Whether UCP 600 should Provide Definition of B/L as Some Experts Suggest?

A debatable question from a trade finance specialist in Denmark - Kim Christensen. We invite your views. Thank you.

	Subscriber's Opinions or Enquirer's Queries	T.O. Lee's Comments or Responses
1st Episode	Black text Plain Background	Black text Yellow Block
2nd Episode	Teal text Plain Background	Teal text Yellow Block
3rd Episode	Navy text Plain Background	Navy text Yellow Block
4th Episode	Maroon text Plain Background	Maroon text Yellow Block

Dear All,

"Whether B/L should be defined in the UCP 600?"

The 3 new terms and conditions of carriage from the Maersk B/L create great arguments and problems amongst L/C practitioners around the world and some experts suggest that UCP 600 should include a definition for B/L.

Since 30 years ago, I could foresee such problems and to me L/C is not purely a banking thing. Since then, I have been studying most related topics about L/C operations, such as air, sea, surface and multimodal transports, cargo insurance, Incoterms, chartering, commodity trades, frauds, dispute resolution, arbitration, mediation, China trade, plus rules, major legislations and conventions on these subjects. So from my own point of view, this is not a simple "Yes or No" question - "Whether B/L should be defined in the UCP 600?"

Firstly, UCP 500 is only a set of rules to reflect the international standard banking practice. It should not go beyond this boundary. The drafters are MOSTLY bankers who know not too much about the other related topics, such as maritime transport. So it is difficult for the drafting group to come up with a water tight definition about Bs/L, which have so many kinds. In my transport workshop, I have named more than 30 kinds of Bs/L for specific purposes and nature. As I always say: "The more you know, the more you don't know!".

Secondly, take one example, the straight bill of lading, consigned straight to the consignee, not "to order", the USA Carriage of Goods by Sea Act says it is OK for the carrier to release the cargo without production of an original B/L and in fact it works SIMILAR to a sea waybill. But in UK, from some judicial decisions (as I am flying to Paris within 6 hours, I have not the luxury to find out these cases in my private reference library, just trust me!) an original must be produced. So how could the ICC Banking Commission drafting group give a water tight definition of straight B/L that could be applicable for both USA and UK? On this issue, Singapore follows UK but Hong Kong follows USA. So this may be a mission impossible unless we have new "regionalised" UCP that have different versions for different regions. But then, this is not "international" standard banking practice! So even if the ICC Banking Commission asks for the help of the ICC Transport Commission to prepare the definition about B/L, it is still mission impossible.

From my experience involved in maritime disputes and L/C disputes, the only effective way to resolve this problem is to educate the bankers who have the ultimate power to determine discrepancies. If they did not know the basics about B/L, how could they make good determination that are convincing to all parties? If they determine discrepancies of B/L solely based on banking perspectives, it is like cutting bones with a cheese knife. This is the core problem. I understand that in the debate of the issue - "Whether bankers need to know something beyond banking? the L/C specialists or experts are spitted up into two groups, with one group supporting that bankers need to have basic knowledge about non-banking subjects, such as Incoterms 2000 and the other group says: "No, I am a banker and I am not required to have such non-banking knowledge". We have such debates published in the L/C Views and L/C Monitor, if my memory does not fail me.

So in a nutshell, the only effective solution is to request the ICC Banking Commission to organise more L/C related workshops, on transport, cargo insurance, commodity trade, Incoterms, frauds prevention, and the like, to enable the bankers to do their job convincingly and effectively. But then banks say they have limited budget for such trainings.

The above opinions are only from my own perspectives and to find out the truth, I always encourage different opinions and comments to keep us nearer to the real truth.

Now a lightning suddenly strikes my mind. I then realise the profound motive of the late Bernard Wheble in asking Charles del Busto to add one article for the sea waybills in UCP 500. His real intention is now clear.

In 1992 most of the bankers considered that there is no need to add an article in UCP 500 for the sea waybills since this article is almost identical to Article 23 for B/L. In his presentation of UCP 500 in Hong Kong, Charles del Busto then replied that it was due to respect to the insistence of Bernard Wheble, the "father of L/C". At that time I did not realise the wisdom of Mr. Wheble.

Now I know that back in the nineties, he has foresight for those problems mentioned above. It is not possible to provide training on non-banking subjects due to resistance from the banks that claim no budget for such luxury. It is also not possible to define B/L in the UCP for reasons I have given above. So the most effective way, also a money saving way, is to provide a separate article for those "straight" or "not to order" maritime transport documents, under the heading of sea waybills. Mr. Wheble's hidden agenda is to suggest the L/C practitioners to use sea waybills if they do not need "to order" B/L or they intend to consign straight to the consignee. Then Article 24 of UCP 500 rules. For those who wish to have "To order" B/L, refer to Article 23.

I hope Mr. Wheble would agree with my guess if someday he met me in Heaven or the Hell, it all depends! (pardon me, just to add some clean (not according to UCP though) humour for this dry subject!)

I am looking forward to see some of you in Paris on Monday in the ICC Banking Commission meetings and the UCP 500 Revision Consulting Group meeting.

Bon Voyage to those who go to Paris!

T. O.

Sir,

Thanks for sharing such important developments in upcoming versions of UCP.

I would like to endorse your views on insertion of Bs/L definition in UCP-600, as long as ICC can cover all 30+ types of Bs/L with a single definition.

Now, specifically from Maersk B/L, why not ICC Maritime Commission itself monitors or device a procedure to standardized terms & conditions for carriage / freight in order to overcome such issues and counter it for the sake of the stake holders.

As a suggestion, to cover the definition, can't UCP-600 refer the relevant law (i.e., Hague Wisby Rules as to refer the definition of Bs/L to cater the requirements on a broad scale)?

Thanks & regards,
Sohail

Dear Sohail,

ICC Maritime Commission has no authority to make any definition for a B/L. The proper authority should be BIMCO, that is responsible for standardization of all Bs/L and charter parties.

Best regards,

T. O.