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Comments to "ICC Guide |
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Comments to "ICC Guide |
Disclaimer
- The names of the parties, as well as the data and information in the cases stated below, have been sanitized in order to protect the identity of the parties involved. The complexities of the cases have also been simplified to facilitate easy understanding of the key issues involved.
- Our expert's opinions do not necessarily reflect the views of the ICC or the ICC Commission on Banking Technique and Practice. No legal imputation should be attached to any of the contents of the cases and no legal responsibility is accepted for any errors, omissions or misleading statements or opinions caused by negligence or otherwise. Our expert's opinions are given for your reference only and you should not rely upon or act on our opinions, of which we are not held liable. You should consult your legal counsel or other experts for their opinions in your specific cases.
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2nd February 2000
Mr. Lakshman Y. Wickremeratne
England
Dear Mr. Wickremeratne,
Comments to "ICC Guide to Collection Operations for the ICC Uniform Rules for Collections (URC 522), ICC Publication No. 561"
I enjoy reading the captioned book written by you and would like to provide the following comments for your consideration:
- Page 34 "Shipping terms: responsibility for costs, insurance and freight"
The statement
"The buyer's/importer's responsibility commences from the agreed destination, and in a sense, the goods are in the "seller's warehouse" during the course of carriage up to the agreed destination" should be better reworded as
"the buyer/importer's responsibility commences from the moment the goods are loaded on board passing the ship's rails, and in a sense, the goods are in the "buyer's warehouse" during the course of carriage up to the agreed destination".
Otherwise your statement appears to be not matching the break point in risk and cost as stipulated in Incoterms 1990 or 2000 regarding FOB, CFR or CIF.
- Page 36 "Case-of-need"
The meaning of "case-of-need" would be more clear to a layman if you had identified the role of the "case-of-need" and stated that it is the seller's/exporter's representative in the buyer's/importer's country, when this term first appears in your publication.
- Page 40 "documents seen in collections"
Four kinds of documents are given and all highlighted with bold types, namely, financial documents, commercial documents, insurance documents and transport documents. This would have guided readers to think that commercial documents do not include insurance documents and transport documents, which is against the stipulation of URC 522 sub Article 2 (b) (2) that states:
"Commercial documents" means invoices, transport documents, documents of title or other similar documents, or any other documents whatsoever, not being financial documents".
For clarity, you should have clarified that commercial documents also include insurance documents and transport documents.
- Page 41 "C) A period after a fixed date"
By giving an example of "30 days after the bill of lading date" and to share more practical experience with your readers, I suggest you to point out the risk of asking for payment "30 days after the bill of lading date". In one of the dispute cases I have handled, the bill of lading was a "received for shipment" bill of lading bearing an on board date 3 days after the issuing date, then parties had disputes as which date should be the bill of lading date, the on board date (according to UCP 500 Article 23) or the issuing date.
- Page 44 "Example of Commercial Invoice"
The box "Vessel/flight no. and date" should be more professionally named as "Vessel and voyage No./flight No. and date". A vessel name without voyage No. is not specific enough and incomplete. It should have identified a particular voyage/sailing, particularly when the same vessel has regular scheduled sailings for the same voyage.
- Page 46 "Packing lists"
Important data content such as "shipping marks" "assortments" (for example in gentleman's shirts, white, 100% south sea cotton, long sleeves, soft collar, etc) are missing in the data content of the packing list. It is also important to point out that there should be no price in a packing list, which is the major difference with an invoice.
- Page 51 "Whatever the documents used, it should have the following characteristics:"
The requirement that "The cover should be effective at least from the date the journey starts" is not necessary because of the following reasons.
The insurance cover becomes effective automatically from the moment that the goods leave the seller's warehouse for the purpose of commencement of the carriage to the buyer's named destination. In fact, the effective date of an insurance document is governed by the "Transit Clause" under the "Duration" section of:
Clause No. 8.1 in Institute Cargo Clauses (A), (B) or (C);
Clause No. 5.1 in the Institute Cargo Clauses (Air), Institute War Clauses (Cargo) & Institute Strikes Clauses (Cargo);
Clause No. 3.1 in Institute War Clauses (Air Cargo) & Institute Strikes Clauses (Air Cargo); and
Clause No. 4 in Institute War Clauses (sending by Post).
