Applying the principles of UCP 600 in todays turbulent environment Session I

International Chamber of Commerce Paris June 18 & 19, 2009

Gary Collyer & Vincent OBrien

Applying UCP 600

Introduction:
review of the key results in the recent ICC Survey Rethinking Trade Finance 2009: an ICC Global Survey; the current issues and environment; and understanding the concerns and issues of the participants.
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First Experiences with UCP 600 to July 2008

Corporate view of UCP 600: Easier to read, follow and apply; Clearer rules that leave little room for banks to manipulate or interpret to their liking; Widespread adoption by banks together with application of the ISBP publication; Need for applicants to grasp that the UCP 600 does not only benefit the beneficiary; The content and structure of UCP 600 should encourage more usage of the documentary credit as a means of payment ; An opportune time to review current practices and look for better documentary credit structures; Use the impetus of UCP 600 to seek out new buyers and suppliers; and A reduction in discrepancy rates has been seen in many countries.
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First Experiences with UCP 600 to July 2008

Bank view of UCP 600: Easier to read, follow and apply; Clearer rules that leave little room for issuing banks to manipulate or interpret to their liking; Widespread adoption by banks together with application of the ISBP publication; Increased usage of documentary credits already seen in markets such as Asia and Middle East. For example, China is now number 1 issuer of documentary credits globally and the Middle East is projecting increases in usage of around 15-20% per annum; Banks are now promoting documentary credits as an offering whereas in the past it was not a priority product; An opportune time to review current practices and look for better documentary credit structures and guidelines; A reduction in discrepancy rates has been seen in many countries.
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Applying UCP 600

Corporate views now: The fees are too high and impossible to anticipate It takes weeks to get paid when it should only take days The banks are too picky when checking my documents The banks are inconsistent in what they consider discrepancies I cant get my L/Cs routed through my preferred bank
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Applying UCP 600

Corporate views now: I cant get my L/Cs confirmed by a bank acceptable to me Getting answers to my questions is like pulling teeth The information that I receive is awful The bankers and I do not understand one another There are just too many banks involved and I cant keep track
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Applying UCP 600

Current experiences with the handling of LCs

Applying UCP 600

Examples of reported spurious and doubtful discrepancies: Grade of steel mentioned in Mills Test Certificate is not as per clause No. 4 of field 46A of the L/C. Field 46A of the LC stated Mills Test Certificate. (USD8.8m) Short quantity supplied in the size 2.00x1230mm which is less than 10 percent which is not as per clause 45A of the LC terms. Field 45A gave a quantity of goods (5 different sizes) all subject to 10% +/-. Quantity of size shown was less than -10% but LC allowed partial shipments. (USD6.4m)

Applying UCP 600

Examples of reported spurious and doubtful discrepancies: Certificate of Origin does not show name of the consignee. The condition in the LC was Certificate of Origin and there was no requirement for the consignee to be shown. (USD3.6m) B/L shows goods shipped on deck. BL was a charter party BL which had pre-printed text (of which .. on deck at shippers risk, carrier not responsible .). The gap was not completed with any quantity. (USD1.7m)

Applying UCP 600

Examples of reported spurious and doubtful discrepancies: Clean on board date not indicated on BL, wrong beneficiary address on documents and documents not presented by express mail. Standby LC required presentation of draft, copy invoice, copy clean on board BL and various certificates. Documents to be sent by express mail and beneficiary address in SBLC was stated to be Zu, Switzerland. The copy BL showed an on board date and no notations or clauses regarding the goods or their packaging. The documents were sent by courier service. The beneficiary address was Zug (in Switzerland). (USD6.7m)

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Applying UCP 600

Examples of reported spurious and doubtful discrepancies: Non-negotiable copies of BL not signed. These are not signed and LC did not request their presentation! (USD2.5m) Certificate of Origin shows as consignee a party other than the beneficiary. LC was silent as regards content of Certificate of Origin. (USD3.4m) Mills Test Certificate is issued by a party other than the beneficiary. LC did not indicate the issuer. (USD3.4m)

