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TRADE SERVICES UPDATE

Volume 13, Issue 5, September October 2011
From the editor

Welcome to yet another issue of the newsletter. Once again it is filled with discussions by the country correspondents. I guess the whole area of trade finance is built upon its ability to discuss matters in a compassionate way. In October one of the main 'forums' for such discussions will take place. I am of course referring to the next meeting of the ICC Banking Commission, which will be held in Beijing on the 26 and 27 of October. One item on the agenda is draft opinions. This time there are a total of eleven opinions up for discussion. The topics vary considerably, from disclaimer texts in a certificate to 'sanctions.' The latter is referred to in my article 'International Standard Sanction Practice,' which you will find in this issue. More than half the queries (six) were submitted by Denmark (hmmm); the other ones were submitted by the Czech Republic, India, Netherlands, Pakistan, and Turkey. By the way this is the first time the opinions have been drafted by the three 'new' technical advisers: Ma Shen (China), Nicole Keller (Germany), and Pavel Andrle (Czech Republic). In my opinion they have done a great job! Again there is the desire on the part of the ICC to 'expand' their topics and therefore a number of panel discussions have been set up. The headlines of these include: INNOVATIONS IN MULTIBANKING AND INTEGRATED SOLUTIONS. HOW BANKERS SHOULD EFFECTIVELY STRATEGIZE IN THE POSTCRISIS REGULATORY ENVIRONMENT THE BIG SHIFTS BUSINESS OUTLOOK FOR TRADE IN ASIA: RISE AND RISE? IMPACT OF THE RMB CROSSBORDER SETTLEMENT ON INTERNATIONAL TRADE AND EXPERIENCE IN CURRENCY INTERNATIONALIZATION THE WAY FORWARD
Last but not least the ongoing projects of the banking commission will be discussed. According to the agenda, the BPO Project will be made public at the meeting. There is a working group (SWIFT/ICC) already working on new rules for BPOs (Bank Payment Obligation). We look forward to seeing the first draft So all in all, there is a full agenda for the Beijing meeting. I look forward to going there, and hope to see many of you there.
Kim Sindberg Editor in Chief Trade Services Update info@lcmonitor.com
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URL: www.lcmonitor.com E-mail: info@lcmonitor.com Tel: +1 416 661 8520

Editorial Board:
Editor in Chief: Kim Sindberg Assistant Editor: Zahoor N. Dattu Executive Editors: Jacob Katsman & Nick Pachnev Country Editors: Austria, Karl Mayrl, Erste Bank der oesterreichischen Sparkassen AG Australia and New Zealand, Hari Janakiraman, Australia and New Zealand Banking Group Ltd. Bahrain, Pradeep Taneja, Arab Banking Corporation BSC Bangladesh, Shahriar Masum, Mutual Trust Bank Ltd Belgium, Emile Rummens, KBC Bank NV Canada, Vincent Barboza, RBC Financial Group China, Sheilar Shaffer (Shi Xiaoling), Agricultural Bank of China Czech Republic, Pavel Andrle, Banking Commission of ICC Denm ark, Jakob Ingerslev, Nykredit Bank Estonia, Age Valgepea, Swedbank Estonia Germany, Markus Wohlgeschaffen, UniCredit Group India, Rupnarayan Bose Director of the Institute of Bank Studies Indonesia, Saul Daniel Rumeser, Iradat Konsultan Iran, Hamid Farrokhi, Bank Tejarat, Tehran - Iran Iraq,Prasad Gadwal, Consultant, Trade Finance, Trade Bank of Iraq, Baghdad Ireland, Vincent O'Brien, The Electronic Business School International Israel, Sarah Younger, Bank Leumi Le- Israel B.M Malaysia, Tang Seng Fatt, EON Bank Berhad Netherlands, Johan Bergamin, ING Bank Nigeria, Ajakaiye Hedgar, Zenith Bank Group Pakistan, Ahmir Mansoor, MCB Bank Ltd. Rom ania, Bogdan Ilie, Romanian Commercial Bank Saudi Arabia, Abdulkader A. Bazara, Samba Financial Group Singapore, Soh Chee Seng, DCTrade Consultants Spain, Xavier Fornt, Professor at High School for International Trade South Korea, Chang-Soon Thomas Song, Korea Exchange Bank Sweden, Fredrik Lundberg, Consultant Switzerland, Daniel Devahive, UBS AG Turkey, Ali Polat, Turkiye Finans Katilim Bankasi U.A.E.,Laxmanan Sankaran, Commercial Bank of Dubai Ukraine, Lyudmyla Yeremenko, Public JSC Kreditprombank U.S.A.,Glenn D Ransier, American Express Bank Vietnam, Nguyen Huu Duc, Vietcombank Danang Legal Editors: Robert M. Parson, Reed Smith LLP U.K. Robert M. Rosenblith, Attorney at Law, U.S.A. George F. Chandler III, Hill Rivkins & Hayden, U.S.A. Contributing Editors: Heinz Hertl, LC Trainer, Austria Christopher Gregory, BBK, Bahrain T.O. Lee, T.O. Lee Consultants Ltd., Canada Radek Dob, esk spoitelna, Czech Republic Mohammad Sohail Hussain, Abu Dhabi Islamic Bank, Pakistan Jee Meng Chen, Ernst & Young, Singapore Alan C.Y. Liu, EnTie Commercial Bank, Taiwan Hasan Apaydin, HSBC BANK A.S. Turkey Ron Wells, BarrettWells Credit Research, U.K. Gleb Rysanov, U.A.J.V. Trais, Ukraine Danielle Austin, LC Consultant, U.S.A. Peter Deisenbeck, UniCreditBank AG, U.S.A, Design & Layout: Mabel Keung Copy Editor: Frances Mundy
In This Issue:
People The Editorial Board Expands FEATURES International Standard Sanction Practice By Kim Sindberg Kim Sindberg offers his suggestions on what he refers to as International Standard Sanction Practice
UCP 600 REVISITED UCP 600 Article by Article (article 26) DISCUSSION CORNER: Should Negotiating Banks Check Metal Commodity Prices under the SBLC Subject to the UCP?
Goods Description
Contract of Carriage in a Bill of Lading
As Agents of the Vessel on Behalf of the Master
Press Release SWIFT and ICC Banking Commission collaborate on enhanced rules and tools for Trade Finance
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Trade Services Update is published bi-monthly by Continental Publishing. Views expressed herein are solely the views of the authors of each article and do not necessarily reflect the official positions of their employers or the organizations with which they are associated. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Copyright 2011 by Continental Publishing. All rights reserved. No part of this journal may be reproduced in any form, by microfilm, xerography, or otherwise, or incorporated into any information retrieval system, without the written permission of the publisher.
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The Editorial Board Expands

