Forestal Minosa v Oriental Credit (CA) Court of Appeal 21 January 1986

Where Reported [1986] 1 W.L.R. 631 [1986] 2 All E.R. 400 [1986] 1 Lloyd's Rep. 329 [1986] Fin. L.R. 171 (1986) 83 L.S.G. 779 (1986) 130 S.J. 202 Summary Subject: Banking Keywords: Debt; Letters of credit; Sale of goods Catchphrases: Letter of credit; non-payment on sale of goods; refusal to accept drafts Abstract: A marginal note to such effect means that the Uniform Customs and Practice is deemed incorporated into a documentary credit unless there is anywhere an express statement to the contrary, and in the absence of any such statement there may be no reason for implying any such exclusion. P were beneficiaries under irrevocable letters of credit issued by a bank in Pakistan, and confirmed by a London bank; each letter bore a marginal note stating that unless expressed to the contrary the Universal Customs were deemed to be incorporated into the letters. D refused to accept the letters and P sued, proceeding under Order 14. The judge gave leave to defend, but gave leave to appeal. Summary: Held, that P's appeal would be allowed. It was clear from the marginal notes that the Universal Customs had to be incorporated. There was no express exclusion and no ground for an implied exclusion. The terms of the Universal Customs were quite unambiguous and D had to pay. Legislation Cited Rules of the Supreme Court Ord. 14 Rules of the Supreme Court Ord. 59 r. 6 Case Comments Documentary credits; Enforcement; Procedure. A documentary credit acceptance. J.B.L. 1986, Jul, 311-312 Documentary credits; Enforcement; Procedure. Documentary credit - confirming bank's liability for non-acceptance of drafts. J.I.B.L. 1986, 1(2), N65-66

Documentary credits; Enforcement; Procedure. Effect of incorporation of UCP (Uniform Customs and Practice for Documentary Credits) and question... L.M.C.L.Q. 1986, 4, 420-423 END OF DOCUMENT
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*329 Forestal Mimosa Ltd. v. Oriental Credit Ltd. Court of Appeal CA Jan. 20 and 21, 1986 Before Lord Justice Croom-Johnson, Lord Justice Balcombe and Sir John Megaw Banking -- Irrevocable letter of credit -- Defendants confirmed letter of credit -Whether Uniform Customs and Practice for Documentary Credits terms incorporated -- Whether plaintiffs entitled to declaration that defendants responsible for acceptance and payment at maturity. In May, 1985, the plaintiffs made five contracts of sale with five separate Pakistani companies. The sales were of five consignments of solid wattle mimosa extract c. & f. Karachi from an African port. The contracts of sale provided for payment in U.S. dollars by an irrevocable letter of credit to be opened in favour of the plaintiffs and to be confirmed by a first class bank in London before shipment and payable at 90 days from the date of the bill of lading. Each of the five companies instructed the Dubai Bank Ltd. to open a letter of credit in respect of its own purchase. The letter of credit was dated May 27, 1985, the expiry date was Aug. 24, 1985, and it provided inter alia that: Except so far as otherwise expressly stated this Documentary Credit is subject to Uniform Customs and Practice for Documentary Credits (1984) Revision . . . Article 10 (b) of the Uniform Customs provided that-When an issuing bank authorizes or requests another bank to confirm its irrevocable credit and the latter has added its confirmation, such confirmation constitutes a definite undertaking of such bank (the confirming bank), in addition to that of the issuing bank provided that the stipulated documents are presented and that the terms and conditions of the credit are complied with. 10 (b) (iii) If the credit provides for acceptance -- to accept drafts drawn by the beneficiary if the credit stipulates that they are to be drawn on the confirming bank, or to be responsible for their acceptance and payment at maturity if the credit stipulates that they are to be drawn on the applicant for the credit or any other drawee stipulated in the credit. Article 11 provided inter alia that-All credits must clearly indicate whether they are available by sight payment, by