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Applying UCP 600

Examples of reported spurious and doubtful discrepancies: Commercial Invoice and Packing List show name of the buyer as viz. ABC Co Ltd whereas buyers name is ABC Co Ltd. LC stated documents in the name of buyer viz. ABC Co Ltd. (USD380k) Beneficiary declaration as per clause 5 of the LC is not presented. Beneficiary presented the required document under the title Beneficiary Certificate. (USD8.7m)

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Applying UCP 600

Examples of reported spurious and doubtful discrepancies latest occurrence: LC provides a goods description (field 45A) that includes partial shipment to be allowed and goods will be carried under deck. Commercial Invoice presented showing the goods description as per field 45A but without the two statements in quotation marks as above. Issuing bank refuses for absence of data. (USD5.1m)

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Applying UCP 600

Issuance:
it all starts with the documentary credit application form; and understanding the various structures, settlement types and variations of documentary credits.

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Applying UCP 600

UCP 600 article 14 - Standard for Examination of Documents

Sub-article 14 (a):
A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank must examine a presentation to determine, on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation. check on the basis of the documents alone

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Applying UCP 600

UCP 600 article 14 - Standard for Examination of Documents

Sub-article 14 (f):
If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).

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Applying UCP 600

UCP 600 article 14 Standard for Examination of Documents

Sub-article 14 (h)
If a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it. 1. 2. Understanding the impact on the applicant Ability of the issuing bank to enhance the wording in the LC

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Applying UCP 600

UCP 600 article 1 - Application of UCP

Concept of Modify or Exclude; No reference to unless otherwise stipulated in the credit throughout UCP 600; UCP applicable when the LC expressly indicates that it is subject to these rules; and Retention of Standby Letters of Credit. There is a need to understand the concept of modification and exclusion and when it is appropriate or not.

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Applying UCP 600

UCP 600 article 2 - Definitions

Negotiation:

the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank. Understand the 3 components of the definition

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Applying UCP 600

ICC Opinion R. 666 and UCP 600 Commentary refers to:

A letter of credit that is stated to be available with a nominated bank, by [sight] negotiation, should not include any reference to claiming reimbursement from a reimbursing bank or, indeed, any reference to the debiting of the issuing banks account held with the nominated bank. This form of structure is a payment letter of credit. A negotiation letter of credit should specify that the nominated bank is to send the documents to the issuing bank and upon the issuing bank ascertaining that they comply with the terms and conditions of the credit, the issuing bank will reimburse in accordance with the instructions of the negotiating bank.
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Applying UCP 600

UCP 600 article 12 - Nomination

Sub-article 12 (b):
By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank. Explicit authorization to prepay or purchase. Potential for loss lies with the applicant rather than the bank. Need for applicants to adopt know your customer principles.

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Applying UCP
UCP 600 article 6 - Availability, Expiry Date and Place for Presentation

Sub-article 6 (a): A credit must state the bank with which it is available or whether it is available with any bank. A credit available with a nominated bank is also available with the issuing bank. Q. Why allow any form of LC to be available with any bank? Q. Is it really possible under each type of availability for a LC to be available with any bank? Q. What is the value to a beneficiary of a LC available with any bank?

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Applying UCP
Understanding the correct form of availability

with an issuing bank; with a confirming bank; with a nominated bank; with an issuing bank and confirming/nominated bank; with issuing/confirming bank for expiry and nominated bank for honour or negotiation; for presentation only.
Banks need to understand availability and what it means in each transaction.
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Applying UCP 600

Sub-article 7 (c) ICC Opinion TA. 674 approved March 2009

The conclusion to this opinion (as to the effect of extending a maturity date of a draft or deferred payment undertaking) includes: Whether a replacement draft or new deferred payment undertaking is required will be determined by local law at the place of acceptance or where the deferred payment undertaking is incurred. if not required then the draft must be re-accepted to mature on the new agreed maturity date (where the credit is available by acceptance with the confirming bank); or a new or amended deferred payment undertaking must be incurred to reflect the new agreed maturity date (where the credit is available by deferred payment with the confirming bank). continued
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Applying UCP 600

