Commission On Banking Technique and Practice
Commission On Banking Technique and Practice
Commission On Banking Technique and Practice
This document is the final version of this paper as produced by the task force
and as it will be voted on in the Commission meeting of 30-31 October. Note
that the vote will take place on the afternoon of 30 October and not on 31
October as in the first provisional agenda sent to you.
Members should compare this version (470/951 rev 4), with the previous version
sent out to you after the spring Banking Commission meeting (470/951 rev 3).
As the authors of this final paper have indicated, they have done their best to
show where the final changes were made, but they have not been able to
produce a blacklined version of the previous paper, since it was heavily
changed and would have been virtually unreadable. The indications of where
changes occurred should be clear in the present paper.
If any member has lost or misplaced the previous version (470/951 rev 3),
please advise Audrey Di Russo at e-mail [email protected] and she will send you
another copy.
Members are also requested to bring all documents to the meeting.
They will NOT be redistributed.
PRELIMINARY CONSIDERATIONS
The Application and Issuance of the Credit
1. The terms of a credit are independent of the underlying transaction even if a
credit expressly refers to that transaction. To avoid unnecessary costs,
delays, and disputes in the examination of documents, however, the
applicant and beneficiary should carefully consider which documents should
be required, by whom they should be produced, and the time frame for
presentation.
2. The applicant bears the risk of any ambiguity in its instructions to issue or
amend a credit. Unless expressly stated otherwise, a request to issue or
amend a credit authorizes an issuer to supplement or develop the terms in a
manner necessary or desirable to permit the use of the credit.
3. The applicant should be aware that the UCP contains Articles such as Articles
13, 20, 21, 23, 24, 26, 27, 28, 39, 40, 46 and 47 that define terms in a
manner that may produce unexpected results unless the applicant fully
acquaints itself with these provisions. For example, a credit requiring
presentation of a marine bill of lading and containing a prohibition against
transhipment will, in most cases, have to exclude UCP 500 sub-Article 23(d)
to make the prohibition against transhipment effective.
4. A credit should not require presentation of documents that are to be issued
and/or countersigned by the applicant. If a credit is issued including such
terms, the beneficiary must either seek amendment or comply with them
and bears the risk of failure to do so.
5. Many of the problems that arise at the examination stage could be avoided or
resolved by careful attention to detail in the underlying transaction, the
credit application, and issuance of the credit as discussed.
GENERAL PRINCIPLES
Issuer of Documents
6. If a credit indicates that a document is to be issued by a named person or
entity, this condition is satisfied if the document appears to be issued by the
named person or entity. It may appear to be issued by a named person or
b) not later than 2 days after does not indicate a period, only a latest
date. If an advice must not be dated prior to a specific date, the credit
must so state.
c) at least 2 days before indicates that something must take place not
later than 2 days before an event. There is no limit as to how early it may
take place.
d) within 2 days of indicates a period 2 days prior to the event until 2 days
after the event.
The term within when used in connection with a date excludes that date in
calculation of the period.
13. Dates may be expressed in different formats, e.g. the 12th of November
2001 could be expressed as 12 Nov 01, 12Nov01, 12.11.2001, 12.11.01,
2001.11.12, 11.12.01, 121101, etc. Provided that the date intended can be
determined from the document or from other documents included in the
presentation, any of these formats are acceptable. To avoid confusion it is
recommended that the name of the month should be used instead of the
number. ICC Opinion R 210.
Title of Documents and Combined Documents
14. Documents may be titled as called for in the credit, bear a similar title, or be
untitled. For example, a credit requirement for a Packing List may also be
satisfied by a document containing packing details whether titled Packing
Note, Packing and Weight List, etc., or an untitled document. The content
of a document must appear to fulfil the function of the required document.
15. Deleted
[New Paragraph] Documents listed in a credit should be presented as separate
documents. If a credit requires a Packing List and a Weight List, such
requirement will be satisfied by presentation of two separate documents, or
by presentation of two original copies of a combined Packing and Weight List,
provided such document states both packing and weight details.
