commission on banking technique and practice opinions of ... · e-mail [email protected] website...

Department of Policy and Business Practices

38 Cours Albert 1er, 75008 Paris, France 26 March 2009/TS/wj Tel +33 (0)1 49 53 28 28 Fax +33 (0)1 49 53 28 59 Document 470/1113rev E-mail [email protected] Website www.iccwbo.org

Commission on Banking Technique and Practice

Opinions of the ICC Banking Commission

Attached are the consolidated Final Opinions that were discussed at the March 2009 Banking Commission meetings that were held in Dubai. Please be advised that Opinion TA684 was approved as originally issued. The following queries were revised: TA 673, 674, 675, 676, 677, 678, 679, 680, 681, 683, 685, 686 and 687. Opinion TA 682 was withdrawn at the meeting.

This ICC working document is provided to you on condition that its contents remain confidential. Distribution is restricted to ICC National Committees and Groups and to ICC members of the Commission on Banking Technique and Practice, designated by ICC National Committees. Reproduction and/or dissemination in any form and by any means are strictly prohibited.



Mrs. Tan Lee Kuan The Association of Banks in Singapore 10 Shenton Way #12-08 MAS Building Singapore 079117 18 March 2009

Subject : Document 470/TA.673rev (UCP 600)

Dear Mrs. Tan,

We refer to our letter dated 22 December 2008. Please find below the opinion of the Banking Commission.

QUOTE

We would like to seek an official opinion from the Banking Commission on the acceptability of insurance documents signed by brokers.

It seems that more and more insurance documents are now signed by brokers. A sample of it is attached for your reference. Sub-article 28 (a) of UCP 600 requires that an insurance document must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies and any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter. With the exception of a few issuing banks, most refuse the document, as brokers are not named in UCP 600 as one of the authorized parties to sign on the insurance document. Those banks which accept the insurance document signed by a broker opine that a broker is also an agent or proxy, or that the ‘broker’ whose signature appears on the document is an employee of the insurance company holding the official designation of ‘broker’ within the company.

In order to avoid any further dispute and to have an international standard practice, we would like to seek an official opinion from the Banking Commission that whether an insurance document issued or signed by a broker is acceptable under international standard banking practice.


– 3 – Document 470/1113rev

ANALYSIS

Sub-article 28 (a) states:

“An insurance document, such as an insurance policy, an insurance certificate or a declaration under an open cover, must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies.

Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter.” CONCLUSION

An insurance document may be issued and/or signed by a broker provided that they indicate that they are acting in the capacity of agent or proxy for an insurance company or underwriter.

Where an individual is an employee of an insurance company and has a title of ‘broker’ they must sign for or on behalf of the insurance company.

Whether the document otherwise complies with the credit and article 28 will depend upon the manner of its completion.

The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above.

The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.

If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.



Neither the ICC nor any of its employees, nor any member of the Banking

Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,

Thierry Senechal Policy Manager Banking Commission



Bill Randle Assistant General Counsel & Foreign Bank Secretary Canadian Bankers Association Box 348, Commerce Court West 199 Bay Street, 30th Floor Toronto, Ontario, Canada M5L 1G2 18 March 2009

Document 470/TA.674rev (UCP 600) Dear Mr. Randle,


QUOTE

On behalf of the Canadian National Committee to the ICC Banking Commission,

we are requesting that the following query about UCP600 be considered by the Commission.

Occasionally, issuing banks extend the maturity date of accepted drafts (or bills of exchange) or deferred payment letters of credit when all of the parties to the letter of credit (nominated and/or confirming bank, issuing/accepting bank, importer and exporter) have agreed to the extension. UCP is silent with respect to such extensions.

Our question is: Do all of the rights and protections of UCP 600 continue to prevail for all parties to the transaction once an extension to maturity date has occurred, as they did with the original acceptance / deferred payment? Is the answer different for an acceptance credit versus a deferred payment credit?

For clarity, the scenario under consideration is one where the extension arises from payment term renegotiations between the exporter and the importer and NOT as a result of an issuing bank's request to refinance the letter of credit. It is



recognized that the latter would constitute a bilateral financial agreement between the issuing and nominated banks.

As an example: issuing / accepting bank contacts the nominated bank with a request to extend the maturity date of an accepted draft from November 1st to December 1st, indicating that the importer (their customer) and exporter (the nominated bank's customer) have agreed to the extension. The nominated bank contacts their client (exporter) who indicates agreement to the extension. The nominated bank agrees to the extension and communicates this to the issuing / accepting bank. In other cases, the request to the nominated bank may come directly from their client (exporter)

Essentially, therefore, we are enquiring about situations where the extension is requested from the confirming bank after the documents have been presented (i.e. in the middle of the payment term allowed in the letter of credit, or shortly before payment date) or, in those cases where the draft is drawn on the confirming bank and it has accepted it and, again, the extension request is presented to the confirming bank after acceptance but prior to the payment date. ANALYSIS

Sub-article 7 (c) states: “An issuing bank undertakes to reimburse a nominated bank that has honoured

or negotiated a complying presentation and forwarded the documents to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank's undertaking to reimburse a nominated bank is independent of the issuing bank’s undertaking to the beneficiary.” CONCLUSION

Whether a replacement draft or new deferred payment undertaking is required will be determined by local law at the place of acceptance or where the deferred payment undertaking is incurred.

If the issuing bank, confirming bank and any bonafide holder other than the confirming bank, agree to the payment term renegotiations that have been determined by the applicant and the beneficiary and no replacement draft or deferred payment undertaking is necessary:



- the draft must be re-accepted to mature on the new agreed maturity date (where the credit is available by acceptance with the confirming bank); or

- a new or amended deferred payment undertaking must be incurred to reflect the new agreed maturity date (where the credit is available by deferred payment with the confirming bank).

