Comments on ICC Document 470/1110

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11 September 2008

To: Emily O'Connor, Senior Policy Manager
and Members of Commercial Law and Practice
International Chamber of Commerce (ICC)

Document 470/TA.657 (UCP 600)

I disagree with the opinions of the officers of the ICC Banking Commission on Discrepancy 2 based on following reasons:

In the “Date of Receipt” box of the CMR, handwritten words (“28”) are used to fill up the blank space in the pre-printed text “France... 28...11-2007” and this should not be deemed to be corrections.

In filling the blank space inside the boxes in the CMR, the officers of the ICC Banking Commission imply that typed words need no authentication whilst hand written words need authentication with initials. In fact, handwritten words and typed words should not be treated differently.

In cargo insurance practice, typed words in an insurance document override pre-printed text and handwritten words in the margin override typed words. This makes commercial sense and is recognised by the courts of law.

UCP 600 should respect the transport practice to allow the truck driver to fill in the date of receipt of goods by hand writing in the “date of receipt” box in the CMR.

Document 470/TA.661 (UCP 600)

“Whilst it is legally possible for one bank to accept a draft that is drawn on another, in the context of letter of credit transactions, the nominated bank will negotiate such a draft.”

I refer to the above statement appearing on page 18, in the “Analysis & Conclusion” section, under Question 2. The word “accept” should be replaced with “negotiate” because a draft drawing on the issuing bank cannot be accepted by a nominated bank. If the nominated bank is a nominated accepting bank, the draft should have been drawn on the nominated bank, not on the issuing bank.

Document 470/TA.666 (UCP 600)

I disagree with the opinions of the officers of the ICC Banking Commission on Case D based on following reasons:

In the multimodal transport document (MMTD), the place of receipt box is blank and the port of loading is X Port. Only one vessel name, Vessel C, is shown in the ocean vessel box. The pre-printed text states that the goods are “Received ...for transportation from the place of receipt or port of loading whichever applicable to the place of delivery or port of discharge whichever applicable subject to terms hereof...” So it is obvious from the above data content that the goods must have been loaded on board Vessel C at X Port as declared in the pre-printed text.

The pre-printed text “Received...for transportation from the place of receipt or port of loading whichever applicable...” should mean that if there is no place of receipt shown in the MMTD, the pre-printed text would refer to the port of loading automatically.

Hence asking for an on board notation (OBN) is superfluous in a situation where there is no place of receipt, only port of loading.

Document 470/TA.667 (UCP 600)

I disagree with the opinions of the officers of the ICC Banking Commission based on following reasons:

In the bill of lading, there is only one vessel name “Vessel XX” shown in the ocean vessel box. The port of loading is Hamburg and the port of discharge is Hong Kong. Place of receipt is “Hannover by truck”.

In the same bill of lading, there is pre-printed statement to evidence “shipped on board” with an issuing date.

According to article 20 (a) (ii), on board notation may be indicated by pre-printed wording. So by referring to the data content quoted above as a whole, this bill of lading should have satisfied the provisions of this sub-article.

However, the exact wording of the pre-printed text is not provided. If the pre-printed text states “Shipped on board for transportation...” rather than “Received for shipment...” there is no reason to refuse this bill of lading.

Document 470/TA.669 (UCP 600)

I disagree with the opinions of the officers of the ICC Banking Commission on page 40 in the beginning of “Analysis” section, stating that:

“The general intent behind conditions such as “freight forwarder bills of lading are not acceptable” or “house bills of lading not acceptable” is to require the issuance of a bill of lading by the carrier, albeit that the freight forwarder or agent could sign the bill of lading according to the requirements expressed in sub-article 20 (a) (i).”

My points are:

From my interaction with traders in my consultancy career, the real intent of the traders is to refuse bills of lading issued by a freight forwarder acting as a contracting carrier or as an actual carrier. Traders do not intend to refuse a bill of lading signed by a freight forwarder as agent of the actual carrier, an ocean liner.

Some freight forwarders, particularly those who are not members of the FIATA, may be small companies with no more than three staff and are weak in capital adequacy. They have no solid financial means to meet the heavy financial responsibilities of an actual carrier. In case of heavy claims, they would declare bankruptcy. This is the real intent for traders in refusing freight forwarder's transport documents, whether in the form of bills of lading or air waybills.

To resolve this problem once and for all, the Banking Commission should indicate in the transport articles that only actual carriers are acceptable. Then freight forwarder signing transport documents as a carrier can only mean a contracting carrier. A small freight forwarder cannot play the role of an actual carrier because they do not own or operate vessels or aircrafts. However, the big freight forwarders, like Schenkers, Penalpina, Crown Pacific, and big couriers like DHL and UPS do own or operate a fleet of cargo ships or aircrafts. They also play the role of actual carriers.

To end the dilemma I would suggest the Banking Commission to interpret the UCP 600 transport articles as follows:

Carrier in UCP 600 means only “actual carrier”.

Transport documents issued by FIATA members as freight forwarders or as carriers are deemed to be issued by actual carriers. Going back to history, the ICC Banking Commission in the nineties once endorsed FIATA transport documents for a fee and FIATA combined transport bill of lading was approved by ICC and duly recognised in UCP 400 under article 25 (d).

A “house” transport document means a transport document issued by a contracting carrier backed up by a master transport document issued by an actual carrier.

Document 470/TA.672

For consistency, the above title should add “(UCP 600)” as the credit is subject to UCP 600.

“An issuing bank's undertaking to reimburse a nominated bank is independent of the issuing bank's undertaking to the beneficiary.”

To make the basis of the decision of the officers of the Banking Commission clearer, the above sentence at the end of article 12 (b) should be included in the quoted article in the beginning of the “Analysis” section.

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