Multiple Pages and Attachments or Riders
16. Unless the credit or a document provides otherwise, pages which are
physically bound together, sequentially numbered or contain internal cross
references, however named or entitled, are to be examined as one
document, even if some of the pages are regarded as an attachment. Where
a document consists of more than one page, it must be possible to
determine that the pages are part of the same document.
17. If a signature and/or endorsement is required to be on a document consisting
of more than one page, the signature is normally placed on the first or last
page of the document, but unless the credit or the document itself indicates
Where an original would not be accepted in lieu of a copy, the credit must
prohibit an original, e.g. photocopy of invoice original document not
acceptable in lieu of photocopy, or the like.
Expressions not defined by UCP
21. Expressions such as shipping documents, stale documents acceptable,
third party documents acceptable, and exporting country should not be
used as they are not defined in UCP. If used in a credit, their meaning should
be made apparent therein. If not, they have the following meaning under
international standard banking practice:
a) shipping documents all documents (not only transport documents),
except drafts, required by the credit.
Deleted
32.
Deleted
33.
Deleted
34.
Deleted
Signatures
35. Even if not stated in the Credit, drafts, certificates and declarations by their
nature require a signature. Transport documents and insurance documents must
be signed in accordance with the provisions of the UCP.
36.
The fact that a document has a box or space for signature does not
necessarily mean that such box or space must be completed with a
signature. For example, banks do not require a signature in the area titled
Signature of shipper or their agent, or similar phrases, commonly found on
transport documents such as Air Waybills or Road Transport Documents. ICC
Opinions R 274, R 288, R 371, R 463. If a document on its face requires a
signature for its validity (e.g. this document is not valid unless signed, or
similar terms), it must be signed.
37.
38.
42. The use of multiple type styles or font sizes or handwriting in the same
document does not, by itself, signify a correction and/or alteration.
43. Where a document contains more than one correction and/or alteration,
either each correction must be authenticated separately or one
authentication must be linked to all corrections in an appropriate way. For
example, if the document shows three corrections numbered 1, 2 and 3, one
statement such as "Correction numbers 1, 2 and 3 above authorized by XXX"
or similar, will satisfy the requirement for authentication.
44.
Deleted
48. Deleted
DRAFTS AND CALCULATION OF MATURITY DATE
Tenor
49. The tenor must be in accordance with the terms of the credit.
a) If a draft is drawn at a tenor other than sight, or other than a certain
period after sight, it must be possible to establish the maturity date from
the data in the draft itself.
b) [former c]As an example of where it is possible to establish a maturity
date from the data in the draft, if a credit calls for drafts at a tenor 60
days after bill of lading date, where the date of the bill of lading is 12 May
2002, the tenor could be indicated on the draft in one of the following
ways:
i.
60 days after bill of lading date 12 May 2002 or,
ii.
60 days after 12 May 2002 or,
iii.
60 days after bill of lading date and elsewhere on the face of the
draft state bill of lading date 12 May 2002, or
iv.
60 days date on a draft dated the same day as the date of the bill
of lading , or
v.
11 July 2002 i.e. 60 days after the bill of lading date.
c) [former d]If the tenor refers to xxx days after the bill of lading date, the
on board date is deemed to be the bill of lading date even if the on board
date is prior to or later than the date of issuance of the bill of lading.
d) [former b]The UCP provides no guidance where the words from and
after are used to determine maturity dates of drafts. Reference to
from and after in the UCP refers solely to date terminology for
periods of shipment. Where the word from is used to establish the
maturity date, international standard banking practice would exclude the
date mentioned, unless the credit specifically provides that from is
considered to include the date mentioned. Therefore, for the purposes of
determining the maturity date of a time draft, the words from and
after have the same effect. Calculation of the maturity commences the
day following the date of the document, shipment, or other event, i.e. 10
days after or from March 1 is March 11.
e) [New Paragraph, formerly part of b] If a credit requires drafts to be
drawn, for example, at 60 days after or from bill of lading date and
permits shipment from a geographical area or region and more than one
on board notation exists a credit requiring shipment from European port
and the bill of lading evidences on board vessel A from Dublin August
16, and on board vessel B from Rotterdam August 18, the draft should
reflect 60 days from the earliest on board date in a European Port, i.e.