deferred payment, by acceptance or by negotiation. The Dubai Bank instructed the defendants to advise the plaintiffs of, and to add its own confirmation to the five credits. On June 3, 1985, the defendants confirmed the five credits specifically saying to the plaintiffs 'This credit bears our confirmation' and 'This credit is the Dubai Bank credit' and also saying unequivocally: . . . This credit is subject to the Uniform Customs and Practice for Documentary Credits . . . The five consignments of wattle mimosa extract were shipped on or about July 20 on a vessel Sun Afric at the port of Beira in Mozambique and bills of lading were issued on that date. The plaintiffs drew 90 day drafts, one on each of the five companies and presented them together with the shipping documents to the defendants on Aug. 16. The defendants forwarded the drafts and documents to Dubai on Aug. 20 and 21 with instructions to the Dubai Bank to release the documents to the buyers against acceptance of the drafts. The Dubai Bank claimed that the documents contained a number of discrepancies and that funds would only be remitted on receipt of funds from the buyers. On Sept. 10, 1985, the Dubai Bank told the defendants that the buyers had accepted the drafts endorsed 'Accepted on clean collection basis not under L/C'. The plaintiffs did not accept and on Oct. 22, 1985, issued their writ against the defendants asking for a declaration that the defendants were responsible for acceptance and payment of the five drafts at maturity and claiming damages. They applied for summary judgment under the Rules of the Supreme Court, O. 14. Held, by BINGHAM, J., that the defendants were entitled to unconditional leave to defend. The plaintiffs appealed. Held, by C.A. (CROOM-JOHNSON and BALCOMBE, L.JJ. and Sir JOHN MEGAW), that (1) the documentary credit was subject to the Uniform Customs and unless there was some express provision which excluded the provisions they were applicable; there were no such express provisions and there was no justification for reading into the contract any implied exclusion nor was there any inconsistency between the terms which the Uniform Customs would incorporate and the terms which appeared on the face of the documents (see p. 333, col. 2); (2) the whole of the documents appeared to have been prepared with reference to the Uniform Customs expressly incorporated in it; the provisions of art. 10 were brought in as terms of the contract and as the provisions of art. 10 (b) (iii) were unambiguous as to the obligation of the*330 confirming bank to be responsible for the acceptance and payment at maturity there was no basis for refusing summary judgment (see p. 333, col. 2; p. 334, col. 1); (3) none of the discrepancies alleged contained any point which was arguable and the appeal would be dismissed (see p. 335, col. 2). The following case was referred to in the judgment of Sir John Megaw: S. L. Sethia Liners Ltd. v. State Trading Corporation of India Ltd., (C.A.) [1986] 1 Lloyd's Rep. 31; [1985] 1 W.L.R. 1398. This was an appeal by the plaintiffs, Forestal Mimosa Ltd. from the judgment of Mr. Justice Bingham in which he refused the plaintiffs' application for summary

judgment and granted the defendants, Oriental Credit Ltd. unconditional leave to defend. Representation Mr. Michael Dean, Q.C. and Mr. Peter Irvin(instructed by Messrs. Heald Nickinson) for the plaintiffs; Mr. Peter Goldsmith (instructed by Messrs. Wilde Sapte) for the defendants. The further facts are stated in the judgment of Sir John Megaw. JUDGMENT Lord Justice CROOM-JOHNSON: I will ask Sir John Megaw to deliver the first judgment in this matter. Sir JOHN MEGAW: This appeal raises a question of some general importance concerning confirmed irrevocable credits in international sale of goods transactions. In May, 1985, the plaintiffs, the appellants in this appeal, Forestal Mimosa Ltd., made five contracts of sale whereby they agreed to sell five consignments of solid wattle mimosa extract, material used in dyeing and tanning. The sale was to five separate Pakistani companies, members of one Pakistani group of companies. The sales were c. & f. Karachi, from an African port. Each of the contracts of sale provided for payment-In U.S. dollars by an Irrevocable Letter of Credit to be opened in sellers favour with and to be confirmed by a first class bank in London before shipment and payable at 90 days from date of Bill of Lading, without recourse. Each of the five companies instructed the Dubai Bank Ltd. through its branch in Multan in Pakistan to open a letter of credit in respect of its own purchase. The Dubai Bank instructed the defendants, who are respondents in this appeal, Oriental Credit Ltd., a London bank, to advise the plaintiffs of, and to add its own confirmation to, the five credits. The defendant bank did so. It notified the plaintiffs of the issue of the credits and confirmed those credits. I shall return later to the relevant terms of the credits. The five consignments of solid wattle mimosa extract were shipped on or about July 20 on a vessel, Sun Afric, a German vessel at the port of Beira in Mozambique. Bills of lading evidencing those shipments were issued at Bremen at the head office of the German shipowners on that date. The