Comments on ICC Document 470/1072

Comments on ICC Document 470/1072 of 16 March 2006

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7 April 2006

To: The Chair and Members
Canadian Working Party on the
ICC Commission on Banking Technique and Practice

Dear Members of the CWP,
Below are my comments on ICC Document 470/TA.601, 608 & 610 for discussions in the meeting on 13 April in CBA conference room.
ICC Document 470/TA.601

I disagree with the statement of the ICC Banking Commission Officers in the last paragraph of page 6:

"Finally, pre-printed texts in (boxes of) a document like CMR need not be considered as a requirement to be checked by banks, to ascertain the acceptability of that document under a credit".

If this holds true, then bankers need not also check for the pre-printed words in the boxes like "Consignor/Shipper", "Consignee", "Port of Loading", "Port of Discharge" and the like in a bill of lading. Without checking the pre-printed words in these boxes, it is not possible to determine compliance with regards to consignor/shipper, consignee, port of loading and port of discharge required by the credit.

I think "the face" of the bill of lading should include pre-printed words in these boxes that are in fact part of the data content of the bill of lading.

A more precise response from the ICC Banking Commission Officers should be as follows:

"Although the pre-printed words in the signature box of the CMR does read "Signature and Stamp of the Carrier", absence of a stamp does not constitute a discrepancy, because UCP 500 Article 28 requires only the signature of the carrier for compliance. Stamp is in fact an additional information provided by the carrier but that is not required under this Article.

Under Article 20 (b) of UCP 500, a document may be signed by handwriting, by facsimile signature, by perforated signature, by stamp, by symbol or by any other mechanical or electronic method of authentication. Hence when there is a signature of the carrier in the CMR, the requirement for signature of the carrier is fully fulfilled. A stamp is not necessary. Compliance is based on the UCP 500 provisions, not the specific requirements, if any of the carrier in the transport document that may vary from one carrier to another".

From my view, in fact the pre-printed words "Signature and Stamp of the Carrier" in the CMR are to provide the flexibility for the carrier to sign by signature or by stamp or by both signature and stamp. It does not mean to require a stamp on top of a signature to make the CMR valid. A carrier would try to minimize the signature process as much as possible. For example, in maritime transport, in one shipment, there may be more than 3,000 bills of lading to be signed.

I also disagree with the statement of the ICC Banking Commission Officers in the "Conclusion" part on page 8:

'In box 23, captioned as "Signature and Stamp of the Carrier" only a signature appears. The absence of an indication that the signature is that of the carrier or name and the capacity of the party signing the CMR, would not comply with (b). We find such a document to be discrepant'.

In checking for compliance, the pre-printed words "Signature and Stamp of the Carrier" inside the signature box should be read in context with the signature in the same box. Then the document checker should have known or ought to know that the signature is from the carrier, not its agent. For the same reason, the name of a party appearing in the "Consignee" box of a bill of lading is taken as the Consignee, not its agent. The checking process must be consistent across the boxes in a transport document. The checker cannot use different rules to interpret the boxes in a transport document.

However, in ICC Document 470/TA.608, in their opinions to query No. 8, on page 44, the ICC Banking Commission Officers state:

"If the document is stated to be issued by the manufacturer then that issuing party is the manufacturer. There is no discrepancy and the nominated bank is correct".

In other words the title of the document "PACKING LIST ISSUED BY THE MANUFACTURER" is read in context with the stamp of the beneficiary.

The ICC Banking Commission Officers should have used the same rule in checking for compliance in both Query TA.601 and TA.608.

ICC Document 470/TA.608

I refer to Query No. 10 in which an air waybill (AWB) singed by an agent of the carrier, shows a flight number of another air carrier. This is not a discrepancy.

I would like to add another reason why this is not a discrepancy. In both passenger flights and cargo flights, the air carriers, like maritime carriers, have consortium operations. Under a consortium agreement signed amongst the air carriers, carrier A may take the passengers or cargoes of carrier B and vice versa to avoid unnecessary competition and to save costs in the unpopular routes. In passenger flights, this is also known as code sharing. Passengers holding tickets issued by Air France may be placed on board Delta flights in USA or Canada. Hence I have reasons to believe that the AWB in Query No. 10 is under consortium operations and it is not abnormal to see the flight number of another air carrier to appear in the AWB. This should not be deemed to be a source of discrepancy.

ICC Document 470/TA.610

I disagree with the statement of the ICC Banking Commission Officers in the last paragraph of page 54:

"An insurance document providing coverage from New York to Sovetskaya Gavan is not acceptable".

In fact, the face of the insurance document in this query does not tell the whole story on which cargo insurance under Institute Cargo Clauses (A), (B) or (C) operates.

The statement in the policy "...insured the goods shipped by the vessel XXX from New York USA to Sovetskaya Gavan, Russia" is in fact a description of the main carriage by sea. It has no intent to confine the insurer's liabilities from the port of loading to the port of discharge.

The policy is subject to Institute Cargo Clauses (A), (B) or (C) because the inquirer has not provided whether Institute Cargo Clauses (A), (B) or (C) are the actual clauses. However, this does not matter. The insurance coverage for Institute Cargo Clauses (A), (B) and (C) will be from warehouse to warehouse, or from the place of storage to the place of final destination according to the Clause 8.11 (Transit Clause) that states:

"This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either on delivery to the Consignee or other final warehouse or place of storage at the destination named herein..."

Hence the insurance coverage is in fact from warehouse to warehouse, which is the standard or default coverage for Institute Cargo Clauses (A), (B) and (C) unless there is a specific exclusion clause or rider attached to the policy. But there is no such exclusion clause or rider in this case and hence the insurance policy should be compliant, despite the description of the main carriage by sea in the policy is port-to-port, from New York to Sovetskaya Gavan, Russia.

Bankers should be familiar with insurance trade practices in order to be able to determine compliance in insurance documents confidently and effectively.

If this case were brought to an UK court, the beneficiary should have a good chance to win, before the English Judges who are familiar with cargo insurance trade practices.

Best regards,
T. O.

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