August 16.
f) [New Paragraph, formerly part of b] If a credit requires drafts to be
drawn, for example, at 60 days after or from bill of lading date, and more
than one set of bills of lading are presented under one draft, the date of
the last bill of lading will be used for the calculation of the maturity date.
While the examples refer to bill of lading dates, the same principles apply to
all transport documents.
Maturity Date
50. If a draft states a maturity date by using an actual date, the date must
have been calculated in accordance with the requirements of the credit.
51. For drafts drawn at XXX days sight, the maturity date is established as
follows:
a) in the case of complying documents, or in the case of non-complying
documents where the drawee bank has not provided a refusal of
documents, the maturity date will be XXX days after the date of receipt
of documents by the drawee bank.
b) in the case of non-complying documents where the drawee bank has
provided a notice of refusal of documents and subsequent approval, at
the latest XXX days after the date of acceptance of the draft by the
drawee bank. The date of acceptance of the draft must be no later than
the date of approval of the documents.
In all cases the drawee bank must advise the maturity date to the presenter.
The calculation of tenor and maturity dates, as shown above, would also
apply to credits designated as being available by deferred payment., i.e.
where there is no requirement for a draft to be presented by the beneficiary.
Deleted
dates of shipment will be taken for the calculation of any presentation period
and must fall on or before the latest shipment date specified in the credit.
Shipment on more than one vessel is a partial shipment, even if the vessels
leave on the same day for the same destination.
Clean Bills of Lading
94. Clauses or notations on bills of lading which expressly declare a defective
condition of the goods and/or packaging are not acceptable. Clauses or
notations which do not expressly declare a defective condition of the goods
and/or packaging (e.g. packaging may not be sufficient for the sea
voyage), do not constitute a discrepancy. A statement that the packaging
is not sufficient for the sea voyage would not be acceptable.
95. The word clean need not appear on a bill of lading even though the
credit may require a clean on board bill of lading or one marked clean on
board.
96. If the word "clean" appears on a bill of lading and has been deleted, the
bill of lading will not be deemed to be claused or unclean unless it
specifically bears a clause or notation declaring that the goods or packaging
are defective.
Goods Description
97. A goods description in the bill of lading may be shown in general terms not
inconsistent with that stated in the credit.
Corrections and Alterations
98. Corrections and alterations on a bill of lading must be authenticated. Such
authentication must appear to have been made by the carrier, master
(captain), or any of their agents (who may be different from the agent that
may have issued or signed it), provided they are identified as an agent of the
carrier or the master (captain). Corrections and alterations on a bill of lading
signed by a freight forwarder in the capacity of a freight forwarder must be
authenticated by the freight forwarder who signed it.
99. Non-negotiable copies of bills of lading do not need to include any
signature or authentication to any alterations and/or corrections that may
have been made on the original.
Freight and Additional Costs
[New Paragraph] If a credit requires that a bill of lading evidences that freight
has been paid or is payable at destination, the bill of lading must be marked
accordingly.
100.
Applicants and issuing banks should be specific in stating the
requirements of documents to evidence whether freight is to be prepaid or
collected.
101.
If a credit states that costs additional to freight are not acceptable, a
bill of lading must not indicate that charges and/or costs additional to the
freight have been or will be incurred. Such indication may be by express
reference to additional costs or by the use of shipment terms which refer to
costs associated with the loading or unloading of goods such as Free In (FI),
Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A
reference in the transport document to costs which may be levied as a
result of a delay in unloading the goods or after the goods have been
unloaded, e.g. costs covering the late return of containers, are not
considered an indication of additional costs in this context.