plaintiffs drew 90 day drafts, one on each of the five buying companies, and they presented the drafts with the shipping documents to the defendant bank in London on Aug. 16. The defendants forwarded the drafts and documents to Dubai on Aug. 20 and 21, with instructions to the Dubai Bank to release the documents to the buyers against acceptance of the drafts. The Dubai Bank, claiming that the documents contained a number of what were called 'discrepancies', told the defendants, the confirming bank, that they would remit funds only on receipt of funds from the buyers. A little later, on Sept. 10, 1985, they told the defendants that the buyers had accepted the drafts endorsed 'Accepted on clean Collection basis not under L/C'. The plaintiffs did not accept. If they had done, the credits which had been established would have been useless, since the plaintiffs would have accepted,

or might be regarded as having agreed, that the credits did not apply. The plaintiffs issued their writ against the defendants on Oct. 22, 1985, asking for a declaration that the defendant bank was responsible for acceptance and payment of the five drafts at maturity and claiming damages. They applied for summary judgment under the Rules of the Supreme Court, O. 14. That application was heard by Mr. Justice Bingham in the Commercial Court on Nov. 22, 1985. The learned Judge gave the defendants unconditional leave to defend. He also gave the plaintiffs leave to appeal. That is the appeal which is now before this Court. The argument before us can be treated as falling into two parts. The first part is the ground on which the defendants succeeded below. It is an issue of law depending on the construction of the terms of the letters of credit, as issued and confirmed. It is accepted on all sides, as it was accepted by the learned Judge,*331 that the point of law at issue can properly be described, once it is ascertained, as a short point. However, as often happens, the defining of the point may take longer than the giving of the answer to it when defined. While the Judge said that he could see force in both arguments and that, if he were left in doubt, he should give leave to defend, he nonetheless expressed the affirmative view that the defendants' argument was correct on the matter of law. The second part of the argument before us relates to the so-called 'discrepancies' in the documents. While we are told that submissions on those points were made to Mr. Justice Bingham, he does not mention them in his judgment. It may be, as perhaps will emerge hereafter, that there is a good reason why the learned Judge did not mention them. However, the defendants, the respondents in this Court, in their respondent's notice under the R.S.C., O. 59, r. 6, put forward certain alleged 'discrepancies of documents' as being additional grounds on which the appeal should be dismissed and which would apply even if they were wrong on their point of law. I propose to deal first, as Counsel have properly dealt, with the point of law, and then, if that falls to be decided in favour of the plaintiffs, to consider whether the appeal should nevertheless be dismissed because there is a properly arguable defence based on all or any of the alleged discrepancies. As to the point of law, we are here faced with the question of the proper approach to the determination of an appeal under O. 14 where the issue is a point of law. If the right approach were that the appeal must be dismissed if this Court regarded the appeal as being 'arguable', even though this Court were to take the view strongly that the argument ought to be decided in favour of the appellants, one would be faced then with the question what is really meant by the word 'arguable' in that context. In one sense the issue of law here is plainly arguable because it has been fairly and sensibly and, if I may say so, most helpfully argued, and also the defendants' argument has found favour with the learned Judge. But, in my view, both commonsense and the prevailing practice require, or at least permit, this Court to take a broader view. As Lord Justice Kerr said recently in S.L. Sethia Liners Ltd. v. State Trading Corporation of India Ltd., [1986] 1 Lloyd's Rep. 3; [1985] 1 W.L.R. 1398 at pp. 33 and 1401D: If a point of law is raised on behalf of the defendants, which the Court feels able to consider without reference to contested facts simply on the submissions of the parties, then it is now settled that in applications for summary judgment under Order 14 the court will do so in order to see whether there is any substance in the proposed defence. If it concludes that, although arguable, the point is bad, then it will give judgment for the plaintiffs.