The "Transit Clause" is worded as follows:
"This insurance attaches (becomes effective) from the time the goods (subject-matter insured) leaves the warehouse, or place of storage at the place named herein (premises) for (the purpose of) the commencement (beginning) of the transit (transport or carriage), continues during the ordinary (regular) course (procedure or route) of transit and terminates (becomes ineffective) either...or...".
Please note that the words in bracket shown above are added for better understanding and are not part of the original text.
From the wording of the "Transit Clause", we can see that the insurance document is in fact effective as from the time the first leg of carriage (the "pre-carriage" at place/point of delivery/receipt in Incoterms 2000) commences, for example when the truck carrying the goods stowed in a container starts its journey at the place of receipt. That means the insurance document is effective from a time which is even earlier than the shipped on board date.
Therefore, if an insurance document can provide on its face the linkage to the goods described in the related transport document such as a B/L, without any inconsistency, the goods would be automatically held covered by the insurance document and it also satisfies the requirement that "it appears from the insurance document that the cover is effective at the latest from the date of loading on board or dispatch or taking in charge of the goods" as stipulated in UCP 500 Article 34 (e) despite that the insurance document is issued later than the shipped on board date and there is no effective date of the insurance document stated on its face.
Other data and information that may establish the linkage with the related B/L are container numbers, shipping marks and numbers, vessel name, voyage number, sailing date, port of loading, port of discharge, the L/C No. and the like.
It is not practical, and also not advisable, for the insurer to indicate the effective date in the insurance document due to following reasons:
- The effective date is governed by the time of commencement of the first leg of carriage as stipulated in the "Transit Clause", which the shipper, the carrier or the insurer cannot control or pre-assign.
- Some cargoes cannot be loaded on a rainy day and the insurer cannot ascertain in advance which day is not a rainy day.
- There are other variables that may effect the time of commencement of the first leg of carriage, for example, engine breakdown, strikes, storms, and other Act of God perils.
- Otherwise there would be no flexibility in cargo handling, which is important in multimodal transport to achieve the objective of moving cargoes safely, speedily and cost effectively from one inland point to another.
- If the cargoes are to be transported one day earlier than the specified effective date on the insurance document (if it is so stipulated in the insurance document), the freight forwarder and the shipper may run the risk of transporting the cargoes without effective insurance coverage.
Therefore, it is not a practice for an insurer to state on an insurance document its effective date, which cannot be pre-determined, and also for reasons as stated above.
Nevertheless some bankers and traders may think that the insurance would be effective as from the issuing date of the insurance document, which is not true.
- Page 52 "Example of Insurance certificate"
The small print in the Royal Insurance (Global) Ltd. states that:
"Notwithstanding the description of the voyage stated herein, provided the goods are at risk of the Assured this insurance shall attach from the time of leaving the warehouse, premises or place of storage in the interior"
It is not reflecting completely the true spirit of "transit clause" in the "Duration" section in an insurance document that specifies that the insurance cover would become effective only if the goods leave the seller's warehouse solely for the purpose of commencement of the carriage. If the goods leave the warehouse for other purposes, such as warehouse shifting, re-packing, modifications, then the insurance cover would not be effective. These wordings are also inconsistent with the Institute terms and conditions mentioned in other parts of the insurance documents and may lead to disputes.
- Page 54 "Payment methods compared"
Under "charter party bill of lading" in the box "contract of carriage" the wording "subject to charter party agreement" is unclear. A more precise wording should be "the charter party itself, rather than the charter party bill of lading, is the contract of carriage".
- Page 55 "Type of delivery"
Under air transport documents, air waybill, road waybill, truck waybill, parcel post receipt and courier, the content in the box "type of delivery" should be more clearly worded as "delivered to consignee/addressee against proof of identity" rather than "delivered to (named) consignee/addressee".
I must congratulate you for a very successful publication. It is written in simple language and easily understood by an average trader. It should be a very good companion for the trading community.
By the way would you mind to advise me of your email address? I hope you would give some comments to articles in my website http://www.tolee.com.
I look forward to your early response.
As the Chinese New Year (5th February 2000) is approaching, may I wish you
Gong Xi Fa Cai(Mandarin version of "Kung Hei Fat Choy" in Cantonese)
Yours sincerely,
for and on behalf of
T. O. Lee Consultants Ltd.
T. O. Lee
Managing Director
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