It is my pleasure to announce a number of appointments to the editorial board. Mr. Hamid Farrokhi As Country Editor for Iran See bio at: http://tradeservicesupdate.com/editor_hamid Mr. Mohammad Sohail Hussain As Contributing Editor See bio at: http://tradeservicesupdate.com/editor_sohail Mr. Fredrik Lundberg As Country Editor for Sweden See bio at: http://tradeservicesupdate.com/editor_fredrik
Best regards Kim Sindberg
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International Standard Sanction Practice

By Kim Sindberg Kim Christensen is Vice President and Technical Trade Finance Adviser at Nordea Trade Finance Bio: http://tradeservicesupdate.com/editor_kim
There are a few issues in the trade finance area that seem impossible to 'crack.' One of these, which is 'hot' right now, is the issue of how to deal with existing sanctions against named persons, companies, commodities, and countries. The sanctions are expressed in various ways; in programs, resolutions, or laws. In order to make the sanctions operational, the so-called sanction lists are made available. These are lists that include the names of the parties, or even ocean vessels, that are sanctioned. The best-known sanctions list is the OFAC SDN list issued by the U.S. Department of Treasury. While this is a U.S. list, similar lists are also issued by international bodies like the European Community or the United Nations Security Council. Banks and other parties are compelled to comply with the sanctions in accordance with the applicable national law or regulation in the jurisdictions in which they operate. The issue has been addressed by the ICC in the document 'Guidance Paper on the Use of Sanction Clauses for Trade Related Products (e.g., Letters of Credit, Documentary Collections, and Guarantees). Subject to ICC Rules,1 but a recent query submitted to the ICC Banking Commission reveals that this issue is indeed alive and kicking and by no means resolved. The query is up for discussion at the meeting of the ICC Banking Commission at the end of October 2011. Therefore, the text available when this article was written is not the final one. Thus this article is not an analysis of Draft Opinion TA752 (as it is numbered) but springs from a statement taken from it. The statement reads: 'International rules of practice do not address how sanctions should be treated or their consequences under the rules.' This is no doubt true, but it is my firm view that the rules should strive to establish some sort of practice. Right now this issue is like 'The Wild West.' There is no common view, and cases where sanctions are called for are handled in an immature way. A sober International Standard Sanction Practice could include that: A banks obligation under a documentary credit and under sanctions are by nature two different matters. The fact that there are sanctions in force that prohibit a bank from fulfilling its obligation under a documentary credit does not change the fact that such bank is obligated vis--vis the UCP 600. If there are
ICC Document No.470/1129 rev 26 March 2010

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sanctions in force the bank may be prohibited to from fulfilling its obligation under the documentary credit. Sanctions are legal requirements; the UCP is a contractual requirement. Legal requirements will always override the contractual requirement. The fact that a documentary credit transaction indicates a person, company, commodity, or country that appears on a sanction list does not in itself mean that an issuing/confirming bank is prohibited from fulfilling its obligation under the documentary credit. A bank should only refuse to honour its obligation under a documentary credit where there are sanctions in force actually prohibiting that bank from honouring its obligation. When a bank refuses to honour its obligation under a documentary credit with reference to sanctions it should provide sufficient proof to the presenter. As a general rule a nominated bank that has acted pursuant to its nomination should be protected, just as is the case where the issuing bank is prevented from paying due to an injunction / stop payment order received from a court. In addition it seems relevant to address the sanction clauses that a number of banks include in their documentary credits. These come in all kind of forms and shapes and (of course) this text is important in the outcome of a case. For Draft Opinion TA752 there is a sanction clause added by the confirming bank that is identical to the one mentioned in the ICC Document regarding sanctions (referred to above), namely, the one found in 3.3: [Abank] complies with the international sanction laws and regulations issued by the United States of America, the European Union, and the United Nations (as well as local laws and regulations applicable to the issuing branch) and in furtherance of those laws and regulations, [A bank] has adopted policies that in some cases go beyond the requirements of applicable laws and regulations. Therefore [the bank] undertakes no obligation to make any payment under, or otherwise to implement, this letter of credit (including but not limited to processing documents or advising the letter of credit), if there is involvement by any person (natural, corporate, or governmental) listed in the USA, EU, UN, or local sanctions lists, or any involvement by or nexus with Cuba, Sudan, Iran, or Myanmar, or any of their governmental agencies.' This is indeed a problematic sanction clause as it indicates that the bank may refuse to pay based on its own 'policies that in some cases go beyond the requirements of applicable laws and regulations.' This means that the beneficiary has a really difficult case, much more difficult than had it merely been a discussion regarding the EU Regulation. Beneficiaries that present documents under a documentary credit with a sanction clause that wide should be aware of the (uncontrollable) potential risk. Put another way, in this case the beneficiary faces a higher risk compared with a documentary credit that does not include a sanction clause, or one that plainly states the regulations that the bank operates subject to, and nothing more than that. This underlines the fact expressed in the ICC document regarding sanctions that: 'A sanction clause should not bring into question the banks commitment under a transaction to which it relates.'
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Sanctions are indeed a troublesome area, but for trade finance, the most troubling is the banks handling of this issue in terms of both their wide sanction clauses and their acts when a name in the transaction appear on a sanction list. One may hope that in time this area will mature.
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UCP 600 Article by Article (article 26)

