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UCP 500 Articles 13 to 49
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UCP 500 Articles 13 to 49
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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.
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11 September 2003
To: Members of the Consulting Group
UCP 500 Revision
ICC Banking Commission
ParisHello Members,
ID 13 (Article 13)
To reflect market practice to allow printing of BL by the shipper on line.
Some forwarders do the documentation for the shippers/beneficiaries and UCP X00 should accommodate this market practice.
YES. Some legislations have the estoppel concept and some don't. UCP, as standardised rules, should adhere to the concept that each presentation is separate, and UCP needs to be consistent with ISP98 Rule 3.07. So for clarity UCP X00 should include this.
PERHAPS. "On the face" is similar to "apparent (compliance)" and goes with the word "appear". Better explain this in the "Commentary of UCP X00" sold separately after introduction of UCP X00.
YES. Banks in Asia have the practice to call the shipping companies to verify the authenticity of BsL. For example, banks in Middle East have the practice to dial M (Captain Mukundan of ICC Commercial Crime Bureau) in case of doubt. The famous Solo case was uncovered in this way. UCP X00 should reflect this practice as long as reasonable time and without delay requirements are met. "Risk management" and "documents only" concepts have to be balanced to prevent DC frauds that are so common these days.
YES. It is impossible to list out what is acceptable and what is not acceptable in each kind of document, such as FDA Certificates, Fumigation Certificates and other very technical certificates. Nevertheless, we may safely set a general rule in UCP X00 that acceptability depends on whether or not the document satisfies the function of that document, a key concept as stated in ISBP 645 Paragraph 43.
NO. Since the nominated bank has no irrevocable payment obligations, the existing Article 14 (e) sanction should not apply to it. So better leave this to a court to decide. A few of my clients do sue the nominated banks for negligence and failure to exercise due diligence.
NO. Only wills, trust deeds and other very important documents are initialled on each page to avoid frauds. There is no such need for BsL and certificates.
YES. Encourage ISO format
YES. If the document checker can determine "facial" compliance based on his information database, common sense, general knowledge about the trade/customer and function of that document, then it is not a non-documentary condition even if no document is called for to meet certain conditions.
For example, a DC calling for (1) containerised MMT shipment (2) CIP Hong Kong can be reflected in a MMTD showing freight prepaid and container Nos. There is no need to call for a certificate to such effect.
YES. According to an old English case Parsons v. New Zealand Shipping Co., in which Romer L. J. adjudicated that shipping marks is not part of the description of goods within the meaning of s. 3 (of COGSA UK). This has to be written in the UCP to end arguments.
YES. In the Middle East, due to hot weather (40+ Celsius) in summer time, banks close at noon but some key bills department staff members still stay behind to complete their work. Are these banking hours? UCP X00 needs to clarify, as there is such dispute already. Those countries that have the practice of afternoon nap have the same problem.
YES. One of the functions of UCP X00 is to reflect latest market practice and give some guidelines to end disputes. So UCP X00 should include this. If one cannot stop a malpractice, better control it. Not every DC practitioner has CDCS qualification, for example the beneficiary and the applicant.
YES. In Hong Kong, there are "long" and "short" Saturdays, during which time a staff member working in the first weekend will take a rest in the second weekend. That means for every Saturday only 50% of the staff members is working. Is this a full banking day (present ICC definition), a half banking day (no one working after lunch time) or a quarter banking day (50% staff members working only for half a day)?
In Hong Kong some banks are open on Saturday but Japanese banks are all closed. So for banking day, which view should be considered? Based on an individual bank or considering the banking industry as a whole?
ID 14 (Article 14)
YES. These hot issues appearing in litigations should be specified in UCP X00 to end disputes. For example, there is no stipulation in UCP 500 that discrepancies must be notified all at one time and no instalments are allowed in sending the key contents of a refusal notice, although these concepts are reflected in the ICC opinions and some legal cases.
ID 21 (Article 21)
YES, YES, YES. My reasons are:
(1) Incoterms is now a subject included in CDCS examination. Otherwise please remove Incoterms from CDCS requirements since bankers need not know Incoterms.
(2) Some DCs use Incoterms. If Incoterms is not understood by a document checker, then it is not possible to determine compliance.
(3) This is also inconsistent with the CDCS scope of basic knowledge required by a banker.
(4) Incoterms is another ICC Rules used in DCs. If URR 525, ISP98, eUCP, ISBP 645 are all recognised, why we have to discriminate Incoterms?
(5) For a DC asking for CIF, on what basis we would reject a BL showing freight collect?
YES. The generalised rule is whether the data content meets the function of that document as stated in ISBP 645 Paragraph 43?
YES. How to examine FCT, FCR, Cargo Receipt (a standard document required in local DC in China trade) etc.