Goods Covered by More Than One Bill of Lading
102. If a bill of lading states that the goods in a container are covered by that bill
of lading plus one or more other bills of lading, or words of similar effect,
this means that the entire container is to be surrendered to the consignee
and therefore all bills of lading related to that container must be presented
in order for the container to be released. Such a bill of lading is not
acceptable unless all the bills of lading form part of the same presentation
under the same credit.
115. The word clean need not appear on a charter party bill of lading even
though the credit may require a clean on board charter party bill of lading
or one marked clean on board.
116. If the word "clean" appears on a charter party bill of lading and is deleted,
the charter party bill of lading will not be deemed to be claused or unclean
unless it specifically bears a clause or notation declaring that the goods or
packaging are defective.
Goods Description
117. A goods description in the charter party bills of lading may be shown in
general terms not inconsistent with that stated in the credit.
Corrections and Alterations
118. Corrections and alterations on charter party bills of lading must be
authenticated. Such authentication must appear to have been made by the
owner, master (captain), or any of their agents (who may be different from
the agent that may have issued or signed it), provided they are identified as
an agent of the owner or the master (captain).
119. Non-negotiable copies of charter party bills of lading do not need to
include any signature or authentication to any alterations and/or corrections
that may have been made on the original.
Freight and Additional Costs
120. If a credit requires that a charter party bill of lading evidences that freight
has been paid or is payable at destination, the charter party bill of lading
must be marked accordingly.
121. Applicants and issuing banks should be specific in stating the
requirements of documents to evidence whether freight is to be prepaid or
collected.
122. If a credit states that costs additional to freight are not acceptable, a
charter party bill of lading must not indicate that charges and/or costs
additional to the freight have been or will be incurred. Such indication may
be by express reference to additional costs or by the use of shipment terms
which refer to costs associated with the loading or unloading of goods such
as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out
Stowed (FIOS). A reference in the transport document to costs which may
be levied as a result of a delay in unloading the goods or after the goods
have been unloaded, are not considered an indication of additional costs in
this context.
135. If a credit does not stipulate a Notify Party(ies), the respective field on the
multimodal transport document may be left blank or completed in any
manner.
Transhipment and Partial Shipment
136. In a multimodal transport shipment, transhipment will occur, i.e. the
unloading and reloading of goods from one mode of transport to another
during the course of the journey from the point of taking in charge, dispatch
or loading on board, to the final destination stipulated in the credit. Should
transhipment be prohibited, banks will accept a multimodal transport
document evidencing transhipment having occurred provided the entire
journey is covered by one and the same multimodal transport document
137. If a credit prohibits partial shipments and more than one set of original
multimodal transport documents are presented covering shipment, dispatch
or taking in charge from one or more points of origin (as specifically allowed
or within a given range in the credit), such documents are acceptable
provided that they cover the movement of goods on the same modes of
transport and same journey and are destined for the same destination. In
the event that more than one set of multimodal transport documents are
presented, and incorporate different dates of shipment, dispatch or taking
in charge, the latest of these dates will be taken for the calculation of any
presentation period and must fall on or before any latest date of shipment,
dispatch or taking in charge specified in the credit.
138.Shipment on more than one means of conveyance (more than one truck
(lorry), vessel, aircraft, etc.) is a partial shipment, even if they leave on the
same day for the same destination.
Clean Multimodal Transport Documents
139. Clauses or notations on multimodal transport documents that expressly
declare a defective condition of the goods and/or packaging are not
acceptable. Clauses or notations that do not expressly declare a defective
condition of the goods and/or packaging (e.g. packaging may not be
sufficient for the journey) do not constitute a discrepancy. A statement that
the packaging is not sufficient for the journey would not be acceptable.
140. The word clean need not appear on a multimodal transport document
even though the credit may require a clean on board multimodal transport
document or one marked clean on board.
141. If the word clean appears on a multimodal transport document and has
been deleted, the multimodal transport document will not be deemed to be
claused or unclean unless it specifically bears a clause or notation declaring
that the goods or packaging are defective.