Following the tradition of the newsletter Trade Services Update we provide article-by-article comments on the UCP 600. The next one up for discussion is article 26. 'On Deck,' 'Shippers Load and Count,' 'Said by Shipper to Contain,' and 'Charges Additional to Freight' The article includes issues that were addressed in UCP 500 articles 31 and 33(d). By nature it covers three different issues. Compared with the UCP 500, the article only includes minor changes. 1. On Deck It is still the case that a transport document: Must not indicate that the goods will be loaded on deck, but it is acceptable that the transport document indicates that the goods may be loaded on deck. In many ways this is an odd article. First, because the majority of goods are shipped above deck (just take a look at todays container vessels). Second, because of the second part of the article, which indicates that it is acceptable that the transport document indicate that the goods may be shipped on deck. The idea is clearly to capture the standard terms and conditions, e.g., in bills of lading. In any case it is important to note this article especially in Charter Party Bills of Lading where it is not uncommon to state that the goods are shipped on deck. In such cases it is important that the LC permits this. 2. 'Shippers Load and Count' / Said by Shipper to Contain' The articles makes it clear that such 'general' statements are acceptable. The provisions must be read in context with article 27: Clean Transport Documents. which indicates that a 'specific' statement expressly declaring a defective condition of the goods or their packaging is NOT acceptable. 3. 'Charges Additional to Freight' The provision is a simplified version of UCP 500, article 33(d), which indicates that a transport document may bear a reference to, charges additional to the freight. This provision should be read in context with ISBP paragraphs 89, 113, 133, and 155, which deal with the situation where the LC states that costs additional to freight are not acceptable.
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Should Negotiating Banks Check Metal Commodity Prices under the SBLC Subject to the UCP?
A debate among the country correspondents.
Question: We all know that metal commodity prices fluctuate every minute on the exchange (e.g., see copper CU on the London Metal Exchange LME) . When a commercial contract provides for the continuous supply of copper during a whole year, with a monthly supply scheme of xxx MT per month, it is common practice that such supplies are paid by monthly invoices calculated (by the exporter) on average prices of CU on the LME during the previous month. Other methods of calculation also exist but that is not the issue here. Please find below a price clause in a SBLC subject to the UCP 600 Price: LME + 153 USD PMT
LME fixation: An average of the CU Grade A prices cash seller and settlement for the month of delivery, published on the LME. Monthly deliveries shall be invoiced on a provisional LME, what shall be an average for the month before contractual month of delivery. The question is: should banks check the prices mentioned by beneficiaries on their invoices? My view is that, unless the credit explicitly instructs the nominated bank to verify the price, we are not obliged to do so. Banks are normally not able to check this because the LME is an external and very specialized source. As long as the invoice corresponds with the wording of the credit, and the LC amount is not overdrawn, we feel safe. However, in an actual case, the issuing bank refuses to honour our claim under the SBLC accompanied with a copy of the unpaid invoices, based on following discrepancy: Commercial invoice does not show the month for which the LME was calculated. What is your opinion on such a rejection? And in general, what is the role and responsibility of the nominated bank regarding checking the reality of the prices mentioned on the invoices? Answer from Czech Republic: In fact, I guess you could have also asked a different question arising out of the issuing bank's refusal, namely: Was the month for which the LME was calculated required to be written on the invoice? Starting with your question, you may refer to the DOCDEX 244 decision on a similar matter (the credit in question was documentary and covered crude oil with the price based on Platts, but it makes little difference). The panel decided that in that particular case the banks were not required to check the Platts quotations, because the price formula was not expressly required by the credit to be checked. I guess your case is similar (at least unless there is an express condition in your credit strictly requiring
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that the price calculation must be verified). The answer to the second (my) question, in my opinion, should be NO. Regardless of the possible answer to the first question, there appears to be no indication in your query to the effect that the month for which the LME was calculated was required to appear on invoice. (In fact, the month in question should be ascertained from the transport document, but even that is questionable the price formula speaks about the month of delivery, not the month of shipment.) Consequently, in my opinion the said discrepancy is invalid. Radek Dob Answer from Bahrain: I fully agree with Dobas! Pradeep Taneja Answer from Spain: I agree with the other colleagues. The invoice is acceptable. Xavier Fornt Answer from Belgium: Dear Radek, Pradeep, and Xavier The credit did not require that the related month had to appear on the invoice; the invoices were worded exactly as required in the credit. So we all agree that such a rejection is invalid As the supplies had to be spread for xx MT per month and as indeed the monthly average copper price is different each month, we can assume that is was the intention or supposition of the applicant or IB that the month concerned would be mentioned on the invoice(s) but when checking documents under a credit there cannot be interpretations or assumptions. Your suggestion that the month of delivery could be deduced from the shipping document is indeed correct. I overlooked this. However, as we do not need to look up the average monthly price on the LME (see above), it is not relevant to me when checking the claim. Emile Rummens Answer from USA: I've seen this question raised on more than one occasion. Issuing banks could end the discussion by clearly stating that: The LC should state: Invoices must certify that the price is calculated at XXX and also whether or not they expect the nominated bank, if any, or themselves, to review the pricing. They could also protect themselves by including something in their reimbursement agreements as to whether or not they will be responsible for reviewing the pricing on LCs such as these. This should avoid the question of review by making it clear that the beneficiary is to certify the price. I've discussed this issue with many bankers and they all have different views. I am unsure what would happen in a court case but I presume it would depend on the exact LC wording. Radak raised the DOCDEX case where the decision was based on the LC's wording. I generally believe that as an independent undertaking an LC stands on the four corner principal and it is the issuer who is responsible for everything said within the LC undertaking. LC rules prescribe that an LC is separate and distinct from any other contract on which it may be based. Because it stands alone, the clearer the