Mr. Goldsmith for the respondents courteously submitted that a later passage on the same page in the learned Lord Justice's argument in some degree weakened that statement of the position. With all respect, I do not agree. In the later passage Lord Justice Kerr was dealing with a different matter. In my view, it would neither be good law nor good sense that, if each member of this Court took a clear and confident view that the issue, though in one sense arguable, ought to be decided in favour of the plaintiffs, they should, nevertheless, dismiss the appeal, leaving the issue of law to be argued at the trial of the action, presumably on the basis that the trial Judge would not be influenced in any way by any view of this Court, with the prospect of the issue, whichever way it might then be decided by the trial Judge, coming again before this Court, it may be many months hence. Having formed a clear view as to the right answer as to the issue of law, I propose to express it and, if my brethren should agree, I should propose that the order of this Court should give effect to that decision and not that the case should be remitted to the commercial Court for a renewed argument on the question of law. I now come, therefore, to the relevant terms of the document which purports to be an irrevocable documentary credit. The terms of the five credits are, for the purposes of this appeal, identical. I take the document, as Counsel did, which appears at pp. 231-232 of the bundle. It is contained in a printed form of the Dubai Bank with the particulars inserted in typescript. It is headed 'Irrevocable Documentary Credit'. The 'Beneficiary', as so described in the document, is the plaintiff company, Forestal Mimosa Ltd. The 'Applicant', so described, who requested the opening of the credit is one of the five Pakistani companies who were the buyers of the goods. The date of issue by the Multan branch of the Dubai Bank is May 27, 1985. The date of expiry is expressed to be Aug. 24, 1985. The amount of that particular credit -- it is only, of course, one of five -- is U.S. $84,900. The opening words of the text, after the definition of the parties, is: Dear Sirs, We hereby issue in your favour this Irrevocable Documentary Credit which is*332 available by acceptance of your drafts at 90 days sight drawn on . . . Then there is set out the name of the Pakistani buyer in question and a reference to the clause 'Drawn under Documentary Credit No.' and the date, and the words 'accompanied by the following documents'. The documents set out are invoices, bills of lading and certificate of origin. Then there is a reference to the insurance cover, which was the responsibility of the buyers since the contracts were c. & f. The insurance policy is not to be treated as being one of the accompanying documents even though it appears under that head. (There was, I should mention, an amendment to the credit because of a change in the insurance company concerned, but it is agreed that nothing turns upon that amendment.) Then in a box at the bottom left-hand corner above the signature of the Dubai Bank, there are included words as follows: We hereby engage with drawers and/or bona fide holders that drafts accepted within the terms of this credit will be duly honoured at maturity. Opposite that note, in the left-hand margin of the document, there is a marginal insertion which, in my view, is of vital importance in this case. It reads: Except so far as otherwise expressly stated this Documentary Credit is subject to Uniform Customs and Practice for Documentary Credits ((1984) Revision) International Chamber of Commerce Publication No. 400. The reference to the 1984 Revision of the well-known Uniform Customs and

Practice for Documentary Credits sponsored by the International Chamber of Commerce (which I refer to for short simply as the 'Uniform Customs') should, it is accepted, be read as referring to the 1983 Revision which took effect on Oct. 1, 1984. Article 11 of the Uniform Customs reads in par. (a): All credits must clearly indicate whether they are available by sight payment, by deferred payment, by acceptance or by negotiation. The reason for the different types there being defined are partly that they involve, or may involve, different obligations as to time of payment if the credit should fall to be paid, and partly because, as is shown by art. 10, somewhat different factors affect the credits according to which of the four types they fall into: hence the provision by art. 11 that credits must clearly indicate which type they are. I come back, then, to art. 10. On the plaintiffs' submission it is decisive of this case. It is the plaintiffs' contention that it is duly incorporated into the relevant contract consisting of the Dubai Bank's credit, confirmed by the relevant bank; and that thus it comes in as an essential term of the contract, created by the confirmed irrevocable documentary credit, as between the defendants and the plaintiffs. Article 10 describes the obligations which arise on an irrevocable credit. Paragraph (a) of the article lays down the obligations of the issuing bank. We are not concerned with that. We are concerned with the obligation of the confirming bank, which is set out in par. (b). The relevant part of par. (b) reads: When an issuing bank authorizes or requests another bank to confirm its irrevocable credit and the latter has added its confirmation, such confirmation constitutes a definite undertaking of such bank (the confirming bank), in addition to that of the issuing bank, provided that the stipulated documents are presented and that the terms and conditions