By complying with the above, and in line with the definition of honour in article

2, i.e.,

“b. to incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment”; and “c. to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the credit is available by acceptance”,

the obligation of the issuing bank to reimburse the nominated (confirming)

bank, according to sub-article 7 (c), extends to the new agreed maturity date.




Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,



38 Cours Albert 1er, 75008 Paris, France Tel +33 (0)1 49 53 28 28 Fax +33 (0)1 49 53 28 59 26 March 2009/TS/wj E-mail [email protected] Website www.iccwbo.org Document 470/1113rev

Ms. Marlén Sandvik ICC Denmark Boersen 1217 Copenhagen K. Denmark 18 March 2009

Document 470/TA.675rev (UCP 600) Dear Ms. Sandvik,


QUOTE

We kindly ask your official opinion to the following question from one of our

members.

We are seeking the Banking Commission's official Opinion regarding a dispute between the issuing bank and ourselves, as nominated bank, regarding an alleged discrepancy concerning a delivery clause in a bill of lading presented under a documentary credit subject to UCP 600.

The documentary credit requires:

++FULL SET ORIGINAL CLEAN ON BOARD, MARINE BILLS OF LADING MARKED FREIGHT PREPAID AND MADE OUT TO ORDER AND BLANK ENDORSED, MARKED NOTIFY [company S, Country I] STATING THE NAME, TELEPHONE AND FAX NUMBERS OF CARRIER'S AGENT IN [city K]. B/L'S TO EVIDENCE SHIPMENT IN 20' CLOSED CONTAINERS. ++FORWARDERS BILLS OF LADING NOT ACCEPTABLE ++ BILLS OF LADING TO STATE QUOTE 14 DAYS CONTAINER-DETENTION FREE PERIOD AT DESTINATION UNQUOTE. ++ONE SET OF BILLS OF LADING NOT TO COVER MORE THAN 10 CONTAINERS.



++BILLS OF LADING THAT ON THEIR FACE INDICATE THAT GOODS MAY BE RELEASED WITHOUT PRESENTATION OF AN ORIGINAL BILL OF LADING ARE NOT ACCEPTABLE.

Several partial shipments took place and bills of lading were presented.

The bills of lading do not include a separate delivery clause, but did include a general pre-printed wording as indicated below. The wording is indicated just above carrier’s signature:

“SHIPPED, as far as ascertained reasonable means of checking, in apparent good order and condition unless otherwise stated herein, the total number or quantity of Containers or other packages or units indicated in the box entitled “Carrier’s Receipt” for carriage always subject to all Terms and Conditions hereof (INCLUDING ALL THOSE TERMS AND CONDITIONS ON THE REVERSE HEREOF AND THOSE TERMS AND CONDITIONS CONTAINED IN THE CARRIER’S APPLICABLE TARIFF) from the Place of Receipt or the Port of Loading, whichever is applicable, to the Port of Discharge or Place of Delivery, whichever is applicable. When the Place of Receipt box has been completed, any notation on this Bill of Lading of “on board”, “loaded on board” or words to like effect, shall be deemed to be on board the means of transportation performing the carriage from the Place of Receipt to the Port of Loading. Where the bill of lading is non-negotiable, the Carrier may give delivery of the Goods to the named consignee upon reasonable proof of identity and without requiring surrender of an original bill of lading. Where the bill of lading is negotiable, the Merchant is obliged to surrender one original, duly endorsed, in exchange for the Goods. The Carrier accepts a duty of reasonable care to check that any such document which the Merchant surrenders as a bill of lading is genuine and original. If the Carrier complies with this duty, it will be entitled to deliver the Goods against what it reasonably believes to be a genuine and original bill of lading, such delivery discharging the Carrier’s delivery obligations. In accepting this bill of lading, any local customs or privileges to the contrary notwithstanding, the Merchant agrees to be bound by all Terms and Conditions stated herein whether written, printed, stamped or incorporated on the face or the reverse side hereof, as fully as if they were all signed by the Merchant. IN WITNESS WHEREOF the number of original Bills of Lading stated on this side have been signed and wherever one original Bill of Lading has been surrendered any others shall be void.”

The issuing bank has refused the bills of lading due to following discrepancy:



“B/L indicates that goods may be released without presentation of an original B/L”.

In our view the requirement is a negotiable bill of lading and we

maintain that only the pre-printed wording concerning negotiable bills of lading is acceptable. It is clearly indicated that as far as negotiable bills of lading are concerned, the merchant is obliged to surrender one original, duly endorsed, in exchange for the goods.

The phrase in the pre-printed wording concerning non-negotiable bills of lading may be deemed as not stated and disregarded.

We think that the reasons for refusal compared to the presented documents are far too doubtful and speculative. We believe it is imperative that the Banking Commission provides a definitive guidance on this issue.

We would be grateful if you make at statement for documentary credits subject to UCP 600 whether said bill of lading is discrepant or not. ANALYSIS

By a letter, dated 23 October 2008, addressed to the members and observers of the ICC Commission on Banking Technique and Practice, the ICC Commission on Commercial Law and Practice, the ICC Commission on Transport and Logistics, and ICC National Committees and Groups, the Secretary General of the ICC made it clear that no opinion could be given in relation to the issues surrounding bills of lading that contain delivery clauses.

However, this query relates specifically to a question as to whether a condition in a credit stating “bills of lading that on their face indicate that goods may be released without presentation of an original bill of lading are not acceptable” would be applicable to a bill of lading that is issued in negotiable form where the wording of the bill of lading refers to the applicability of a delivery clause in circumstances where it is issued in a non-negotiable or negotiable form.

There was no separate delivery clause stated on the bill of lading. The bill of lading does, however, contain the following wording “Where the bill of lading is non-negotiable, the Carrier may give delivery of the Goods to the named consignee upon reasonable proof of identity and without requiring surrender of an original bill of lading. Where the bill of lading is negotiable, the Merchant is obliged to surrender one original, duly endorsed, in exchange for the Goods.”