Sub-article 7 (c) ICC Opinion TA. 674 approved March 2009

The conclusion to this opinion (as to the effect of extending a maturity date of a draft or deferred payment undertaking) concludes by saying: By complying with the above, and in line with the definition of honour in article 2, i.e., b. to incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment; and c. to accept a bill of exchange (draft) drawn by the beneficiary and pay at maturity if the credit is available by acceptance, the obligation of the issuing bank to reimburse the nominated (confirming) bank, according to sub-article 7 (c), extends to the new agreed maturity date.
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Establishing Best Practices

Issuance: Clear and precise terms and conditions Terms and conditions that match the form of shipment Documentary requirements that outline the issuer (if required) and the data content for each document (do not rely on the effect of sub-article 14 (f))

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Applying UCP 600

Alternative forms of Documentary Credits

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Alternative forms of Documentary Credits

Advance Payment; Red / Green Clause; Revolving / Reinstatement; Instalment; and Assignment of Proceeds.

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Alternative forms of Documentary Credits

Advance Payment (Red Clause)

This is often referred to as a red clause credit due to the fact that the wording regarding the advance payment was typed in red ink so as to highlight this condition. Today, advance payments under credits are fairly rare and generally limited to around 80% of the credit value. The advance is often paid against a receipt from the beneficiary indicating that they will ship the goods as required by the credit and in the event that they fail to do so will return the advance or percentage thereof in respect of goods not shipped. Where there are doubts as to the beneficiarys ability to return the funds, the applicant may insist that the advance is made against the issuing of a bank guarantee covering the value of the advance. When the beneficiary presents their documents for the goods shipped, the invoice will be issued for 100% of the value less the amount of the advance relative to those goods.
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Alternative forms of Documentary Credits

Red Clause LCs

Where a bank guarantee is to be issued to cover any advance payment, consideration should be given to include wording as below (or similar): This guarantee will automatically reduce by xx% of the value of any invoice presented under letter of credit number xxxxxxx as part of a complying presentation made by the beneficiary to XXX Bank [name of nominated bank]. By the inclusion of this wording, the liability under the guarantee will reduce as shipments are made under the respective letter of credit. Issuing banks (and applicants) that allow the advance to be made against an undertaking of the beneficiary must appreciate that the nominated bank will have no further involvement in recovering the funds in the event of failure to ship. The ultimate risk lies with the applicant.
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Alternative forms of Documentary Credits

Green Clause LCs

A letter of credit which contains a clause authorising the nominated bank to make advances to the seller against security (such as a payment guarantee from a third party or the pre-shipment storage of the goods in the name of the nominated bank or the issuing bank) before shipment /presentation of documents. If the seller fails to present the documents, the issuing banks or buyers reimbursement obligations can be recovered through enforcement of the security.

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Alternative forms of Documentary Credits

Revolving and Reinstatement LCs

Revolving: A revolving credit has three features that need to be addressed in a credit:1. whether it is automatic or not; 2. whether the revolvement amount is cumulative or non-cumulative; and 3. the basis under which the revolvement will occur. Reinstatement: A reinstatement credit has three features that need to be addressed in a credit:1. the initial amount of the credit; 2. the basis under which the reinstatement will occur; and 3. the maximum amount to which the reinstatement will be made.

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Alternative forms of Documentary Credits

Revolving LC basics

Beneficiaries prefer a cumulative, automatic revolving credit as they have a bank undertaking for the full amount of the value of their goods. Banks prefer a non-cumulative or cumulative, but non-automatic revolving credit as it limits the banks exposure to the value of one revolvement. A non-cumulative revolving credit allows the bank to reduce their liability by any undrawn balance within any revolvement period. A cumulative automatic revolving credit could, possibly, allow the Beneficiary to draw the full value in the final segment of the credit.
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Alternative forms of Documentary Credits