of the credit are complied with. I leave out sub-pars. (i) and (ii) which relate to credits described in art. 11 as being by sight payment and by deferred payment. I come to sub-par. (iii), which relates to the type of credit which is referred to in art. 11 as being available by acceptance, which, in my view, plainly is the relevant type in the present case. Sub-paragraph (iii) reads: If the credit provides for acceptance -- to accept drafts drawn by the beneficiary if the credit stipulates that they are to be drawn on the confirming bank, or to be responsible for their acceptance and payment at maturity if the credit stipulates that they are to be drawn on the applicant for the credit or any other drawee stipulated in the credit. I need not read sub-par. (iv), which deals with the fourth type as defined in art. 1, namely credit by negotiation. As I have said, the obligations, whatever they may be, which were undertaken by the Dubai Bank by the document to which I have referred, were undertaken towards the plaintiffs by the defendant bank when, on June 3, 1985, the defendant bank confirmed the five credits (p. 233 of the bundle), specifically saying to the plaintiffs, 'This credit bears our confirmation' and 'This credit is the Dubai Bank credit', and also saying, unequivocally-*333 This credit is subject to the Uniform Customs and Practice for Documentary Credits (1983 Revision) International Chamber of Commerce of Publication No. 400. The defendants' contention before the learned Judge, accepted by him and repeated, if I may say so, with clarity and very helpfully by Mr. Goldsmith, is that, when one looks at the letter of credit of the Dubai Bank in the first instance, without referring

to the Uniform Customs terms, it is clear that that credit was, by agreement between the parties, on the words that they used, only to become operative in the event that the buyers under a particular credit did in fact accept the sellers' draft when the sellers' draft, together with the other documents, was presented to them; and that, if the buyers declined to accept that draft, while the buyers might be liable under legal obligations to the sellers by virtue of the contract of sale, the sellers would obtain no help, assistance or legal right of any sort by virtue of the confirmed credit. That would be so because the confirmed credit would not have come into operation as a contract between the plaintiffs and the defendants. Mr. Goldsmith submitted, quite rightly, that that did not mean that the credit, if that was its effect, was of no benefit whatever to the sellers. It could, in certain circumstances, be of benefit to them: it would be of benefit to them if the buyers under the credit did indeed accept the draft, because then the effect of the confirmed credit would be that the bank would come under an obligation to the sellers. If the buyers thereafter failed in their obligation to pay the draft at maturity, the bank would have to pay the sellers the amount of the unaccepted draft. But, on Mr. Goldsmith's submission which the Judge has accepted, it would be a credit (if it can be so described) under which it was open to the buyers of their own volition to make the bankers' credit wholly ineffective for any purpose simply by saying, 'We refuse to accept the draft'. That is a contract which the parties can make if they wish. But, to my mind, it would not be regarded within the commercial community as being properly described as a confirmed irrevocable documentary credit. The purpose -- or, at any rate, one of the important purposes -- of such a credit, as it is understood in international finance, is that it shall not be open to the buyer by his own choice with, it may be, no kind of legal justification whatever, when proper documents are tendered, to render the bank's obligation to the seller under the credit a wholly useless obligation and one that has no legal effect. If it were not for the incorporation into this contract of the Uniform Customs, there would be, at any rate, a fair argument for Mr. Goldsmith's submission, and for the learned Judge's view. In his opinion, the Uniform Customs could not be treated, as he put it, as overriding the other terms of the document. So the legal issue is, quite shortly, whether art. 10 (b) (iii) is incorporated into the contract so as to make the defendants responsible for the acceptance and payment of the bills. To my mind, it is wrong to approach this question of construction by looking at the document first without reference to the Uniform Customs. The marginal note which I have cited provides unambiguously that, except insofar as otherwise expressly stated, this documentary credit is subject to the Uniform Customs. Unless, therefore, there is some express provision which excludes the Uniform Customs terms, they have got to be brought in. There is no such express provision excluding any relevant part of the Uniform Customs. It might be that, if it could be shown that there was some irreconcileable inconsistency between the Uniform Customs terms and the other terms of the document, the Uniform Customs terms would have to be ignored. In my judgment, there is no justification for reading into the contract any implied exclusion; and -- I think this is probably part of the same proposition -there is no inconsistency between the terms which the Uniform Customs would incorporate and the terms which appear on the face of the document itself. On the contrary, those terms have been included by reference to the Uniform Customs terms, and are first to be interpreted by reference to the relevant parts of the Uniform Customs terms.