Goods Description
goods on the same aircraft and same flight, and are destined for the same
airport of destination. In the event that more than one air transport
document is presented incorporating different dates of shipment, the latest
of these dates of shipment will be taken for the calculation of any
presentation period and must fall on or before the latest shipment date
specified in the credit.
[New Paragraph] Shipment on more than one aircraft is a partial shipment, even
if the aircraft leave on the same day for the same destination.
Clean Air Transport Documents
163. Clauses or notations on an air transport document which expressly declare
a defective condition of the goods, and/or packaging are not acceptable.
Clauses or notations on the air transport document which do not expressly
declare a defective condition of the goods and/or packaging (e.g.
packaging may not be sufficient for the air journey) does not constitute a
discrepancy. Statements that the packaging is not sufficient for the air
journey would not be acceptable.
164. The word clean need not appear on the air transport document even
though the credit may require a clean air waybill or one marked clean on
board.
165. If the word clean appears on an air transport document and has been
deleted, the air transport document will not be deemed to be claused or
unclean unless it specifically bears a clause or notation declaring that the
goods or packaging are defective.
Goods Description
166. A goods description in an air transport document may be shown in general
terms not inconsistent with that stated in the credit.
Corrections and Alterations
167. Corrections and alterations on air transport documents must be
authenticated. Such authentication must appear to have been made by the
carrier or any of its agents (who may be different from the agent that may
have issued or signed it), provided it is identified as an agent of the carrier.
Corrections and alterations on an air transport document signed by a freight
forwarder in the capacity of freight forwarder must be authenticated by the
freight forwarder who signed it.
168. Copies of air transport documents do not need to include any signature of
the carrier or agent (or shipper even if required by the credit to appear on
the original air transport document), or any authentication to any
alterations and/or corrections that may have been made on the original
Freight and Additional Costs
169. Deleted
[New Paragraph] If a credit requires that an air transport document evidences
that freight has been paid or is payable at destination, the air transport
document must be marked accordingly.
[New Paragraph] Applicants and issuing banks should be specific in stating the
requirements of documents to evidence whether freight is to be prepaid or
collected.
170. If a credit states that costs additional to freight are not acceptable, an air
transport document must not indicate that charges and/or costs additional
to the freight have been or will be incurred. Such indication may be by
express reference to additional costs or by the use of shipment terms that
refer to costs associated with the loading or unloading of goods. A reference
in the transport document to costs which may be levied as a result of a
delay in unloading the goods or after the goods have been unloaded are not
considered an indication of additional costs in this context.
171. Air transport documents often have separate boxes which, by their preprinted headings, indicate that they are for freight charges prepaid and
for freight charges to collect, respectively. A requirement in a credit for an
air transport document to show that freight has been prepaid will be fulfilled
by a statement of the freight charges under the heading Freight Prepaid,
or a similar expression, and a requirement that an air transport document
show that freight has to be collected will be fulfilled by a statement of the
freight charges under the heading Freight to Collect, or a similar
expression.
179. Transport documents which are not documents of title should not be issued
to order or to order of a named party. Even if a credit calls for a
transport document which is not a document of title to be made out to
order or to order of a named party, such a document, showing goods
consigned to that party, without mention of to order or to order of, is
acceptable.
180. If a credit does not stipulate a Notify Party(ies), the respective field on the
transport document may be left blank or completed in any manner.
Partial Shipment
[New Paragraph] Shipment on more than one means of conveyance (more than
one truck (lorry), train, vessel, etc.) is a partial shipment, even if they leave on
the same day for the same destination.
Goods Description
181. A goods description in the transport document may be shown in general
terms not inconsistent with that stated in the credit.
Corrections and Alterations
[New Paragraph] Corrections and alterations on an Article 28 transport
document must be authenticated. Such authentication must appear to have
been made by the carrier, or any one of their named agents, who may be
different from the agent that may have issued or signed it, provided they are
identified as an agent of the carrier.