The wording appearing on this particular bill of lading, and as quoted under

“QUOTE” commencing with “[W]here the bill of lading is non-negotiable, the carrier …..” is considered to be terms and conditions of carriage and will not be examined according to sub-article 20 (a) (v).

It should be noted that in accordance with the terms and conditions of the credit the bill of lading has been issued in a negotiable form. CONCLUSION

There is no discrepancy for this specific bill of lading.





Yours sincerely,




Mr. Amerigo Gori Segretario Generale ICC Italia Via Barnaba Oriani 34 00197 Roma Italy 18 March 2009

Document 470/TA.676rev (UCP 600) Dear Mr. Gori,

We refer to our letter dated 5 January 2009. Please find below the opinion of the Banking Commission.

QUOTE

Documentary credit issued on 8.7.2008 by a bank in Country A in favour of a

customer of ours for an original amount of USD700,000.00 (reduced with a subsequent amendment to USD350,000.00), with expiry date on 31.8.2008 (postponed with a subsequent amendment to 10.9.2008). The documentary credit stated in field 31D “Place of expiry: [Country I]” and in field 41D “Available with any bank in [Country I], by payment”, The documentary credit was notified to our beneficiary without adding our confirmation, as per the issuing bank’s instructions.

We negotiated these documents as follows: 1st availment on 3.9.2008 for USD 81,819.50 with B/L presented within 21 days at the relevant branch counter; 2nd availment on 3.9.2008 for USD 152,985.00 with B/L presented within 21 days at the relevant branch counter; 3rd availment on 3.9.2008 for USD 40,334.00 with B/L presented within 21 days at the relevant branch counter; 4th availment on 5.9.2008 for USD 107,303.00 with B/L presented within 21 days at the relevant branch counter.



We sent the documents to the issuing bank on the above mentioned dates, stating that “we enclose documents complying with L/C terms and conditions” and on the same dates we sent MT 754 messages specifying “documents received within L/C validity and terms (21 days) ….” and asking for the relevant payment.

On 11.9.2008 we received from the issuing bank a refusal for the four availments via four separate MT734 messages. Those referring to the first, second and fourth availments contained the sole discrepancy “Late presentation”. The one referring to the third availment contained the “Late presentation” discrepancy and an additional one “Credit overdrawn by USD32,441.50”. This was a mistake of the issuing bank because this discrepancy referred to the fourth availment. We informed the bank of the erroneous reference and agreed on the correct one with messages on 18 and 22 October 2008. Therefore, we accepted this LAST discrepancy. We deliberately took the risk of the overdrawn availment on request of our very good client.

On 11.9.2008 and 12.9.2008 we rejected, via MT799 messages, the discrepancy raised stating “… we have declared that as per sub-article 14 (b) documents have been received within L/C validity and terms”.

On 18, 22 and 23.9.2008 we sent MT799 messages asking for the relevant payment.

On 25.9.2008 we received an MT799 message from the issuing bank stating that the discrepancies “haven’t been yet released by the [Country A] party”.

On 26 and 29.9.2008 we sent two further MT799s asking again for payment.

On 30.9.2008, we were informed, by phone, from our representative office in City M, Country A (which every day was pressing for payment both City M and City N offices of the issuing bank) that the latter had reaffirmed the “Late presentation” discrepancy and intended to raise additional discrepancies. We sent another MT 799 message, confirming what we had previously stated and making specific reference to UCP 600 sub-articles 14 (b) and (c), 15 (c), and 16 (c) and (f).

On 6.10.2008 the issuing bank, with another MT799 message, raised additional discrepancies never mentioned before, in addition to the previous one.

On the following day, we rejected once again the “Late presentation” discrepancy as well as the other discrepancies raised after 5 banking days, referring again to both UCP 600 sub-article 16 (c) and to the “Official Opinion of ICC No. R480”. In the meantime, we informed the issuing bank that in case of non-payment



we would, as already declared, report their default to the competent authorities in our country and abroad.

On 22.10.2008 we received a message from the issuing bank where they stated again the additional discrepancies and indicated that “in view of the above we would be returning the documents to you in due course”. We immediately refused this decision as a wrongful consequence of the invalid discrepancy as above.

Please note that in the meantime the applicant and beneficiary agreed about a separate settlement of the fourth availment and therefore our claim to the issuing bank refers now to the first three availments only.

Please note that, up to now, we have not yet received any reply to our request for payment dated 8.10.2008. NATIONAL COMMITTEE ANALYSIS

1) Sub-article 10 (c) states: “…… The beneficiary should give notification of acceptance or rejection of an amendment. If the beneficiary fails to give such notification, a presentation which complies with the credit or to any not accepted amendment will be deemed notification of acceptance by the beneficiary of such amendment. As of that moment the credit will be amended.” The fact that the nominated bank sent the documents to the issuing bank on a date falling within the amended expiry date of the credit inferred that the beneficiary had accepted the amendment and that the amended expiry date had become the actual expiry date of the credit. The credit is correctly amended.

2) Sub-article 6 (a) states: “A credit must state the bank with which it is available or whether it is available with any bank. ……….”. Sub-article 6 (d) (i) states: “A credit must state an expire date for presentation. An expire date stated for honour or negotiation will be deemed to be an expiry date for presentation”. Sub-article 6 (d) (ii) states: “……..The place for presentation under a credit available with any bank is that of any bank. ……….”. As the credit indicated only the expiry date of the credit and there was no indication about an expiry date for presentation, the 10.09.2008 (as postponed with a subsequent amendment) was the proposed new expiry date for presentation. As the credit stated “Place of expiry: [Country I]” and “Available with any bank in [Country I], by payment” the presentation occurred correctly with a [Country I] (nominated) bank within 10.09.2008.



The discrepancy “Late presentation” is groundless.

3) Sub-article 16 (c) states: “When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate it must give a single [emphasis added] notice to the presenter. The notice must state: i) that the bank is refusing to honour or negotiate; and ii) each discrepancy in respect of which the bank refuses to honour or negotiate; and …….”