Reinstatement LC basics

A reinstatement credit allows the applicant to limit the value of any one shipment by setting the value of the credit to that level. For example, the total contract price is USD100,000 but the maximum that would be drawn in any one presentation is USD15,000 The credit will be issued for an initial amount of USD15,000 and state that the amount will be reinstated after each drawing to the amount of USD15,000 subject to a maximum of USD100,000 If the beneficiary makes an initial drawing of USD12,500 the amount will reinstate to USD15,000 but the remaining total amount reduces to USD87,500 and so on until the full credit amount is drawn. The banks liability is for the full USD100,000
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Alternative forms of Documentary Credits

UCP 600 article 32 - Instalment Drawings or Shipments

An instalment credit is covered by UCP 600 article 32. Care must be taken when drafting an instalment credit to ensure that the right structure is used. For example, DC issued on 9 February stating:1000 Pens to be shipped by 28 February 1000 Pens to be shipped by 15 March 1000 Pens to be shipped by 31 March is not an instalment credit unless the first shipment is not made. All the goods could be shipped before 28 February. An instalment credit should have specific goods to be shipped within given periods that do not overlap. For example: 1000 Pens between 9 and 28 February, 1000 Pens between 1 and 15 March, 1000 Pens between 16 and 31 March. Article 32 is to be excluded under a Standby DC where instalments occur.
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Alternative forms of Documentary Credits

UCP 600 article 39 - Assignment of Proceeds

The fact that a credit is not stated to be transferable shall not affect the right of the beneficiary to assign any proceeds to which it may be or may become entitled under the credit, in accordance with the provisions of applicable law. This article relates to the assignment of proceeds and not to the assignment of the right to perform under the credit. Points to note: assignment of the proceeds not the right to perform under the credit; payment security to assignee exists only if compliant documents presented; bank should limit their payment obligation to documents being presented at their counters; copy of assignment notice should be sent to all parties; and clear instructions where more than one assignee or partial shipments.
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Applying UCP 600

Advising and Confirmation:

roles and responsibilities of an advising bank and a confirming bank; and form and scope of confirmation of a documentary credit.

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Applying UCP 600

UCP 600 article 9 - Advising of Credits and Amendments

Concept of 2nd Advising Bank; Bank now satisfies itself as to the apparent authenticity; and Advice of LC or amendment accurately reflects the terms and conditions of the LC or amendment received.

Are instructions to confirm addressed to the advising bank and/or the second advising bank that is stated in the LC? What is satisfying itself as to the apparent authenticity? What are the risks of not passing to the beneficiary what was received?
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Establishing Best Practices

Advising: Are you willing to accept your nomination? Do you examine the credit for workability?

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Applying UCP 600

Adding confirmation what is possible and what needs to be observed

considerations to add confirmation; reduced expiry; reduced amount; determining confirmation of 100% where a split schedule is included in the LC; more than one confirming bank.
The basic rule for a bank requested to confirm is do I understand what I am confirming and the risks that I am undertaking

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Applying UCP 600

Understanding recourse

Having confirmed a LC, the confirming bank has no right of recourse to the beneficiary in the event of default by the issuing bank, or the issuing bank subsequently identifying discrepancies that were not determined by the confirming bank. But what form of recourse is available where the documentary credit is not confirmed? Recourse when the issuing bank fails to provide reimbursement according to the terms of the credit citing bankruptcy, lack of foreign exchange, Government intervention etc. and (?) When the issuing bank identifies discrepancies in documents that the nominated bank failed to determine.
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Applying UCP 600

Understanding recourse LC available by Honour with a nominated bank (not confirmed)

Honour is to: Pay, if the LC is available by sight payment; Accept a draft drawn on the bank, if the LC is available by acceptance; or Incur a deferred payment undertaking, if the LC is available by deferred payment. To pay, accept or incur a deferred payment undertaking is a commitment on the part of the nominated bank and is considered without recourse to the Beneficiary. For payment LCs a separate recourse agreement may, however, be made with the beneficiary
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Establishing Best Practices

Confirmation: Do you understand what you are confirming? What is the wording of your confirmation and what does it mean? Do beneficiaries understand the effect of confirmation? Cancelling, removing or opting out of confirmation.

