficiary (not English or that of the issuing bank). The description contained some of the listed items but also a general description that translat ed in English would read wooden furniture. The description of the packing, includi ng the weight, agreed between the invoice, packing list and CMR. The CMR also sh owed under the field Document Annexes Dobavnica, Faktura 100301 in handwriting (the invoice was numbered 100301). The issuing bank identified 3 discrepancies (1) Photocopy of invoice instead of copy is presented; (2) Description of goods stated on CMR not as per L/C and invoice; and (3) Correction on CMR was not authenticated (one figure in the invoice number ap pears to have been amended or over-written). Both the issuing bank and advising bank offered their views on the discrepancies . The conclusion agreed by the ICC Banking Commission was as follows: For discrepancy (1) under international standard banking practice, a copy is understood to mean

a non-original. Unless the credit specified the type of copy that was or was not acceptable any type of copy (non-original) was acceptable, including a photocop y. (2) The credit did not specify the language in which documents were to be issued . Absent such indication, the issuing bank is required to examine the CMR in the language it has been issued. In addition to the text for the goods description, there was other data that created compliance with the invoice data i.e., the de tails of the packing and the reference to the invoice number. (3) The view was that the invoice number was that stated on the presented invoic e and that the text on the CMR had been completed in a bold manner, possibly to emphasise the correct reading of the number. The conclusion of the ICC Banking Commission was that the discrepancies were not valid. See opinion TA755rev for the full transcript of the above opinion. ------------------------------------------------------------------------TA756 - This was a query relating to an invoice that showed the full description of goods stated in the credit, which included Hydraulic Drilling Rig but also wen t on to describe the goods as Second Hand Hydraulic Drilling Rig. The confirming bank had refused the documents on the basis that the documents ev idenced goods not as described in the credit. The presenter disagreed but reques ted that the confirming bank contact the issuing bank for a waiver. The issuing bank also refused the documents for the same reason. The analysis stated that sub-article 18 (c) requires the invoice to bear a descr iption that corresponds to that in the credit. The addition of second hand is not part of the goods description that appears in the credit. These words indicate a different category or classification of the goods that is not apparent from the description in the credit. The conclusion stated that the discrepancy was valid. See opinion TA756 for the full transcript of the above opinion. -----------------------------------------------------------------------TA757rev This request referred to a credit that contained a payment instruction for a final amount to be paid as follows: USD XXX payable at sight against shipp ing documents and USD165,000 to be paid on receipt of original certificate issue d by the applicant confirming the successful testing, commissioning and launchin g of XXX. This was later amended to read An amount of USD165,000 to be paid at sight under the L/C on receipt of original certificate issued by the applicant confirming th e successful testing, commissioning and launching of XXX or maximum within 10 mo nths from the date of the last dispatch. The final invoice of beneficiary shall describe this amended clause. The final drawing (last dispatch), in respect of shipments made, contained a num ber of discrepancies and the nominated bank authorised release of the documents against payment of a lesser amount on the condition that the issuing bank confir med that the remaining USD165,000 would be paid according to the conditions of t he amendment. The issuing bank paid the lower amount but did not give the confirmation as requ ested by the nominated bank. A written claim for USD165,000 was made to the issu ing bank 10 months after the date of the last dispatch. The issuing bank refused claiming that presentation of the applicants acceptance certificate was mandator y for all drawings. The analysis stated that the amendment not only provided for alternative means b y which the USD165,000 would be paid, but that due to the wording of the amendme nt, the claim could have been made at any time after the date of the last dispat ch owing to the use of the word within. There was no requirement that the certific ate of the applicant be presented in all cases and the conclusion states that th e discrepancies noted by the issuing bank were not valid. See opinion TA757rev for the full transcript of the above opinion. ------------------------------------------------------------------------TA758rev This request demonstrates how the use of different terminology, even if not intended for use in the same context, can cause disputes between banks.

The bill of lading showed a shipped on board date of 14 September 2011 and the p acking list stated shipping date 13.09.2011. The issuing bank refused the document s due to the packing list showing an inconsistent shipping date to the bills of lading. The argument of the nominated bank was that the wording might have different mea nings depending on the context in which it is used in each document. The analysis and conclusion of the ICC Banking Commission agreed with the nomina ted bank. In this case, the use of shipping date, in the packing list, could ref er to the movement of the goods out of the warehouse of the beneficiary for the delivery to the carrier or their agent and should not be seen as an indication o f the date of shipment (as is the case with the date appearing in a shipped on b oard notation on a bill of lading). See opinion TA758rev for the full transcript of the above opinion. -----------------------------------------------------------------------TA752rev This query was held over from the October 2011 ICC Banking Commission m eeting. This query relates to the situation where a confirming bank has decided that due to economic sanctions they believe that their undertaking to honour or negotiate has been rescinded by the content of the relative sanctions order. A revised draft had been delivered to ICC national committees for their comments . Only 11 countries commented on this query (out of 22 that provided comments to all the draft opinions). Most were in general agreement, with some additional p roposals for further text to be added. The audience in Doha were presented with a revised text, via a powerpoint presen tation and the decision was made to allow them to review the full text before an y decision on approval will be made. The revised text has been re-distributed an d national committees have been given until the middle of May to provide any com ments. Based on the level and form of any comments received, the Officers of the ICC Banking Commission will decide whether to approve the draft opinion at that time. ------------------------------------------------------------------------DOCDEX Cases There was only 1 DOCDEX case reviewed by the experts in the period following the October 2011 ICC Banking Commission. Case 315 This case referred to a transaction subject to UCP 222 (yes, 222!). The initiato r was an individual who was the holder of 11 promissory notes issued as a result of settlement under a credit and totalling USD27million. A court had already ruled against the initiator and the initiator had looked to the DOCDEX process to invalidate the court decision and render a view that the U CP would require settlement to be made. The panel of experts were unable to give such an answer within the confines of t he UCP and the DOCDEX rules.