The issuing bank is not allowed to raise additional discrepancies other than those raised in their first message. Any subsequent message with additional discrepancies communicated to the nominated bank, even within the five banking days after the receiving of documents, will be disregarded by that bank. The only rejection notice that is valid is the first one. In this case the additional discrepancies were raised with messages sent well after the expiry of the fifth working day after the receiving of documents by the issuing bank (i.e. 6 Oct. 2008). Therefore, as per sub-article 16 (c), the “issuing bank is precluded from claiming that the documents do not constitute a complying presentation” on the grounds of those additional discrepancies.

On this matter reference is made to the “ICC Banking Commission Collected Opinions 1995-2001”, ICC Publication No. 632, query R.271, page 170. Note that the wording “single notice” did non appear in UCP 500. It has been inserted in UCP 600 for the express purpose to give effect to the above mentioned opinion, as it referred to a longstanding consolidated practice.

The subsequent discrepancy advice sent by the issuing bank to the nominated bank on 6 October 2008 is invalid and is to be disregarded.

4) For the maximum clarity we wish also to deal with a question which is not part of this query because the discrepancy was “Late presentation” and the related answer has been given under 1, 2, and 3 above. If the wording of the discrepancy “Late presentation” was used by the issuing bank in lieu of “Stale documents” (as it appears from the last messages), the statements of the nominated bank inserted into each negotiation advise (MT754) “Documents in good order received within L/C validity and terms (21 days)” make each presentation compliant with reference to such a term. The longstanding practice of the full reliance of the nominated bank’s statement concerning this aspect, when sending negotiated documents to the issuing bank, is confirmed for a long time by the answer to the query R.480 in ICC Publication No. 632, page 413. Of course, the date of negotiation/sending of documents to the issuing bank has no matter with the determination of a presentation on time. Moreover, nothing prevents the issuing bank from requiring the nominated bank to show evidence of the presentation date.



NATIONAL COMMITTEE CONCLUSION

The discrepancy “Late presentation” is groundless. Additional discrepancies other than those listed in the rejection notice are invalid.

Under UCP 600 article 35, the issuing bank is obliged to reimburse a nominated bank which determines that a presentation is complying whether or not the nominated bank has honoured or negotiated.

The issuing bank must reimburse the first three availments. The claim for the reimbursement of the fourth availment has been withdrawn by the nominated bank because the seller and buyer agreed other arrangements for its settlement. ANALYSIS

There are two main issues to cover in this opinion: (1) the initial discrepancy of late presentation for each of the three drawings (given that the fourth drawing is not part of the query), and (2) the sending of a further refusal notice by the issuing bank. (1) The query states that all three drawings were made within the presentation

period of 21 days after the date of the bills of lading. The individual schedules contained the wording “we enclose documents complying with L/C terms and conditions” confirming that all the terms and conditions, including those relating to the presentation period, had been adhered to. This was also confirmed in a MT754 message.

(2) Sub-article 16 (c) requires that when, as in this case, the issuing bank decides to refuse to honour, it must give a single notice to that effect to the presenter.

Sub-article 16 (d) requires that the notice of refusal be given no later than the

close of the fifth banking day following the day of presentation. That single notice, for each drawing, was contained in the 3 individual refusal notices that were sent on 11 September 2008.

On 6 October 2008, the issuing bank sent an MT799 message raising additional

discrepancies. Not only was this message sent more than five banking days following the day of presentation, it constituted a further refusal that is not permitted under sub-article 16 (c).

The reference to article 35, in the National Committee’s Conclusion, has no impact on the determination of this query as article 35 refers to the events



surrounding the loss of documents in transit which was not the case here. Even if the nominated bank has not negotiated, the issuing bank has given an undertaking to the beneficiary to honour a complying presentation (sub-article 7 (c)). CONCLUSION Based on the facts provided, the issuing bank has no reason to doubt the statement appearing on the schedule or the wording in the MT754 and would not be entitled to refuse due to “late presentation”.

The sending of a further notice of refusal has no effect under article 16 and will be disregarded.

The issuing bank is required to reimburse the nominated bank for the full value of the three drawings covered by this query.





Yours sincerely,




Donald R. Smith Chair, Banking Committee United States Council for International Business 1212 Avenue of the Americas New York, NY 10036-1689 United States 18 March 2009

Document 470/TA.677rev (UCP 600) Dear Mr. Smith,


QUOTE

We received two troubling reports of letters of credit issued by some Country I

banks containing clauses to the effect:

1. “Documents must be correct on first presentation. Correction of documents is not permitted.” 2. “Negotiating bank must certify that documents were correct on first presentation.” 3. “Provided documents on first presentation in strict conformity with the LC terms, you are authorized to reimburse yourselves with …”

It appears the issuing bank is attempting to prohibit the beneficiary from

correcting any discrepancies in their documents and representing them.

Our National Committee believes the use of these or similar clauses to be bad practice and beyond the authority of the issuing bank. Some of our banks have stated their intent to refuse to advise credits containing these or similar clauses.

Are we correct that such clauses are beyond the authority of the issuing bank and without effect on the beneficiary or any nominated bank?



NATIONAL COMMITTEE ANALYSIS

The documents are the property of the presenter (presumably the beneficiary or a party presenting on their behalf) until they are honoured. The documents may be withdrawn by the presenter and corrected and represented until such time as they are honoured or otherwise disposed of in accordance with the presenter’s instructions.