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LC is, the less chance for a misunderstanding to occur. Remember that, while not obligated to do so, the ICC always encourages advising/confirming/nominated banks to ask questions of the issuer upon advising to ensure a common understanding is established upfront. Glenn Ransier Answer from UK: I agree that price verifications should not form part of a bank's remit while examining documents, unless of course (although it should be discouraged) the LC is worded such that it requires the presentation of the reference tool/report. In any case, banks are not expected to conduct detailed mathematical calculations (paragraph 24 of the ISBP). However, a dialogue and clarification with the issuing bank prior to presentation should in most case, resolve doubts or false expectations as to what would or would not be acceptable. Failing this, if a price clause is mentioned, my view is that the invoice should quote such a clause verbatim, in addition to the good's description. I'm not sure whether in the given case, the price clause was in fact quoted in full, but if it had been, I doubt that there would have been any grounds for refusal, because, in this case, the inclusion of the price clause on the invoice would have become a statement of fact (i.e., that the price has been calculated on the basis of the month of delivery), without requiring the month to be expressly stated or inferred. To refute this, the issuing bank whould have to assert that the statement (contained in the price clause) is either false, or not conclusive for the purpose of determining that the price has been calculated on the basis of the month of delivery. I doubt that this would withstand scrutiny in a court of law. Abrar Ahmed Answer from Belgium: To avoid any doubt, the wording on the invoices concerning the price reflected exactly what was mentioned in the credit. My question was twofold : 1) Should we, as bankers, check whether the price per MT used by the beneficiary indeed reflects the real LME average price? (We did NOT check this, so the price used could have been for example, twice the real LME- price if the beneficiary had wanted to cheat.). 2) The SBLC covered during one year all monthly shipments of xxx MT, but on the invoices which month the price related to was not mentioned? So for the shipment of February, the beneficiary could have possibly used the LME- price of last September. My opinion is that such a refusal is unjustified because nowhere in the credit was it required that the month had to be mentioned on the invoice. If I understand all the comments properly, and if there are no counter-arguments, I think we all agree that the rejection was invalid Emile Rummens Answer from India: I would interpret the condition in the credit, Monthly deliveries shall be invoiced on the provisional LME, which shall be an average for the month before the contractual month of delivery, as a nondocumentary condition. Therefore, the invoice is not discrepant. To the question, should banks check the prices mentioned by beneficiaries on their invoices? I would take recourse to article 5 of the UCP 600. Flowing from this article, even if such a condition / requirement is indeed stated in the credit (regarding the price, the month, or both), as a examining
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banker I would still term the condition as non-documentary, unless and until the credit followed up such a requirement (in the credit) by naming the document(s) to be presented in support/evidence thereof, and if possible, its issuer and data content. Failing which, it would remain a non-documentary condition and the examining banks would have no responsibility regarding it. My submission, therefore, is that the rejection has no substance whatsoever. Rupnarayan Bose Answer from Switzerland: If the DC specifies a formula, it must be checked, otherwise no. But in both cases it is a good idea to check the prices because beneficiaries can make mistakes in the invoice and it would be a pity to send a incorrect invoice to the issuing bank, especially these days. Daniel Devahive Answer from USA: Hi Daniel, That's what makes this question a perpetual and reoccurring one. The underlying question is should banks check? If the invoice certifies the pricing, by what UCP principle(s) should banks examine this and/or refuse it? Because of the four corners principle, we do not verify that the stated vessel on a BL exists with the issuing carrier nor, in the case of an inspection certification, do we verify any of the facts stated, etc. An interesting question. Glenn Ransier Answer from Switzerland: Glenn, Therefore, if there is nothing in the UCP, there should be something similar to ISP98 rule 4.11 (b) in the next ISBP. And by the way, par. 24 ISBP should be deleted. It means well but is totally inapplicable. Daniel Devahive Answer from Canada: From my experience in handling commodities transactions, price is a crucial factor and hence the presentation makes no real sense if the price is not to be checked before payment for the following reasons: 1 The value of the shipment in most commodities trade involving a charter party BL is huge, in terms of millions USD. 2 The price may fluctuate widely at times and the buyer has to make sure that the seller is charging the right price. 3 Some dishonest sellers may refer to an incorrect commodity price index to take advantage of the price differences. 4 The price error, if not checked, may be huge, turning an otherwise profitable business transaction into a loss. Hence I do recommend that the buyer state clearly and precisely in the LC that the beneficiary is to
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provide documentary proof to support the price charged. The LC also has to ask the banker to check the price formula in full detail. This is simple common sense. For our banker friends who say No to this, may I ask you a question: Would you check the price formula if the buyer were your own son? T. O. Lee
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Goods Description
Case: LC Goods Description: COMMODITY: LOGS GRADE: ABC DIAMETER:30CM AND UP, ON BARK MEASUREMENT (THE VOLUME OF LOGS IN DIAMETER 30-39CM MAX, 60PCT AND FOR DIAMETER 40+CM MIN,40PCT) LENGTH: 3-3.9M 10PCT(MAX), 4M+90PCT(MIN) WITH FREE TRIM MIN.30CM TOTAL QUANTITY: 500M3 Partial shipment is allowed. Presentation: The documents are presented for an amount less than the total LC amount (i.e., a partial shipment has been made). The invoice cites the above goods description in full. In addition it details each shipped log quality as follows: Item No Xx Xx Quality A B Quality Diameter 30-34 40-49 Total M3 20,56 9,68 Unit Price xxxx Xxxx Amount xxxx xxxx
Etc. (One full page - but showing no totals) In addition a (required) Measuring List is presented. This one lists each log as follows: Number 01 02 Length 6,80 8,10 diameter 40,00 34,00 volume 0,85 0,74
Etc. (Listed in three pages - but showing no totals) Since this is a partial shipment the following questions arise: 1) Must the bank (for the purpose of future shipments) keep track of what diameters has actually been shipped within the two allowed ranges: i.e., 60% 30-39 cm max and 40% 40+ cm? Or it is sufficient that the full goods description is mentioned as well as a list of what has actually been shipped? 2) Must the bank (for the purpose of future shipments) keep track of what log lengths have been shipped within the two allowed ranges, i.e., 10% 3-3,9 m and 90% 4+ meter? Or is it sufficient that the full goods description is mentioned on the invoice?
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3) The actually shipped lengths are only mentioned on the Measuring list. If question 2 is yes then should the actual lengths be mentioned on the invoice? Answer from China: As a person who is not a native speaker of the English language, I have to say when I read this query, my eyes blurred. In short, 1. An invoice or measuring list should not be issued with so many complicated details. Otherwise, banks will have to take much more time checking them one by one, which will inevitably incur lots of problems. Because bankers have no relevant knowledge of the commodity, they shouldn't keep track of such issues. 2. The documents themselves may indicate the items that have not yet been shipped to relieve the bank of this burden. No other better solutions can be found right now. :-( Ofei Answer from Switzerland: -Yes, I think so, sir. -Think so? You ought to know Evelyn Waugh - Brideshead Revisited
1. Yes, somehow the bank must keep track of what has been shipped. 2. As in # 1 above. 3. Yes, ISBP par. 95 if I have understood it.
Once, I had a transaction of logs between canton du Valais and Turkey. The packing list with the specifications was 400 pages or so. Did I check it? Daniel Devahive Answer from Canada: First the background story: In my thirties, I was engaged as a commodity trader in timber and log trade for shipments by charter parties from Indonesia and Malaysia to Hong Kong, Taiwan, Japan and Korea. At that time, the owners, mostly Datuk and Tan Sri (equivalent to MBE KBE in UK) from Malaysia, backed up by the federal and provincial ministers in Malaysia and military generals in Indonesia, were very smart and provided good entertainment for the bankers, and hence, discrepancies were not a concern at all. We invited the bankers for lunch and sent the Mercedes to pick them up from their