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Applying UCP 600

Amendments:
drafting and structuring of amendments; and acceptance or refusal of amendments.

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Applying UCP 600

UCP 600 article 10 Amendments

Sub-article 10 (c):
The terms and conditions of the original credit (or a credit incorporating previously accepted amendments will remain in force for the beneficiary until the beneficiary communicates its acceptance of the amendment to the bank that advised such amendment. The beneficiary should give notification of acceptance or rejection of an amendment. If the beneficiary fails to give such notification, a presentation that complies with the credit and to any not yet accepted amendment will be deemed to be notification of acceptance by the beneficiary of such amendment. As of that moment the credit will be amended. Q. Effect of banks requesting a beneficiary certificate certifying as to which amendments have been accepted or rejected.
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Applying UCP 600

UCP 600 article 10 - Amendments

Let us review the circumstances of a LC: LC issued for USD25,000 covering shipment of nuts and bolts. Partial shipment allowed. Amendment received reducing amount to USD15,000 Beneficiary subsequently presents documents for USD15,000 and the LC is valid for another 5 weeks. Has the amendment been accepted or has a partial shipment been effected?
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Applying UCP 600

UCP 600 article 10 - Amendments

LC is issued for USD3.5M and is available with the confirming bank by acceptance at 180 days after BL date. LC states that discount charges are for account of the applicant. Amendment issued stating discount charges now for beneficiary account. Documents are then presented for full value of the LC and discount is requested by the beneficiary. Has the amendment been accepted or rejected?
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Establishing Best Practices

Amendments: Does the amendment cater for all the terms and conditions of the LC? What effect does the amendment have on the remaining terms and conditions?

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Establishing Best Practices

Example of an amendment not catering for all the terms and conditions of the LC and leaving an element of ambiguity.

LC requires shipment from Singapore to Rotterdam and requires presentation of bills of lading. Incoterm CFR. Beneficiary and applicant determine that bills of lading are the wrong form of document and agree on a forwarders certificate of receipt. An amendment is issued stating delete bills of lading and insert freight forwarders certificate of receipt issued by Acme Forwarding Company Ltd. Incoterm is unchanged. Is the FCR to indicate shipment from/to or just delivery at Singapore? What about the other BL conditions consignee, notify party and freight paid or payable?
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Applying UCP 600

Transferable Credits and Back-toBack Credits:

application of UCP 600 and the transfer application form; and correct form and structure; what is possible in a transferred credit?; and what documents can be substituted?

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Transferable Documentary Credits

UCP 600 article 38 - Transferable Credits

(a) states that no bank is under an obligation to transfer; (b) provides definitions of Transferable credit means a credit that specifically states it is transferable. A transferable credit may be made available in whole or in part to another beneficiary (second beneficiary) at the request of the beneficiary (first beneficiary); Transferring bank means a nominated bank that transfers the credit or, in a credit available with any bank, a bank that is specifically authorized by the issuing bank to transfer and that transfers the credit. An issuing bank may be a transferring bank; and Transferred credit means a credit that has been made available by the transferring bank to a second beneficiary.

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Transferable Documentary Credits

UCP 600 article 38 - Transferable Credits

(e) No longer a requirement for irrevocable instructions regarding amendments; (f) If transferred more than once, each transferred credit stands as an individual credit; (g) No change to items that can be reduced or curtailed but if original credit is confirmed, so must the transferred credit; (i) If first beneficiary fails to substitute or fails to correct substituted documents (where the 2nd beneficiary documents complied), 2nd beneficiary documents may be utilised; and (k) documents must be routed through transferring bank. Issues: Changing additional terms and conditions Substituting more than the draft and/or invoice Examination and handling of second beneficiary documents
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Transferable Documentary Credits