Whilst UCP 600 article 1 permits issuers to vary the rules, the above clauses are beyond the authority of the issuing bank. Such clauses would fundamentally alter the obligations of the issuer and the rights of the beneficiary and place an inappropriate burden on the nominated bank. NATIONAL COMMITTEE CONCLUSION

The use of such clauses, or similar, are considered bad practice for the reasons stated. Banks are discouraged from placing such clauses in their credits. Notwithstanding the content of article 1, an issuing bank has no authority over the documents until such time as they are honoured. Such clauses are without effect. ANALYSIS

It is not for an issuing bank to dictate what a beneficiary or other presenter may or may not do in order to achieve a complying presentation. In the normal course of events, it is within the rights of a presenter to request the return of discrepant documents and have them corrected, where possible. It is also their right to replace discrepant documents with corrected ones. Until the documents are honoured or negotiated they remain the property of the presenter.

It is also not for the issuing bank to request such certificates from the nominated bank in order that reimbursement is effected for any honour or negotiation that has transpired. CONCLUSION

The analysis and conclusion of the national committee is partially agreed.

A condition in a credit that documents may not bear any corrections is one that the beneficiary would have to abide by, unless the credit was subsequently amended to remove the condition, and a nominated bank would be required to refuse documents that contained any corrections.



The other clauses specified in the query represent bad practice and issuing

banks should refrain from including such terms and conditions in their credit.





Yours sincerely,





Document 470/TA.678rev (UCP 600) Dear Mr. Smith,


QUOTE

Question regarding the identification of the carrier.

[Company C] Shipping Container Lines (Country X) Co., Ltd, issue bills of lading on their letterhead as follows: [Company C] Shipping Container Lines (Country X) Co., Ltd and sign them in the following manner: “Sign: [Company C] Shipping Container Lines (Country Y) Co., Ltd (As Agents for the Carrier)

Per:________John Smith__________________________ [Company C] Shipping Container Lines (Country X) Co., Ltd.” The identity of the carrier is not otherwise stated on this side of the document.

On the reverse side of the bill of lading, first line under definition, it identifies [Company C] Shipping Container Lines (Country X) Co., Ltd as the “carrier”.



Is the identity of the carrier to be presumed as [Company C] Shipping Container Lines (Country X) Co., Ltd? Or, must it be further expressly identified on this side of the document? NATIONAL COMMITTEE ANALYSIS & CONCLUSION

Based on the information provided the identity of the party signing the document and the identity of the carrier are not clear. The document is discrepant. ANALYSIS

Sub-article 20 (a)(v) states that banks will not examine the contents of the terms and conditions of carriage and this will include an examination of those terms and conditions to determine the name of the carrier.

It should be noted that the structure of the signing of the bill of lading leaves some doubt as to the capacity in which it has been signed.

The bill of lading shows:

Sign: [Company C] Shipping Container Lines (Country Y) Co., Ltd (As Agents for the Carrier)

Per: :________John Smith__________________________ [Company C] Shipping Container Lines (Country X) Co., Ltd.” Given the indication that the Country Y office is acting as agents for the carrier, it would be expected that they would sign the bill of lading and not the Country X office.

CONCLUSION

The analysis and conclusion of the national committee is agreed in conjunction with the analysis shown above.

The bill of lading does not indicate the name of the carrier in a manner that is required by sub-article 20 (a) (i).







Yours sincerely,





Document 470/TA.679rev (UCP 600) Dear Mr. Smith, We refer to our letter dated 19 December 2009. Please find below the opinion of the Banking Commission.

QUOTE

The credit requires a port to port shipment and [Company C] Shipping Container Lines issue their bills of lading with a pre-printed clause stating: “When the place of receipt of the goods is an inland point and is so named herein, any notation of “on board”, “shipped on board” or words to like effect on this BL, shall be deemed to mean on board the truck, trail car, aircraft or other inland conveyance… ….from the place of receipt of the goods to the port of loading”. Is a separate on board notation required under this bill of lading? NATIONAL COMMITTEE ANALYSIS & CONCLUSION When a credit requires presentation of a transport document covering a port to port movement, bills of lading containing this or similar clauses require a separate on board notation with the vessel name and date and port of loading and this notation prevails over the pre-printed clause. This is consistent with ICC Opinions TA635rev (query3), TA665rev and TA667rev.



ANALYSIS The analysis of the Opinions referred to above include the following wording: A bill of lading is a generic term for a transport document that includes, but is not necessarily limited to, transport by sea from a port of loading to a port of discharge. It is recognized, however, that there will still be occasions when the shipping company or its agent will include reference to a place of receipt or taking in charge that is different from the port of loading. To cover this eventuality, the content of sub-article 20 (a) (ii) reads: “indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:”. The emphasis in this condition is that the document checker must be able to determine that the bill of lading appears to indicate that the shipped on board statement (pre-printed wording or by a separate notation) relates to loading on board the named vessel at the port of loading stated in the credit and not to any pre-carriage of the goods between a place of receipt or taking in charge and the port of loading. Unless it is evident from the bill of lading that the shipped on board statement applies to the vessel and the port of loading, the bill of lading will require an on board notation showing the port of loading and the name of the vessel, even if the goods are loaded on the vessel named in the bill of lading. For this bill of lading, if there is an inland place of receipt shown, it is evident that any on board notation is not in respect of the named vessel that is leaving the stated port of loading. CONCLUSION The analysis and conclusion of the national committee is agreed subject to the following: If the bill of lading evidences an inland place of receipt, the bill of lading will require a dated on board notation bearing the name of the vessel and port of loading stated in the credit, even if the bill of lading is pre-printed “shipped on board in apparent good order and condition ……” or similar. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.



If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,





Document 470/TA.680rev (UCP 600)

Dear Mr. Smith, We refer to our letter dated 19 December 2008. Please find below the opinion of the Banking Commission.