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office to take them to the deluxe restaurants. Once my boss gave me HKD 8,000 cash to spend in an evening. I returned to the office next morning and returned HKD 3,000 cash to him. I expected him to praise me for my honesty. However, to my dismay, he said: T. O., you have not done your job! From that time on, I had to search for the most expensive restaurants, night clubs, and other forms of entertainment to ensure that I could spend all the money. I had to work this way at least two times a week. After working for eight years like this, my wife advised me to leave the company or I would be spoiled at the end. I listened to her words of wisdom and left the company and worked as a forwarder for a change. Now we come to the issues raised by the enquirer. 1 For an LC providing partial shipments, the banker has to check the documents for all shipments to ensure that conditions related to percentage and size do actually comply in each shipment. 2 The packing list, no matter how many pages, is a stipulated document. So it must be checked. Having said that, from my experience, if you treated your bankers well, they would be pleased to waive them as typos. 3 When I was providing training courses in commodities and charter party BLs, I spent half a day to taking bankers to visit a break bulk vessel and having the captain and first mate tell them all the loading and discharge procedures. This was a great help to document checkers and they returned with more confidence on the determination of discrepancies. T. O. Lee Answer from Malaysia: My opinions are as follows: 1) Yes, the bank is required to keep track of the diameters that have actually been shipped to ensure that they are within the allowed ranges. 2) Yes, the bank is also required to keep track of the log lengths to ensure that they are within the allowed ranges. 3) No, the invoice may contain a summary of the items that have been shipped in addition to the description of goods that are stated in the LC. As long as the actual lengths that have been shipped can be determined from the measuring list and are within the range and limits that are stated in the LC, I would not consider it a discrepancy. This is based on Article 14 (d) & (e), Article 18 (c) of UCP 600, and paragraphs 58, 59 and 63 of ISBP (2007 Revision). TANG Seng Fatt Answer from Bahrain: I agree with Tang. Christopher Gregory Answer from China: ISBP 681, par.64, prohibits over-shipment indicated in the invoice. If a LC involves partial shipment and also includes qualifications such as 60 pct, 40pct in diameter and 10 pct, 90 pct in length, I think
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that only checking its full goods description and actual shipment description in the invoice is insufficient to determine the compliance. In addition, keeping track of each shipment is necessary to make sure the total quantity as well as the percentage qualifications fall within the stipulated range. Also, as lengths are part of the goods description, I think the invoice missing the actual log lengths information is not good enough (see ISBP 681, par.59). I would prefer that the invoice also include actual log lengths. Sheilar Shaffer Answer from Canada: For a shipment of a small quantity of say twenty logs, the goods description in the invoice may/should/must indicate length, breadth, and weight of each log. However, if the shipment is large, such as a whole break bulk vessel there may be 3,000 plus logs. Then it would be very tedious to indicate the length, breadth, and weight of each log, not to mention marking each log. If these are all indicated in the invoice, then what is the packing list or summary sheet for? Merely a duplication of the contents of the invoice? We might end up with 400 sheets for the invoice alone. This is not exactly green practice. Paper is made from wood pulp and we will have less trees to protect us from flooding :-( From my experience in the log trade, it is very common to have 30 logs all of the same length and breadth, not to mention weight. The only way to identify them is the specific or unique marking on each log. Hence, merely stating the lengths, breadths, and weights of the logs without the markings is not enough or meaningless. Which of the 30 logs is the invoice referring to? Therefore, the practice is to state in the invoice the summary information and let the packing list or summary sheet do the rest, with the identification. The invoice should state something such as this: 30 pcs. SQ/SSQ/Queen Victoria (quality grading popular in Malaysia) hard/soft wood, 20 meters L x 1/2 meter breadth, detailed as per summary sheets attached. Then let the summary sheet do the rest, lengths, breadths(diameter), and weights as well as markings, for example, SSQ (red) 001/500; SQ (blue) 001/400; and QV (yellow) 001/200 etc. May I end my comments by quoting words of wisdom from the father of letters of credit, Bernard Wheble: Bankers should examine documents with simple common sense. T. O. Lee Answer from Czech Republic: My suggested answers are as follows: 1) Yes, if stated on any of the documents, banks must keep track (diameter limits are part of the LC terms, the LC description of the goods). 2) Yes, if stated on any of the documents, banks must keep track (log length limits are part of the LC terms, the LC description of goods) 3) No, unless the credit expressly requires them to be enumerated, these data need not appear on invoice, - the LC description must suffice. This is, however, subject to a reservation. It is unclear whether the credit expressly required diameter
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and/or length lists to appear on any of the documents. I expect that the function of the measuring list is to show measurements, but what if only one of the measurements (either diameter, or length, but not both) were stated therein? I guess it would comply. It could also show other measurements, but it is questionable, as what else could be a measure ... Radek Dob Answer from Romania: In my opinion the answers are : 1) Yes, you must keep track to determine compliance of the required percentages in diameters. 2) Yes again. You must keep track of this, too. 3) It is not necessary for the actual lengths to be stated on the invoice But I do want to ask why the beneficiary doesnt issue an invoice indicating the goods description as required under the LC that is, the percentage of goods shipped with dia. 30-39 and the percentage of goods shipped with dia.40+, the percentage per lengths and the total value? The details of each diameter and length need only be stated on measuring list. The total of specific diameters and lengths must correspond with the percentage stated on the invoice. I have had a few LCs exactly like yours and, trust me, both the confirming bank and the issuing bank checked very carefully to see that the percentages were respected (I received a rejection for overshipment by 0.25% of diameter 30-39 cm., i.e., 60.25% while maximum allowed was 60%). This type of credit doesn't allow you to take into consideration paragraph 24 of ISBP 681. Furthermore, if the percentages required werent respected, the issuing bank would be entitled to reject the documents (of 2nd, 3rd ... last presentation). Sub-article 14(d) of the UCP600 would give them a reason for rejection: the percentages required both on diameters and lengths represent data in a document that upon the 2nd, 3rd ... last shipment/presentation of documents must not conflict with the credit. Bogdan Ilie Answer from Spain: I agree with other colleagues, and my answers are: 1) Yes. 2) Yes. 3) No. Have a nice eastern weekend, Xavier Fornt Answer from Nigeria: Having closely studied the scenario, the bank 1) must, as a matter of its fiduciary duties, keep track of what diameters have actually been shipped within the two allowed ranges,
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2) must keep track of what log lengths have been shipped within the two allowed ranges, and 3) accept that the invoice need not contain the actual length of the logs, nevertheless it could state see details of actual log lengths on Measuring List enclosed ...or some such phase. The bank must undertake this extra mile in order to ascertain the value outstanding in the subsequent shipments, notwithstanding the provision of ISBP, Paragraph 24: Detailed mathematical calculations in documents will not be checked by banks. Banks are only obliged to check total values against the credit and other required documents. By the way, the analogy by T.O. Lee was interesting. Ajakaiye Hedgar
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Contract of Carriage in a Bill of Lading