Sub-article 38 (k) ICC Opinion TA. 632 approved October 2007

The conclusion to this opinion includes the following: When there is a 100% transfer of the credit amount and no substitution is
to occur, the necessity to present the documents of the second beneficiary to the transferring bank is negated. This position prevails to the extent that the transferring bank has not added their confirmation to the transferred credit and, thereby, necessitating that documents are presented to that bank in order for the undertaking of the confirming bank to be fulfilled. In the advice of transfer, where there is a 100% transfer, the transferring bank may make a modification of the rule to state that the documents are to be sent direct to the issuing bank. In such circumstances, the transferring bank should inform the issuing bank of this action.
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Back-to-Back Documentary Credits

Back-to-Back Credits

Used where the beneficiary of a credit (middle man) cannot obtain a transferable credit or cannot arrange for their bank to issue a credit in their own name. Beneficiary of the original credit seeks to use that credit as security for a bank to issue another credit in favour of the supplier of the goods. In a back to back credit there are two separate and independent credits issued whereas under a transferable credit the transaction happens under the umbrella of the original credit. Most banks are willing to handle transferable credits as there is protection under UCP in the event of failure on the part of the 1st beneficiary. Under a back to back credit each credit is independent and failure of the 1st beneficiary may put the bank at risk of receiving proceeds to cover their payment to the supplier.
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Back-to-Back Documentary Credits

Back-to-Back Credits

Issues with Back-to-Back LCs: matching terms and conditions between credits; aligning the settlement under both credits; substitution by the original beneficiary and failure on their part to do so; banks that link the settlement of one LC to settlement under the other; safeguards?

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Applying UCP 600

International Standard Banking Practice:

applying the principles of paragraphs 1-42.

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Why the need for ISBP?

Lack of a clear International Standard (possibly even Bank or Country). To explain what is meant by the reference in the definition of Complying Presentation. Lack of full document coverage within the UCP. Poorly issued credits leading to increased rejections and multiple interpretations. To put meaning to imprecise terms and incorporate positions taken in ICC Opinions, Decisions and DOCDEX cases.

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Who is the ISBP intended for?

ALL parties to a Letter of Credit NOT just the banks Including

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Is the ISBP binding in the same manner as the UCP?

ISBP publication 681 was approved by the Banking Commission of the ICC, as was the UCP 600. ISBP publication 681 is an Official Publication of the Banking Commission.

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Applying ISBP Publication 681

Article 2 of UCP 600 provides a definition of Complying Presentation as a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules [UCP 600] and international standard banking practice. Reference to international standard banking practice is not confined to the content of the ICC publication 681. International standard banking practice also includes the opinions and DOCDEX decisions that are not in the publication plus other functions and acts performed by banks on a daily basis.

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Applying ISBP Publication 681

Application and Issuance of the Credit Paragraph 2

The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. Unless expressly stated otherwise, a request to issue or amend a credit authorizes an issuing bank to supplement or develop the terms in a manner necessary or desirable to permit the use of the credit.
Paragraph 5

Many of the problems that arise at the examination stage could be avoided or resolved by careful attention to detail in the underlying transaction, the credit application, and issuance of the credit as discussed.

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Applying ISBP Publication 681

Paragraph 8 A certification, declaration or the like may either be a separate document or contained within another document as required by the credit. If the certification or declaration appears in another document which is signed and dated, any certification or declaration appearing on that document does not require a separate signature or date if the certification or declaration appears to have been given by the same entity that issued and signed the document.

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Applying ISBP Publication 681

Paragraph 9 Corrections and alterations of information or data in documents, other than documents created by the beneficiary, must appear to be authenticated by the party who issued the document or by a party authorized by the issuer to do so. Corrections and alterations in documents which have been legalized, visaed, certified or similar, must appear to be authenticated by the party who legalized, visaed, certified etc., the document. The authentication must show by whom the authentication has been made and include the signature or initials of that party. If the authentication appears to have been made by a party other than the issuer of the document, the authentication must clearly show in which capacity that party has authenticated the correction or alteration.
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Applying ISBP Publication 681

Corrections and Alterations Paragraph 11

The use of multiple type styles or font sizes or handwriting in the same document does not, by itself, signify a correction or alteration. An example of the application of this rule is in ICC Opinion TA.657 where the date of issuance and receipt of goods shown on a CMR were completed by pen where the document was completed except for the date which was shown as __-11-2007. The completion of the date, in pen, was acceptable under this practice.