QUOTE

Reference to a clause on the back of the bill of lading (terms and conditions). [Company C] Container Shipping Lines issue bills of lading with a pre-printed clause in the “Received for Shipment” area with the following statement regarding the requirement to surrender an original: “One original bill of lading should be surrendered, except clause 22 paragraph 6, in exchange for delivery of the shipment. Signed by the consignee or duly endorsed by the holder in due course.” The reverse of the bill of lading does not contain clause 22 paragraph 6. When such language or reference appears, is a bank required to read the terms and conditions of carriage which appear on the reverse of the transport document in order to understand the information contained in the received for shipment or shipped on board area? NATIONAL COMMITTEE ANALYSIS ICC Opinion R575, which was submitted in respect of a UCP 500 sub-article 23 (a)(v) query, states in the Analysis & Conclusion, “Reference to specific clauses, by number or otherwise, within the terms and conditions listed on the reverse, does not



compel the bank to review such clauses to establish compliance of the document with the credit terms and conditions.” NATIONAL COMMITTEE CONCLUSION UCP 600 sub-article 20 (a) (v) explicitly states “Contents of terms and conditions of carriage will not be examined.” Reference to specific clauses, by number or otherwise, within the terms and conditions listed on the reverse, does not compel the bank to review such clauses to establish compliance of the document with the credit terms and conditions. ANALYSIS & CONCLUSION The answer to the question is no. The bill of lading referred to clause 22, paragraph 6, which should have appeared in the terms and conditions of carriage. UCP 600 sub-article 20 (a) (v) states that the contents of the terms and conditions of carriage will not be examined. The fact that clause 22 paragraph 6 did not appear within this bill of lading does not impact the conclusion given. The response given in Official Opinion R.575 would also apply to this query. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.




Yours sincerely,





Document 470/TA.681rev (UCP 600) Dear Mr. Smith, We refer to our letter dated 19 December 2008. Please find below the opinion of the Banking Commission.

QUOTE Is a description of the goods required to appear on the bill of lading? [Company C] Container Shipping Lines issue bills of lading with a pre-printed clause in the “Received for Shipment” area with the following statement regarding the description of the goods: “Which description the carrier has no reasonable means of checking and is not part of the BL” (emphasis added). As this states that the description of the goods is not part of the bill of lading, is this document acceptable: 1. if there is no description contained in this area? 2. if the description appears to be in conflict with the description in other stipulated documents? NATIONAL COMMITTEE ANALYSIS UCP600 sub-article 14 (e) states: “In documents other than the commercial invoice, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit.”



UCP600 sub-article 20 (a)(ii) contains a requirement that the bill of lading “indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit.” NATIONAL COMMITTEE CONCLUSION A description of the goods must appear on a bill of lading subject to article 20. The description may be in general terms not in conflict with the description in the credit. ANALYSIS It is general shipping practice that the carrier will not take responsibility for the description of goods that is shown on the bill of lading. Wording such as “said to contain”, “shippers load and count”, “particulars furnished by the shipper, carrier not responsible” or similar, are common features of bills of lading. The term and condition - “Which description the carrier has no reasonable means of checking and is not part of the BL” is a similar form of wording. Although sub-article 20 (a) (ii) refers to “indicate that the goods have been shipped on board …..” it does not imply that a description of goods is to appear. CONCLUSION The UCP does not require a goods description to appear on any document other than the invoice (sub-article 14 (e) refers). However, it is transport industry practice that a form of description will appear and that description should not conflict with the description in the credit. The wording quoted on the bill of lading i.e., “and is not part of the BL” is seen as being similar to terms quoted in article 26 i.e., ‘shipper’s load and count’ and ‘said by shipper to contain’. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.




Yours sincerely,




Mrs. Yeliz Geriş ICC Turkey - ICC Türkiye Milli Komitesi Executive Director / Müdür V. Atatürk Bulvarı, No. 149 Bakanlıklar 06640 Ankara, Turkey 18 March 2009

Document 470/TA.683rev (UCP 600) Dear Mrs. Geris, We refer to our letter dated 5 January 2009. Please find below the opinion of the officers Banking Commission.

QUOTE One of our members has submitted the following query regarding application of sub-article 22 (b) of UCP 600. Our Analysis and Conclusion are given thereafter for your perusal. Sub-article 22 (b) of the UCP 600 states “A bank will not examine charter party contracts, even if they are required to be presented by the terms of the credit.” There has been a case where the credit called for presentation of a CP B/L and the respective charter party contract. Our document checker observed, upon presentation of these two separate documents, that the date appearing at the top of the CP contract and the general information for the voyage details, vessel and owner names appearing at the very beginning of the CP contract did not match with those stated in the CP B/L presented.

a) Can such simple observation constitute a discrepancy?

b) Should the expression “respective” be seen as a credit term compelling a checker in making sure that both documents are related to each other, at least by comparing the major details?



NATIONAL COMMITTEE ANALYSIS AND CONCLUSION The issues surrounding the query to be determined are whether the two documents presented under the credit, namely the CP B/L and the respective CP contract can be seen as containing conflicting data for the purposes of sub-article 14 (d) and whether a simple observation of the major details can be considered as “examining” the CP contract for the purposes of sub-article 22 (b). According to the facts provided, a simple observation of a conflicting date or of any of the major details appearing at the very beginning of the CP contract would not seem to be “examining the CP contract” for the purposes of sub-article 22 (b) whilst further reading into its terms and conditions would seem as “examining” the same. Therefore, in these circumstances, a document checker, prompted by the credit term “respective”, cannot turn a ‘blind eye’ and will be in his/her right to raise at least one of the issues among the conflicting data as an anomaly to be raised as a discrepancy. This would not seem as not abiding by sub-article 22 (b). It could be further stated that the absence of the expression “respective” would make no difference in reaching an identical conclusion since the intention, i.e., the implied coherence between the two documents would not be any different from the use of the expression ‘respective’. ANALYSIS The analysis and conclusion of the National Committee is not agreed. Sub-article 22 (b) draws no distinction between how a requirement for a charter party contract may be described in a credit. The rule is that a bank will not examine a charter party contract, even if required as a stipulated document under the credit. CONCLUSION There are no grounds for refusal of the documents under UCP or the terms of the credit. A requirement for the presentation of the ‘respective’ charter party contract does not modify or exclude sub-article 22 (b). The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.