Question: If a bill of lading is presented under an LC and the bill of lading is silent about the contract of carriage [i.e., the reverse side of the bill of lading is completely blank and there is no reference at all to a contract of carriage], would this constitute a valid discrepancy? Regarding the above I will add the following: Why is UCP 600, article 20(a)(v), drafted so that, at a minimum, a reference to a contract of carriage is required. Answer from USA: Does the description of goods/services noted on the BL reference incoterms? (It should.) This would identify who is contracting carriage. This is the beauty of the incoterm rules.
If the incoterms are NOT noted in the description/services, because they don't have to be, as discussed previously, that's why I'd LOVE to see a SWIFT code specifically for incoterms. It would not be a mandatory field, yet a great option. Danielle Austin Answer from Switzerland: 1. Yes. 2. Im not sure, perhaps to ascertain that it is a contract of carriage and not something else. Daniel Devahive Answer from Czech Republic: 1. Yes, it is the condition of UCP. 2. It is the standard requirement for nearly all transport documents (with the brave exception of article 24 documents, which I consider an oversight by the UCP drafters, and to some extent the charter party BL, but still, the fact that the carriage is subject to a charter party must be in some way stated on the document). With waybills, it is comprehensible, the transport document is in many cases the contract of carriage itself. With bills of lading, it is not stated in the UCP that BL must contain terms and conditions of the transport contract itself. The bill of lading in itself is a contract and the terms and conditions of carriage may in some way also be part of the bill-of-lading contract. At least, this is my first glance understanding. And to Danielle's comment: Why SHOULD incoterm be stated in the transport document? There is no such requirement, nor is
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there any need, in my opinion. Of course, if beneficiary sells on an EXW incoterm it is not sensible to require that he present an AWB or BL (he is not the shipper in fact, he is not contracting for carriage, as you say). But it is the matter of the underlying contracts. Credits and transport documents as such have little to do with incoterms (and this is NOT to say that transport and LC people should not understand them, they should, otherwise they can't tell their clients that it is not a good thing [if not clear nonsense] to call for a transport document under an EXW contract). Radek Dob Answer from USA: Great point, Radek, regarding EXW shipments not asking for transport documents since the beneficiary is not contracting carriage. I would welcome an LC issued this way, although I highly doubt an issuing bank would issues LCs in this format knowing that their applicant is shipping freight collect, even though this would make it a lot easier for the beneficiaries. I will wait for the day -;) I've always seen the description text (which typically includes the incoterm) added to the BLs/ AWBs directly from the LC along with the LC#. Danielle Austin Answer from Iraq Under terms of the LC, if there is a specific mention that a short form/blank bill of lading is not acceptable, then this constitutes a discrepancy. Otherwise clause 20 (a) (v) would be applicable and this does not form a discrepancy. Prasad Gadwal Answer from UK Yes, it is a valid discrepancy, because the UCP so mandates. However, while the BL represents the physical embodiment of a contract of carriage, i.e., its evidence, it is not the contract itself, and the wording on the back of the document (if stated) only points to the terms of the contract. Especially so, since one could argue that by shipping the goods and then obtaining the BLs, part of the contract has already been fulfilled. This is true even before the issuance of the BLs. Therefore, the BL cannot be seen as the contract itself. From a practical point of view, one could also argue whether or not a bank derives any benefits at all from the inclusion of the terms and conditions (whether by reference to an external source, or by direct incorporation), if they do not intend to be a party to the contract of carriage and if they are not required to (or expected to) examine the terms. So, would the absence of the terms and conditions invalidate the contract? I am not a lawyer, but my view is that it would not. As regards mandatory incorporation of incoterms into the BL, I agree with Radek, and feel that it is unnecessary and undesirable. Incoterms cover the division of costs, responsibilities, and risks in the transfer of goods, and only some of these (and depending on the incoterms in question) concern the requirement for the production of a transport document. Abrar Ahmed
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Answer from Canada A BL has three main functions: 1 2 3 Receipt of goods for carriage. A (quasi) endorsable document of title. A contract of carriage.
Hence, if the BL has no terms and conditions of carriage it is a very serious matter rendering the functionality of the BL incomplete or at risk. T. O. Lee Answer from China It constitutes a discrepancy. A BL is evidence of contract of carriage. I disagree that the BL is a contract of carriage. For example, a contract of carriage is made between the buyer and the carrier under FOB. But the BL is made between the carrier (or agent) and the shipper (seller in most cases). So, the BL simply certifies that it is issued under a contract of carriage. I always insist that the shipper cannot be indicated as the buyer even under FOB. Ofei Answer from Canada Dear Ofei, A BL is a contract made between the carrier (or its agent) with the merchants (either buyer, seller, or their agents, normally the forwarders).Hence it is a genuine contract of sea carriage. Dear Abrar, In old English shipping cases, the courts determined that a BL is evidence of a contract of carriage existing among the parties because, before the BL is issued, a verbal contract has already been made among the merchants. However, whether or not the BL is a genuine contract of carriage, the court will deem it as such in the proceedings any way. This is a scholastic issue, better left to the scholars to deal with, and for the purpose of the UCP, we should deem it as a genuine contract of carriage. T. O. Lee Answer from China Dear T.O, I usually think that contract of carriage refers to the carrier who collects freight from the shipper. But as mentioned earlier, in a BL, the carrier may not collect freight from the shipper (better use consignor) named in the BL if the transaction is based on FOB. It's natural that under a contract of carriage, the carrier will get paid from the other party, i.e., the shipper.
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That's why I take the BL only as evidence of a contract of carriage. One more proof is there will never be the shipper's signature on the BL but rather the carriers or the carrier's or agent's (or master's or master's agent). To me, a contract should bear both parties' signatures. Your comments are appreciated. Ofei Answer from Romania 1. Absence of a contract of carriage and/or of any reference made to one is a discrepancy, according to UCP 600, article 20(a)(v). 2. To answer Danielle's comment, incoterms cannot be considered as wording making reference to the contract of carriage. As is stated in Incoterms 2010, Introduction, The Incoterms rules explain a set of three-letter trade terms reflecting business-to-business practice in contracts for the sale of goods (and not practice in contracts of carriage). Bogdan Ilie Answer from Spain As per article 20(a)(v) it appears it is a discrepancy. Xavier Fornt Answer from Bahrain I concur we would observe this as a discrepancy. I also remember the 'good old days' when we used to get the following standard clause in LCs 'Short Form/Blank Back Bills of Lading not Acceptable' :) Christopher Gregory Answer from Hong Kong In practice, there is no doubt it is to be treated as a discrepancy, Blank back B/L submitted, according to UCP 600, article 20(a)(v). Ms Ho Wai Ching Answer from Turkey As to the first query, yes, this is a discrepancy, The second could be: in addition to the document-of-title nature of the document, to allow the consignee or the holder to see, in the event of dispute, whether the carrier has acted according to their stated terms and conditions of carriage in the carriage and delivery of the goods. Hasan Apaydin
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Answer from Canada 1) Incoterms 2010 or previous versions only deal with the rights and obligations of the buyer and the seller and nothing more. So the carrier is not bound by any version of incoterms. 2) BLs, like LCs, are invented by traders and bankers (who are not scholars or lawyers) jointly to fulfill their needs. As a result, these are documents that do not necessarily follow the legal doctrines. Many scholars and experts have tried in the past to legalize the LC and the BL. They have all failed in trying to explain the LC and BL within legal frameworks. They have invented the commercial contract, novation, assignment, and agency theory, etc., etc. If you wish to know more about this, please visit my website www.tolee.com for articles on this subject. 3) Trying to fit the LC and BL into a legal framework will only create more problems than those scholars are currently trying very hard to resolve. It is bound to fail. 4) To make this simple, trying to legalize the LC and BL is like evaluating fusion cuisine discretely by Thai, French, Italian, Chinese, or Japanese gourmets. They are bound to fail because fusion cuisine is made up of Chinese, Thai, Japanese, French, Italian, and even Cajun cuisnes :-) Enjoy!!!. T. O. Lee Answer from Bahrain Just to mix things up a bit, I remember last year we had an export LC (oil) that called for a charter party bill of lading. The charter party BL was issued by the beneficiary of the LC and signed by the Master of the Vessel. It mentioned the Port of Loading + Discharge and Freight Payable as per Charter Party + Clean on Board. It also contained the following clause: THIS SHIPMENT IS CARRIED UNDER AND PURSUANT TO THE TERMS OF THE CHARTER PARTY DATED N/A BETWEEN N/A AND N/A AS CHARTERER AND ALL THE TERMS, WHATSOEVER OF THE SAID CHARTER EXCEPT THE RATE AND PAYMENT OF FREIGHT SPECIFIED WHEREIN APPLY TO AND GOVERN THE RIGHTS OF THE PARTIES CONCERNED IN THIS SHIPMENT. I would appreciate your comments as to what discrepancies you would have observed in the above case or whether the BL is acceptable and fulfils the criteria required of a charter party BL. Thank you for your valued feedback, Christopher Gregory Answer from Canada Dear Chris, From our experience, it is misleading just to focus on a few terms in a charter party bill of lading (CPBL) without reviewing all the terms and conditions of carriage on its face. This is very dangerous. We need to see the whole CPBL before we can comment on this query as one term may save or destroy another term. The life of a consultant is not just answering yes or no as some of our clients think. It is not that simple. T. O. Lee
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As Agents of the Vessel on Behalf of the Master