YES. This problem in certificate of origin (C/O) can be resolved by clarifying in UCP X00 that transport terms should not be used in non-transport documents. If they are used, then "consignee", a transport term used in a non-transport document (e.g. C/O or invoice), would be interpreted as the "buyer".
YES. To the extent that it satisfies the function of that document as stated in ISBP 645 Paragraph 43.
ID 23 (Article 23)
YES. The master (captain) signs in the capacity of the highest commander of a cargo ship. He is not signing as a person. So he only needs to indicate his capacity or authority. There is no need to give his name. The BL is not a marriage certificate. This rule applies to the agent as well. This is a maritime law issue and the BIMCO should be consulted as BIMCO, not FIATA, is the authority to approve all standard forms of BsL (including charter party BsL).
YES. My reasons are:
(1) A carrier would not wish the shippers to know that he does not own the cargo ship, to create a negative image. So if a charter party is mentioned (in however manner) in a BL, it should be a charter party BL.
(2) To save costs and to avoid confusions, a carrier would like to use one form of BL to cover all his shipments, whether carried on his own ship or on a ship under a charter party. So he would not want to indicate a charter party on his BL if the chartered ship operates as a liner (not a tramp).
YES. There is a need for presenting an Internet BL against an eUCP DC that is also subject to UCP automatically. Better consult also ICC Transport Commission.
YES. This is for the good purpose of arranging speedy, low cost and safe transport, especially for perishable goods that cannot wait for the original cargo ship to become seaworthy and cargoworthy again after repairs done in a dockyard. If one calls for an ambulance after a heart attack, would he insist to seat there, waiting for fixing the ambulance van and refuse to take a taxi instead? This is particularly so in a MMTD where speed, low cost and safety are the prime parameters of MMT services.
YES. If one insists that the on board notation must refer to the ocean vessel, then at the time the BL is issued, the DC may run the risk of expiry as DCs are often received late and many shipments are made the last minute.
ID 33 (Article 33)
YES. Please clarify THC (Terminal Handling Charges), a hot argument amongst parties that the Incoterms 2000 cannot resolve. I have already presented this problem through Professor Charles Debattista to ICC Incoterms 2000 Committee. Please do some follow-ups with them.
ID 34 (Article 34)
YES. Please include insurance "consultant" as well. A consultant appears to be more independent than a broker.
YES. Please consult the Insurance Commission for the effective date of cargo insurance, not based on the issuing date (as some document checkers think) but according to "commencement of transit" as per Article 5.1, also known as the "Transit Clause" in all Institute Cargo Clauses (A) (B) & (C).
ID 37 (Article 37)
YES. For those big buyers, such as Wal Mart, K Mart, etc. the office that places the order, that opens the DC, that receives the goods, may be all different. Similar remarks also apply to a giant seller in some trades.
YES. Perhaps, function of a document will tell, according to ISBP Paragraph 43.
YES, YES, YES. My reasons are:
(1) Incoterms is now a subject included in CDCS examination. Otherwise please remove Incoterms from CDCS requirements since bankers need not know Incoterms.
(2) Some DCs use Incoterms. If Incoterms is not understood by a document checker, then it is not possible to determine compliance.
(3) This is also inconsistent with the CDCS scope of basic knowledge required by a banker.
(4) Incoterms is another ICC Rules used in DCs. If URR 525, ISP98, eUCP, ISBP 645 are all recognised, why we have to discriminate Incoterms?
(5) For a DC asking for CIF, on what basis we would reject a BL showing freight collect?
ID 45 (Article 45)
Change to banking or business based on new naming of parties.
ID 48 (Article 48)
YES. Please include also change in currency by request of parties but without using amendments as some banks did.
"inconsistency" based on the fact that data may be different in substituted documents.
YES. There is no stipulation in UCP 500 that a confirmed DC being transferred is still a confirmed DC.
ID 49 (Article 49)
YES & NO. No deletion as assignment of proceeds is also used in some countries, as a way of financing.
Other Issues:
Syndication / Participation
YES.
(1) Since non-banks can also issue DC, I can anticipate that some localised non-banks, not known outside their countries, may issue large amount DCs through syndication with international banks to increase the acceptance of their DCs. Some non-banks ask for advices done by banks for the same reason, although this may not be the only reason. So UCP X00 should consider the future trend.
(2) It is important to stipulate that in advising a non-bank DC, a bank needs to make such clarification on its advice letter/form.
(3) Make rules to cover a bank advising, confirming, transferring and discounting/forfaiting a non-bank DC,
(4) Make rules to cover a non-bank advising, confirming, transferring and discounting/forfaiting a bank DC, if this is allowed in the DC.
T. O. Lee
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