Yours sincerely,




Mrs. Yeliz Geriş ICC Turkey - ICC Türkiye Milli Komitesi Executive Director / Müdür V. Atatürk Bulvarı, No. 149 Bakanlıklar 06640 Ankara, Turkey 18 March 2009

Document 470/TA.684 final unrevised (UCP 600) Dear Mrs. Geris, We refer to our letter dated 5 January 2009. Please find below the opinion of the Banking Commission.

QUOTE

One of our members has submitted to us the following query regarding application of the signing requirements of UCP transport articles. Our Analysis and Conclusion are given thereafter for your perusal. In some transport documents there exist pre-printed statements, other than those in relation to the ‘Shipped’, ‘Received’ or ‘Taken in charge’ positions which, once the document is issued, may not match with superimposed statements. For example, a pre-printed statement reads “Signed for the Master” and the document appears to be signed, by means of a superimposed notation, by a named agent as agent for a named carrier or the pre-printed statement reads “As agent for the carrier’ and the document appears to be signed by the carrier identified as the carrier, again by means of a super-imposed notation or stamp. We wish to know whether such mismatching between pre-printed and superimposed statements are to be seen as conflicting data or the superimposed notations shall be seen as overriding the pre-printed ones for the simple reason that superimposed or added data evidences the actual or final position taken by the issuer, as of the date of issuance.



NATIONAL COMMITTEE ANALYSIS AND CONCLUSION The query refers to transport documents bearing, by design, pre-printed statements for purposes of convenience at the time of their issuance. We would state that pre-printed statements in relation to the issuing/signing parties must be examined in such a manner that the intention behind their presence in the document should not create ambiguity towards determination of compliance with the credit terms and the UCP transport articles. For example, ICC Opinion R.354 includes a case where a named agent signs under the pre-printed statement reading “Signed for the Master / for the Carrier, as agents”. It is evident that the original intention behind this pre-printed wording is that one of the two options is to be deleted at the time of issuance. However when the issuer fails to do that it creates an ambiguity as to the capacity in which it signs, hence making such issuance unacceptable under the UCP. In regard to the examples given in the query, the original intention behind the pre-printed statements would seem to be overridden by the superimposed ones which are to be evidence of the actual or final position taken by the issuer/signer of the document as of the date of issuance. In other words, the issuer/signer, by completing the document by means of superimposed statements, preempts the originally intended function of any pre-printed statement. Therefore, determination towards compliance should be based on the actual and final position taken by the issuer/signer by means of the superimposed statement it used, as of the date of issuance, unless the position creates an ambiguity similar to that observed in the case of the opinion mentioned above. ANALYSIS & CONCLUSION A superimposed stamp or other form of notation that provides evidence of the name and capacity of the party signing the transport document will supersede any pre-printed wording that may imply a different form of signing for that bill of lading. Provided the manner of signing the transport document meets the requirements of the respective transport article, the document will be acceptable. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.




Yours sincerely,





Document 470/TA.685rev (UCP 600) Dear Ms. Sandvik, We refer to our letter dated 5 January 2009. Please find below the opinion of the officers of the Banking Commission.

QUOTE We kindly ask your official opinion to the following question.

Issue: Goods description on documents other than the invoice – “Rose, A- Grade” not stated on the Health Certificate

On 9.9.08 we received and advised a documentary credit subject to UCP 600 issued by Bank P, Country K. The following documents were required:

• Signed commercial Invoice in 3 copies • Packing List in 3 copies • Original Health Certificate…. • Full set of Insurance Policy …. • Full set of Bills of Lading … • Other document (s) ( if any)

There was no special requirement in respect of goods description to be stated on these documents. The credit stated the following under field SWIFT 45A (Description of goods):



+HS No. 0297.14-1020 +Fresh Frozen Chicken Wing (Rose, A-Grade) +Packing: 2KG x 8Bags / carton +Quantity: 72MT x USD…… +Total amount USD …….. CIF City B, Country K (Terms of price) CIF (Place of Terms of Price) City B Port +(Country of origin) Denmark On 30.9.08, 6.10.08 and 14.10.08 our client presented three complete sets of documents. We examined the documents and found them in compliance with the credit. The first of these three sets was duly paid by the issuing bank. (“Rose A-Grade” was not stated on the Certificate of Health pertaining to this first presentation.) On 20.10.08 and 23.10.08 the issuing bank refused presentation 2 and 3 stating the following discrepancy: “The Certificate of Health not show A-Grade”. The Invoice, Insurance Policy, Bill of Lading and Packing List stated, among other details, “Fresh Frozen Chicken Wing (Rose, A-grade). “Fresh Frozen Chicken Wing” was stated on each of the presented Certificates of Health, as description of the goods. One of the two Certificates of Health stated the following as additional information placed at the bottom of the document (Rose, A-Grade), HS no. 0207.14-1020 Packing: 2kg x 8 bags/carton Credit no. A1234567BC98765 The other Certificate of Health did not show “Rose, A-Grade” We protested strongly towards the issuing bank via several swift messages (MT799) as well as by a separate letter sent by courier, addressed to the General Manager of City S Business Operations. In addition, we referred the case to the issuing bank’s head office by two letters sent by courier. We drew the bank’s attention to UCP 600 sub-article 14(e) which reads: “In documents other than the commercial invoice, the description of the goods, services or performances, if stated, may be in general terms not conflicting with their description in the credit”. Our communication to the issuing included the following:



…..“There is really no conflict. Your refusal is completely unjustified and not acceptable to us. The document would have been contradictory if it had shown for instance quote Rose B-Grade unquote. But certainly not contradictory because it is silent on this point. Therefore if applicant has had the intention that the Certificate of Health should indicate specific information, the credit should have named such details specifically. Since this is not the case in this credit we insist on immediate payment.” …. The issuing bank maintained the refusals of presentations 2 and 3 despite our protests. Please let us have your opinion on whether you endorse our views. ANALYSIS Sub-article 14 (e) states “In documents other than the commercial invoice, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit.” There is no requirement in UCP for the Certificate of Health to bear a description of the goods that corresponds with that given in the credit, or for any goods description that is shown to contain details such as grading, specifications or quality. From the text of the query it would seem that there was no requirement in the credit for the Certificates of Health to contain reference to ‘Rose, A-Grade”. Sub-article 14 (f) is quite clear in stating that absent any required data content, the document will be accepted as presented provided it fulfils the function of the document and otherwise complies with sub-article 14 (d). The absence of reference to ‘Rose, A-Grade” on a Certificate of Health, despite being quoted on other stipulated documents, does not create a conflict as envisaged by sub-article 14 (d). It would seem, absent any refusal for this reason, that the Certificates of Health otherwise fulfilled the function of the document requested. It is noted that one of the Certificates of Health did make reference to “Rose, A-Grade” and the issuing bank still refused for absence of that data. Sub-article 14 (f) states “If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).”



It is noted that the H.S. number was mistyped on one of the Health Certificates. Banks should avoid incorporating a condition “Other documents (if any)” without being specific as to the document(s) required and, where appropriate, the name of the issuer and the required data content. CONCLUSION The Certificates of Health are compliant with the credit and the UCP. There is no discrepancy for either presentation. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,





Document 470/TA.686rev (UCP 600) Dear Ms. Sandvik, We refer to our letter dated 5 January 2009. Please find below the opinion of the Banking Commission.

QUOTE We advised an L/C issued by a Country C Bank to a Danish beneficiary. Under ‘Documents Required’ the L/C states: +copy of label printed both in English and Chinese The L/C was issued in English. When examining the document we noted that one of the boxes on the document stated: “under 2 kg per piece”. This was in accordance with other documents, the document itself and the credit as far as the English text goes. We are unable to read Chinese. When presented to the issuing bank the documents were refused, stating the following discrepancy: Wrong translation in copy label about size After consulting a Chinese speaking person we were informed that the Chinese text reads “above 2 kg per piece” We would appreciate to have the opinion of the Banking Commission.



ANALYSIS The letter of credit was issued in English and required as one of the stipulated documents “copy of label printed both in English and Chinese”. English was the acceptable language to both the issuing bank and the nominated bank. Chinese, whilst an acceptable and understood language of the issuer, would not be a language that was acceptable or understood by the nominated bank if required to be adopted in the determination of compliance of a document. By requiring the copy of the label to be in both languages, the principal language for the examination of documents by the nominated bank and issuing bank would be English, in line with the language of the credit. The nominated bank would be entitled to accept the Chinese version on an “as presented” basis without regard to its proper and consistent translation. Where a credit requires a document to be issued in more than one language, the nominated bank would be advised to inform the issuing bank of the language that can be examined for compliance. CONCLUSION There is no discrepancy. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission’s officers based on the facts under “QUOTE” above. They do not necessarily reflect the opinion of the ICC Banking Commission until the Banking Commission renders its approval or disapproval of these opinion(s) at the next scheduled meeting. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion.




Yours sincerely,




Donald R. Smith Chair, Banking Committee United States Council for International Business 1212 Avenue of the Americas, New York, NY 10036-1689 United States 18 March 2009

Document 470/TA.687rev (UCP 600) Dear Mr. Smith, We refer to our letter dated 5 January 2009. Please find below the opinion of the Banking Commission. QUOTE

The alleged discrepancies below were the only discrepancy cited in each presentation, by the issuing bank:

“1. Insurance cert. No. xxxxxxxxxxx shows the amount USD 102,762.02 not covering 110 pct of invoice value USD93,420.02. The correct insurance amount should be at least USD102,762.022 which must not be rounded down from 3 places of decimals.

2. Insurance cert. No. yyyyyyyyyyy shows the amount USD 18,880.32 not covering 110 pct of invoice value USD 17,163.93. The correct insurance amount should be at least USD18,880.323 which must not be rounded down from 3 places of decimals.

Pls refer to UCP 600 sub art 28F and ICC opinion R468.”

NOTE: The amount of the letter of credit is shown in two decimal places and the terms and conditions of the credit do not mention the insurance coverage amount calculation methodology.



NATIONAL COMMITTEE ANALYSIS

ICC Opinion R468 does not address this issue.

UCP 600 sub-article 28 (f) states, in part: “(i) The insurance document must indicate the amount of insurance coverage and be in the same currency as the credit.

(ii) A requirement in the credit for insurance coverage to be for a percentage of the value of the goods, of the invoice value or similar is deemed to be the minimum amount of coverage required.

If there is no indication in the credit of the insurance coverage required, the amount of insurance coverage must be at least 110% of the CIF or CIP value of the goods.”

It is not possible to pay a fraction of the smallest unit of currency.

International standard banking practice is to calculate to 2 decimal places.

NATIONAL COMMITTEE CONCLUSION

This is not a discrepancy.

ANALYSIS Although ICC Opinion R.468 refers to the fact that the insurance document must be issued for a minimum of 110% of the CIF or CIP value, it does not address the issues raised in the refusal of the issuing bank i.e., whether a calculation should be made to three decimal places. It is insurance industry practice that insurance documents will evidence coverage to a maximum of two decimal places. This practice recognizes that in the event of a claim the insurance company or their agent will not be in a position to effect payment that would include a currency unit that went to a third decimal point. The minimum calculation in the examples shown would be: Invoice value USD93,420.02 + 10% i.e., USD9,342.00 = USD102,762.02 and Invoice value USD17,163.93 + 10% i.e., USD1,716.39 = USD18,880.32



CONCLUSION There is no discrepancy in respect of either presentation. While it is recognized that some currencies i.e., BHD, KWD, OMR and TND are handled and quoted to three decimal places, for the purposes of determination of compliance of an insurance document calculation to two decimal places represents international standard banking practice. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under “QUOTE” above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

Yours sincerely,