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Applying ISBP Publication 681

Paragraph 13 Drafts, transport documents and insurance documents must be dated even if a credit does not expressly so require. A requirement that a document, other than those mentioned above, be dated, may be satisfied by reference in the document to the date of another document forming part of the same presentation (e.g., where a shipping certificate is issued which states date as per bill of lading number xxx or similar terms). Although it is expected that a required certificate or declaration in a separate document be dated, its compliance will depend on the type of certification or declaration that has been requested, its required wording and the wording that appears within it. Whether other documents require dating will depend on the nature and content of the document in question.
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Applying ISBP Publication 681

Documents for which the UCP 600 transport articles do not apply Paragraph 19

Some documents commonly used in relation to the transportation of goods, e.g., Delivery Order, Forwarders Certificate of Receipt, Forwarders Certificate of Shipment, Forwarders Certificate of Transport, Forwarders Cargo Receipt and Mates Receipt do not reflect a contract of carriage and are not transport documents as defined in UCP 600 articles 19 - 25. As such, UCP 600 sub-article 14(c) would not apply to these documents. Therefore, these documents will be examined in the same manner as other documents for which there are no specific provisions in UCP 600, i.e., under sub-article 14(f). In any event, documents must be presented not later than the expiry date for presentation as stated in the credit.

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Applying ISBP Publication 681

Documents for which the UCP 600 transport articles do not apply Paragraph 20

Copies of transport documents are not transport documents for the purpose of UCP 600 articles 19-25 and sub-article 14(c). The UCP 600 transport articles apply where there are original transport documents presented. Where a credit allows for the presentation of a copy transport document rather than an original, the credit must explicitly state the details to be shown. Where copies (non-negotiable) are presented, they need not evidence signature, dates, etc.

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Applying ISBP Publication 681

Issuer of documents and signatures Paragraphs 22, 37 and 40

If a credit indicates that a document is to be issued by a named person or entity, this condition is satisfied if the document appears to be issued by the named person or entity. It may appear to be issued by a named person or entity by use of its letterhead, or, if there is no letterhead, the document appears to have been completed or signed by, or on behalf of, the named person or entity. Even if not stated in the credit, drafts, certificates and declarations by their nature require a signature. Transport documents and insurance documents must be signed in accordance with the provisions of UCP 600. A signature on a company letterhead paper will be taken to be the signature of that company, unless otherwise stated. The company name need not be repeated next to the signature.
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Applying ISBP Publication 681

Paragraph 31 Where an original would not be accepted in lieu of a copy, the credit must prohibit an original, e.g. photocopy of invoice original document not acceptable in lieu of photocopy, or the like. Where a credit calls for a copy of a transport document and indicates the disposal instructions for the original of that transport document, an original transport document will not be acceptable. Paragraph 32 Copies of documents need not be signed.

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Applying ISBP Publication 681

Title of Documents and Combined Documents Paragraph 41

Documents may be titled as called for in the credit, bear a similar title, or be untitled. For example, a credit requirement for a Packing List may also be satisfied by a document containing packing details whether titled Packing Note, Packing and Weight List, etc., or an untitled document. The content of a document must appear to fulfil the function of the required document.
Paragraph 42

Documents listed in a credit should be presented as separate documents. If a credit requires a packing list and a weight list, such requirement will be satisfied by presentation of two separate documents, or by presentation of two original copies of a combined packing and weight list, provided such document states both packing and weight details.
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Applying ISBP Publication 681

Documents should be examined in accordance with international standard banking practice, as stated in the UCP 600 and as articulated in the ISBP. Any rejection of documents should state discrepancies in accordance with UCP 600 article 16. You reject documents because they are discrepant under UCP 600. There is no harm in explaining to another party which ICC Opinion, DOCDEX Decision or paragraph of the ISBP was used to understand how the practices of the UCP were applied.

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