[New Paragraph] Copies of Article 28 transport documents do not need to
include any signature authentication to any alterations and/or corrections that
may have been made on the original.
Freight and Additional Costs
[New Paragraph] If a credit requires that an Article 28 transport document
evidences that freight has been paid or is payable at destination, the transport
document must be marked accordingly.
[New Paragraph] Applicants and issuing banks should be specific in stating the
requirements of documents to evidence whether freight is to be prepaid or
collected.
INSURANCE DOCUMENTS
Application of Articles 34 36
[New Paragraph] If a credit requires presentation of an insurance document,
Articles 34 through 36 are applicable
Issuers of Insurance Documents
182. Insurance documents must appear on their face to have been issued and
signed by insurance companies or underwriters or their agents. If required,
all originals must appear to have been countersigned.
183. An insurance document is acceptable if issued on an insurance brokers
stationery, provided the insurance document has been signed by the
insurance company or its agent, or by the underwriter or its agent. A broker
may sign as agent for the named insurance company or the named
underwriter.
Risks to be Covered
184. The insurance document must cover the risks defined in the credit. If a
credit is explicit with regard to risks to be covered, there must be no
exclusions referenced in the document with respect to those risks. If a
credit requires all risks coverage, this is satisfied by the presentation of
an insurance document evidencing any all risks clause or notation, even if
it is stated that certain risks are excluded. An insurance document
indicating that it covers Institute Cargo Clauses (A) satisfies a condition in a
credit calling for an all risks clause or notation.
185. Insurance covering the same risk for the same shipment must be covered
under one document unless the insurance documents for partial cover each
clearly reflect, by percentage or otherwise, the value of each insurers cover
and that each insurer will bear their share of the liability severally and
without pre-conditions relating to any other insurance cover that may have
been effected for that shipment. An insurance document that clearly
reflects, by percentage or otherwise, the share of liability that each insurer
will bear is not acceptable unless the co-insurers clearly state their joint
liability, or the leading insurer states it bears 100% of the covered risk.
186. The insurance document must show that risks are covered at least between
the point of shipment, dispatch or taking in charge and the point of
discharge or final destination as required by the credit.
Dates
187. Insurance documents must not bear a date of issuance which is later than
the date of loading on board or dispatch or taking in charge of the goods
(as applicable) at the place stated in the credit, unless it appears from the
insurance document that the cover is effective at the latest from the date of
CERTIFICATE OF ORIGIN
Basic Requirement
194. A requirement for a certificate of origin will be satisfied by the presentation
of a signed, dated document that certifies to the origin of the goods.
Issuers of Certificates of Origin
195. A certificate of origin must be issued by the party stated in the credit.
However, if a credit requires a certificate of origin to be issued by the
beneficiary, the exporter or the manufacturer, a document issued by a
Chamber of Commerce will be deemed acceptable provided it clearly
identifies the beneficiary, the exporter or the manufacturer as the case may
be. If a credit does not state who is to issue the certificate, then a
document issued by any party, including the beneficiary, is acceptable.
196. Deleted [covered in general principles]
197. Deleted [covered in general principles]
Contents
198. The certificate of origin must appear to relate to the invoiced goods. The
goods description in the certificate of origin may be shown in general terms
not inconsistent with that stated in the credit or by any other reference
indicating relation to the goods in a required document.
199. Consignee information, if shown, must not be inconsistent with the
consignee information in the transport document. However, if a credit
requires a transport document to be issued to order, to the order of
shipper, to order of the issuing bank, or consigned to the issuing bank,
the certificate of origin may show the applicant of the credit, or another
party named therein, as consignee. ICC Opinion R 276. If a credit has been
transferred, the name of the first beneficiary as consignee would also be
acceptable.
200. The consignor/exporter shown in the certificate of origin must be either the
shipper stated in the transport document, the manufacturer or the supplier
as evidenced in the credit or other required documents, or the beneficiary
(in the case of a transferred credit the first or second beneficiary).