Question: The following question has been received. I kindly ask your views: LC required a charter party BL. BL received as follows: Contained in the signature box was the following: American Shipping Co. Inc. As agents of the vessel on behalf of the master Master Capt. John Doe Is it a discrepancy under UCP 600? Answer from Romania: UCP 600, article 22, states, Any signature by an agent must indicate whether the agent has signed for or on behalf of the master, owner, or charterer. Consequently it is clear that the way charter party BL has been signed is a discrepancy. Bogdan Ilie Answer from China: The signature does not clearly indicate the identity of the agent. By appearance, I would believe John Doe is the master. But there is no need to indicate the name of master under UCP 600, article 22. So the correct signature should be: American Shipping Co. Inc. John Doe As agents on behalf of the master. Ofei Answer from Czech Republic: American Shipping Co. Inc. As agents of the vessel on behalf of the Master Capt. John Doe 1) It shows named agent: American Shipping Co. Inc. 2) It was signed by somebody on behalf of the agent (I suppose). 3) The agent indicated they signed it as agents of the vessel on behalf of the master. This perfectly compliant with the UCP 600 when signed as agents on behalf of the master, no need to show the masters name (under UCP 600). If it does anyway, good indeed.
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The wording of the vessel does not make it discrepant, in my view. 4) Certainly there is no need for a name of the signatory (meaning the concrete representative of the agent) to appear in the CPBL. It is in my view compliant. Pavel Andrle Answer from Switzerland: No. Daniel Devahive Answer from Nigeria Charter party BL, in my view it is not discrepant! Ajakaiye Hedgar Answer from Vietnam I agree with Pavel that the wording of the vessel does not make the CPBL discrepant. Nguyen Huu Duc Answer from China I agree with Pavel Andrle. The additional wording, as agent of the vessel, would not make it discrepant, as it also claimed that American Shipping Co. Inc. on behalf of the master; I think that the American Shipping Co. Inc.'s identity as the agent of the master can be discerned. This BL is acceptable. No discrepancy. Sheilar Shaffer Answer from UK I agree. The terms agents of and on behalf of in this context are interchangeable. So, the only issue might be whether American Shipping Co. Inc. can argue that they are agents of two different parties at the same time? However, I do not see this as a conflict of interest. Abrar Ahmed Answer from Romania Although most of answers above judge that the document complies, I still believe it is discrepant: The signing party evidence suggested that it has been signed on behalf of the master, but not as the agent of the master but as the agent of the vessel only. Subart 22(a) clearly indicates what agent is allowed to sign a charter party bill of lading: the agent: of the master, owner, or charterer. Not of the vessel. There is a saying: if it sounds like a duck and walks like a duck, then it is a duck! In this case it neither sounds nor walks like a duck. So, it is not a duck! Bogdan Ilie
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Answer from Spain In my opinion, it is not discrepant. Xavier Fornt Answer from Romania 1. The absence of a contract of carriage and/or of any reference made to one is a discrepancy, according to UCP600 article 20(a)(v). 2. In answer to Danielle's comment, incoterms cannot be considered as making reference to the contract of carriage. As it is stated in Incoterms 2010, Introduction, The INCOTERMS rules explain a set of three-letter trade terms reflecting business-to-business practice in contracts for the sale of goods (and not practice in contracts of carriage). Bogdan Ilie Answer from Czech Republic Although the signature identification does not appear to be very fortuitously worded, I probably would not have the guts to use it as a reason for refusal. Radek Dob Answer from Czech Republic Dear Bogdan, I believe there is nothing wrong with the agent also being the agent of the vessel. The crucial thing is that he signed the BL "on behalf of the master. My source says: A ship agent is employed to represent the interests of either the ship's owner, the ship's operator, or the cargo's owner (consignee) while the ship is in port. Pavel Andrle Answer from Bangladesh It appears that American Shipping is performing two separate roles here; acting as an agent of the vessel and as agent of the master. I see no reason why they can perform two roles. The document complies in my opinion. Shahriar Masum Answer from Switzerland Radek, Of course it is not fortuitously worded. It has often been pointed out that bankers should have some knowledge of the real world. The other way round should also be true. The real world should have some knowledge about our business.
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It is not so difficult to sign a CPBL properly. It would suffice to read sixteen short lines in the UCP. Have a nice weekend. Daniel Devahive Answer from China Dear Bogdan, I see your point. You doubt the wording of the signature on behalf of the master. But I note that ICC position paper No.4 elaborated on the wording of the signature in transport documents. For example, an agent of a carrier can sign the document in several ways below: (b) when the word 'carrier' has been used on the front of the document to identify the party acting as carrier, either, e.g., ABC Co, Ltd. as agent for(or 'on behalf of') XYZ Shipping, carrier (signature) or ABC Co, Ltd. as agent for(or 'on behalf of') XYZ Shipping (signature) or
ABC Co, Ltd. as agent for(or 'on behalf of') the above named carrier (signature)
So if the wording, on behalf of can be the equivalent of as agent for, then on behalf of the master could also be read as agent of the master. There seems to be no doubt that American Shipping Co. Inc. is the agent of the master. Just some rough thoughts, Sheilar Shaffer Answer from Canada After seeing all the different but interesting arguments, I would like to share my views as follows: From my experience in resolving commodities disputes where CPBL and LC are involved, we have to understand the following facts before we can determine documentary compliance in the real world, not just those related to the UCP, which is created by bankers who may not know too much about actual shipping practices or maritime laws. 1) We need to understand the legal capacity of a vessel before we can determine whether the
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signature is compliant or not. In maritime laws, a ship is treated as if it were a person. Hence the competent court may issue a court order to arrest the cargo ship if the ship owners have legal liabilities towards a party who applies to the court for such arrest, in order to force the ship owners to clear the legal liabilities, such as debts. 2) Hence someone (a person or a corporation) can be the agent of the cargo ship. For example, we have a ship's agent to husband a cargo ship at a certain port of call. The agent acts like a spouse, providing food, water, supplies, and fuel to his wife, the cargo ship. 3) A party can be the agent of the cargo ship as well as the agent of the master. 4) Hence the signature should be compliant, at least theoretically. UCP 600 only requires facial compliance and nothing more. 5) If we step into the real world, I wonder how the cargo ship could nominate her agent (or choose her husband) since she can neither speak (to say I do) or write. Only a ship-owner can nominate a ship's agent, not the ship herself. 6 Believe it or not, most of the so-called agents may not be authorized by the master or the ship owners at all. T. O. Lee Answer from Czech Republic Hi Sheilar, Just to be fair to Bogdan (and not implying that the BL was discrepant!), I think you somewhat misread the wording. I would read these examples as follows:
ABC Co. Ltd. as agent for (or "on behalf of") XYZ Shipping, carrier. as giving two options: ABC Co. Ltd. as agent for XYZ Shipping, carrier. or ABC Co. Ltd. as agent on behalf of XYZ Shipping, carrier. but strictly speaking as derived from the context not ABC Co. Ltd. on behalf of XYZ Shipping, carrier. See also the UCP wording
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The master or a named agent for or on behalf of the master (i.e., an agent for or an agent on behalf of!). And, by the way, the position papers were officially declared extinct, if I remember well? Radek Dob Answer from Australia I would consider the signature to be complying. Traditional interpretation of on behalf of means as agent of, and this is something that is widely accepted as far as my knowledge goes. Coincidentally, I had an argument with an issuing bank recently on a similar issue. They rejected an insurance document that was signed by the agent 'On behalf of the underwriters (It did not say as agents of). Janakiraman Hariramchakraborthy Answer from UK I believe the quoted examples by Sheilar were intended to illustrate that there is in fact no difference between agent for and for and on behalf of. The ICC guidance was only intended to draw a distinction between the different methods of signing a BL (where the name of the carrier has been stated elsewhere on the BL). It was not intended to draw a distinction between the phrase for and on behalf of, or agent for, which are both understood to mean the same thing, and have the same effect. I would even venture to suggest that the word for XYZ without mention of and on behalf of XYZ would have the same effect, and would signify that the signatory is signing as the agent of XYZ. Abrar Ahmed Answer from Turkey UCP 600, article 22 (a) (i) reads in part be signed by the master or a named agent for or on behalf of the master and its does not necessarily require that the agent be indicated as agent of the master. From the signature of the bill of lading, it appears that American Shipping Co. Inc. is in every way an agent and signing on behalf of the master. There would be no grounds for rejection. Hasan Apaydin Answer from Switzerland As I said in my opinion, there is no discrepancy. But I do not think that the for or on behalf of may replace the word agent. (I understand that this is also Radek's opinion.). If American Shipping Co. had signed the BL on behalf of the master without specifying that they were agents, the signature would have been discrepant.
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Maybe in the real world it is different, but so far, whether the real world likes it or not, we check the documents according to the UCP and not according to the real world in question. Maybe the bankers do not know too much about shipping practices or maritime laws. It remains to be seen if the shipping industry knows much about banking practices and the UCP. Daniel Devahive Answer from Czech Republic Yes, certainly, The agent must be nominated and they must indicate that they signed the BL as agent for the master of the carrier. Pavel Andrle
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Press Release:
SWIFT and ICC Banking Commission collaborate on enhanced rules and tools for Trade Finance
Declaration paves way for market acceptance of the Bank Payment Obligation instrument
Brussels, 8 September 2011 SWIFT, the financial messaging provider for more than 9,700 financial institutions and corporations in 209 countries, and the Banking Commission of the International Chamber of Commerce (ICC) are set to sign a cooperation agreement that will enable industry-wide adoption of the Bank Payment Obligation (BPO). The ICC Banking Commission is a global rule-making body for the banking industry and a worldwide forum of trade finance experts whose common goal is to facilitate international trade finance. The BPO is an alternative means of settlement in international trade and provides the benefits of a letter of credit in an automated environment. It enables banks to offer flexible risk mitigation and financing services across the supply chain to their corporate customers. Both SWIFT and the ICC Banking Commission believe that by working together, they can achieve uniform adoption of the BPO, reducing costs and mitigating risks in international trade for buyers and sellers alike. Gottfried Leibbrandt, Head of Marketing, SWIFT explains: Industry forecasts indicate that merchandise exports are set to grow to 33 USD trillion by 2020, from 15 today. We are committed to help our members innovate in trade finance for corporates. We are delighted to cooperate with the ICC Banking Commission on this. Kah Chye Tan, Global Head of Trade & Working Capital, Barclays and Chairman of ICC Banking Commission confirms: Trade Finance is a critical banking service supporting the world economy. It is vital that the industry aligns on enhanced rules and tools in support of trading counterparties whether large or smaller. The ICC Banking Commission views the development of the Bank Payment Obligation rules and the related ISO 20022 messaging standards as strong foundations for banks to provide modern risk and financing services aligned with todays technology evolution." The declaration of cooperation, to be signed at Sibos in Toronto, confirms the framework for collaboration between SWIFT and the ICC Banking Commission to publish and maintain a set of contractual rules that will establish uniformity of practice in the market adoption of the Bank Payment Obligation (BPO) and the related ISO 20022 messaging standards.
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................................................................................................................................... About SWIFT SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 9,700 banking organisations, securities institutions and corporate customers in 209 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest. About the ICC Banking Commission The ICC Banking Commission is a leading global rule-making body for the banking industry, producing universally accepted rules and guidelines for international banking practice, notably letters of credit, demand guarantees and bank-to-bank reimbursement. ICC rules on documentary credits, UCP 600, are the most successful privately drafted rules for trade ever developed and are estimated to be the basis of trade transactions involving more than one trillion dollars a year. The Banking Commission is equally a worldwide forum of trade finance experts whose common aim is to facilitate international trade finance across the world. With over 500 members in 85 countries, many of them emerging, the Banking Commission is one of the largest ICC Commissions. For more information, please refer to www.swift.com or contact our PR agency:
- 32 -

Famous last quote

'When I Rest I Rust' - Domingo Placido
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Sponsor By: GlobalTrade Corporation Web: www.globaltradcorp.com
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TRADE SERVICES UPDATE

From the editor

Kim Sindberg Editor in Chief Trade Services Update info@lcmonitor.com

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Contract of Carriage in a Bill of Lading

As Agents of the Vessel on Behalf of the Master

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The Editorial Board Expands

Best regards Kim Sindberg

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International Standard Sanction Practice

ICC Document No.470/1129 rev 26 March 2010

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UCP 600 Article by Article (article 26)

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Contract of Carriage in a Bill of Lading

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URL: www.lcmonitor.com E-mail: info@lcmonitor.com Tel: +1 416 661 8520

TRADE SERVICES UPDATE

URL: www.lcmonitor.com E-mail: info@lcmonitor.com Tel: +1 416 661 8520

TRADE SERVICES UPDATE

URL: www.lcmonitor.com E-mail: info@lcmonitor.com Tel: +1 416 661 8520

TRADE SERVICES UPDATE

URL: www.lcmonitor.com E-mail: info@lcmonitor.com Tel: +1 416 661 8520

TRADE SERVICES UPDATE

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TRADE SERVICES UPDATE