The first passage on which Mr. Goldsmith relies as excluding the operation of art. 10 (b) (iii) of the Uniform Customs terms is the opening words-We hereby issue in your favour this Irrevocable Documentary Credit which is available by acceptance of your drafts . . . drawn on (the buyers). Mr. Goldsmith says this means that, unless and until the buyer does accept, this documentary credit is not available. In my judgment, when one looks at the whole of this document, it appears that it has been prepared with reference to the Uniform Customs expressly incorporated in it. That is the reason for the use of the phrase 'available by acceptance' which might otherwise be thought to have some different meaning. Those words are introduced because of art. 11 of the Uniform Customs which directs that: 'All credits must clearly indicate whether they are available by sight payment, by deferred payment, by acceptance or by negotiation'. The*334 draftsman of this document, because the Uniform Customs terms are going to be incorporated in the contract, has properly included this provision, as required by art. 11, that this credit is available by acceptance -- art. 11, and nothing else is the source of those words. The further provision on which Mr. Goldsmith relied and which the learned Judge, I think, primarily regarded as supporting his view of the case, was the passage which I have read in the box at the left-hand bottom corner-We hereby engage with drawers and/or bona fide holders that drafts accepted within the terms of this credit will be duly honoured at maturity. Mr. Goldsmith, not unnaturally, placed great weight on the words 'accepted' and 'at maturity'. But, again, in my view, those words were brought in because of the provision at the end of sub-par. (iii) of par. (b) of art. 10, 'or any other drawee stipulated in the credit'. In order to provide that the credit should also be available to a bona fide holder, those words were introduced into the credit. Their purpose is consistent with, and explained by, the provision of the Uniform terms. In my judgment, therefore, when one finds that the provisions of art. 10 are brought in as terms of the contract, and that the provisions of art. 10 (b) (iii) are unambiguous as to the obligation of the confirming bank to be responsible for the acceptance and payment at maturity, the defence on which the defendants succeeded below does not reflect the true construction of the contract. I would hold that it shows no basis for refusing summary judgment to be given. I then have to deal with what I have described as being the second part of the argument before us. That is the submission on behalf of the respondents by virtue of a respondent's notice that, even if they are wrong on the point of law which I have discussed, nevertheless there were in this case what are described generally as being 'discrepancies' in the documents. Mr. Goldsmith quite properly reminds us that in a credit of this sort it is essential that there should be strict compliance with the contractual provisions as to the documents. I shall go through the eight points raised by the respondent's notice, seven of which, Mr. Goldsmith sought to submit, provided at least an arguable basis, sufficient for the defendants to be given leave to defend. The first point is that, by the typed conditions attached to the credits, the plaintiffs are permitted to negotiate the documents within 30 days of the date of the bill of lading. It is submitted that in this case the documents were not negotiated within 30 days by the plaintiffs and that, therefore, there is at any rate an arguable case that the credits ceased to be operative on that ground. The provision as to the 30 days is contained in the special conditions at p. 232: The beneficiaries are permitted to negotiate the documents within 30 days from the

date of Bill of Lading. The word 'negotiate' is an unfortunate word in that context but, as it is the plaintiffs who have to 'negotiate' the documents, and as, under the terms of the contract, the only thing that they can do with the documents is to hand them to the confirming bank, that provision must be taken as having been fulfilled if the plaintiffs provide the necessary documents to the confirming bank within 30 days of the bill of lading. That they did on Aug. 16, the bills of lading being dated July 20. Accordingly, that point is one which is devoid of substance. The second point is that, while by the typed conditions of the credit bills of lading showing a third party as shipper were acceptable, the credits did not permit bills of lading showing what is called 'the involvement of a fourth party'. The third party in the typed condition means, simply, somebody other than the sellers themselves. The bill of lading in this case was a bill of lading showing, as shippers, AmiMozambique S.A.R.L. on behalf of The Wattle Co. Ltd. That does not make it a bill of lading other than that of third party as shipper. That point is not arguable. Thirdly, it is said that the bills of lading should have been endorsed in favour of the Dubai Bank but the endorsements were irregular because they were endorsed to two persons jointly, Dubai Bank and Ami-Mozambique on behalf of The Wattle Co. Ltd. In fact, there can be no doubt that the bills of lading were endorsed, not to, but by Ami-Mozambique on behalf of The Wattle Co. Ltd. They were the endorsers, not the endorsees. There is nothing in that point. Mr. Goldsmith did not pursue the fourth point. The fifth point is that the bills of lading show the port of loading as Beira, but they are purportedly signed in West Germany on the very day of shipment. That, it is said, casts doubt on their genuineness. The facts are right. The port of loading was Beira. The bills of lading were signed in Bremen and purport to be signed on July 20, which was the date on which shipment, according to the bills of lading, was completed. I see no basis for suggesting that*335 there is an arguable case that that gives rise to suspicion as to their genuineness. The suspicion is suggested to be that it is most unlikely that, if the shipping were only completed in Beira on July 20, the bills of lading could have been signed on that day in Bremen; therefore, the bills of lading must have been signed later and ante-dated. The point is one which cannot be regarded, on the material before us, as arguable. The sixth point is that the declaration of the vessel was dated prior to shipment. The reference to 'declaration of the vessel' appears to relate to a provision in the terms of the letter of credit described as-Shipment/transhipment on Israeli/Taiwan and South African Flag Vessels/Ports Prohibited [--under the heading --] Special Conditions. On June 17, 1985 (p. 195) the plaintiffs or their agents in Beira submitted a certificate: To Whom it may Concern This is to certify that M.V. 'Sunafric' not Israeli/Taiwan and South African flag and that it will not call at Ports in those countries prior to discharging at Karachi. The point, it is said, is that a declaration of that sort made on June 17, when the vessel did not sail until July 20, was premature because there might have been a change of owners meanwhile, or the vessel might have called at forbidden ports between the two dates. That is a point which is without substance. The seventh point was a complaint that a declaration of shipment was made by the shipper instead of the issuer of bills of lading. The provision in the credit document as to declaration of shipment does not make any provision as to who is to give the

declaration of shipment. In fact, the declaration was given by the plaintiffs (the sellers) or their agents, as appears at p. 194. There is no basis for submitting that that is in any way a wrong declaration of shipment under the terms of the credit. Finally, as the eighth point, it is said that the declarations for insurance were made late in all cases, except in respect of one documentary credit where it was made early. The provision for declarations of shipment is contained in the Dubai Bank credit document under the heading of 'Insurance': Declaration of shipment should be made to their [-- the Insurance Company's --] Office [-- the address is given in Multan --] a copy of which should accompany the documents. In fact, the declarations of shipment were all made on July 22 with, it is suggested, the exception of one of them which, on the face of the document, shows it as having been made on July 2, recording that the vessel sailed on July 20. It is plain, when one looks at that declaration, that there has been a mis-typing, with two figures 2 superimposed, and that that document, as the others, was in fact prepared and sent on July 22 and was not a premature declaration that the vessel had sailed, made 18 days before it did sail. However that may be, the defendants still say that the declarations dated July 22 were late. They were made on July 22 whereas shipment, according to the bill of lading, was completed on July 20 and the vessel probably sailed on that day. I see no basis in the contract contained in the credit document or in the ordinary principles of law for saying that a declaration sent to the insurance company, giving the date of shipment, is out of time because it was despatched on July 22 when the ship sailed on July 20. Those are all the so-called 'discrepancies'. None of them contains any point which, in my judgment, is arguable. I am confident that the learned Judge did not mention them in his judgment because he took the same view. I would, therefore, allow this appeal. It would appear to be that, if my Lords agree, the consequence may be that judgment should be given in favour of the plaintiffs on their claims; but that may be a matter for submissions hereafter. Lord Justice CROOM-JOHNSON: I agree with the judgment which has been delivered both as to the meaning of irrevocable documentary credit and as to the unarguability of the so-called discrepancies. Lord Justice BALCOMBE: I too agree and, although we are differing from a Judge very experienced in this field, the matter has been dealt with so comprehensively by Sir John Megaw that I do not wish to add anything. [Order: Appeal allowed with costs here and below. Interlocutory judgment to be entered for damages and interest to be assessed. Leave to appeal to the House of Lords refused.] (c) Lloyds of London Press Limited [1986] 1 Lloyd's Rep. 329

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Copr. (c) West 2002 No Claim to Orig. Govt. Works