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8 November 2007
The ”Commentary on
UCP 600” is out now!
 As
promised lcviews.com dedicate a page to this important LC publication.
Available right now are two articles. The aim it to evaluate the book as
objectively as possible - from as many angles as possible. In that respect one must realize that the truth is
not “fixed”; there are of course other equally important and correct views
on the book than the ones presented right here - right now.
We kindly and strongly ask for your
view on this book in order to present a picture as
multifarious and balanced as possible.
The UCP 600 has now been in force for 4 months.
People are starting to get used to it. Some may have “taken it in” – while
others do as they use to. To me the vital issue is to evaluate where
“practice – as it goes on in real life” has been affected by those new rules.
This week I had a question that I want to share with you – as this is one
case where a change in practice (perhaps) was indented by the UCP 600
Drafting group:
It is regarding the name of the beneficiary in the
LC compared to that stated in the invoice. I have “neutralised” the name
in the below example –
so that focus can be on the principle.
The case is as follows:
Beneficiary name as per LC:
ABC IMP and EXP Company of Guandong
Beneficiary name as per invoice:
ABC IMP and EXP Company of Guangdong
You will note that the only change is the “g” in “Guangdong”.
The issuing bank refused the documents because of this extra “g” in the
invoice – which by the way (as you may know) is the correct way of spelling
Guangdong (!!)
This is a case that you may argue around all that
you like. The focus I will take here is actually the “Commentary on UCP 600”; which on page 64 describes the
new standard for examining documents
presented under an LC. It is said that “Consequently, this new standard does
not require a mirror image of data”
My question is: with this “new principle” at hand –
would I be able to fight such silly refusals?
I think “yes” – what do you think? Your
comments appreciated.
Another issue:
 Since
my last posting lcviews.com had the pleasure of presenting the Vietnamese LC
Specialist Nguyen Huu Duc to the international public. He has
previously published
articles in his native Vietnamese – but the article “Recourse
in case the documents are discrepant or forged” is his first
article in English. We are proud that he chose lcviews.com for that – and look
forward to publish other articles from him in the future.
Nguyen Huu Duc has been added to “Whos
Who in LC World – online”.
Kim
[submit
your comments]
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Comments to the newsletter:
From Bogdan
Iile:
Dear Kim,
In the case you presented concerning the name of the
beneficiary, it is obvious that you are facing a misspelling of the
beneficiary’s name in the LC.
I think it is common sense to understand that the
beneficiary of the LC will indicate his correct name on the documents,
notwithstanding the LC evidence otherwise.
If the LC should mentioned the name of the
beneficiary as follows:
“AXZ IMP and EXP Company of Guandong”
and the invoice:
“ABC IMP and EXP Company of Guangdong”
then it would have been a discrepancy. To me it is
logical and of common sense to understand when you are facing a simple
misspelling and when you are facing two different entities.
I faced similar cases but when sending the documents
the the issuing/confirming bank I mentioned the correct name of the
beneficiary.
When UCP Drafting Group wrote “not require a mirror
image of data” I believe they were having such case in mind. The problem is
the individual interpretation of he meaning of “not require a mirror image
of data”
Consequently, such discrepancies will not cease (unfortunately).
But hope dies last!
Regards,
Bogdan
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From Frank
Dear Kim,
To a reasonable documents examiner, there could be
no doubt that this case is obviously a misspelling error, no matter who
causes it. Rejection due to such reason is to ruin the L/C efficiency, and
even worse, to repel the beneficiary's confidence in the credit.
Best of all, the interpretation of documents
examination standard in "Commentary on UCP600” would be an effective
argument against such ridiculous "discrepancy", if the issuing bank may be
sensible after all. However, if the issuing bank persists in "strict
compliance", the debate will turn out to be boring! (Who knows to what
extent the document examination should be strict or not strict? ---it is
hard to say, of course.)
As to the result, I think it is a toss-up. Chance is
50/50.
Best regards
Frank
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From Abdulkader
Spelling of names is a big issue in our area because
the names are Arabic names but when written in English they could have
different forms. For example my name Abdulkader maybe written in
different forms; some write my name as
Abdul Kader
AbdulKader
Abdulqader
Abd El-Kadr
Abd el-Kadir
etc
This form of writing my name never has changed me as
a person. I’m the same person that the different forms referred to. I
believe all this forms although inconsistent with each other they don’t pass
conflicting message or information to a native Arab.
Having said that there could be cases where the name
is registered as a trade mark in a country different to the native country
of the name and is written in alphabets not of the origin of the name, there
could be issues. The person who is foreign to the name would not possibly
know for example if Abdulkqader and Abdul Kader refer to the same name or
person and would most likely consider this as unknown name to the credit and
not just a different form of writing the same name or just a mere
misspelling.
To conclude, because we are talking about a name of
a person or entity and not just a common name of goods, service or
performance written in the original language used for such common names, it
may sometimes be difficult to accept your argument based on article 14d.
Best Regards
Abdulkader
27 October 2007
In school we learn that 2 plus 2 equals 4. In life we
learn to distinguish right from wrong – although right or wrong in life may
seem somewhat abstract these days. We still however believe that it is
possible to distinguish.
It seems that this “quest” for right or wrong is
also being applied to the UCP. As such this is natural – as a banker of
course need to know what is right and what is wrong – i.e. what to consider
a discrepancy – and what to accept.
However the “right or wrong” concept in UCP matters
is by nature different from the mathematics example used above. 2 plus 2
will always equal 4 – and 2 plus 2 is simply not 5!
In UCP matters – the right or wrong is not based on
mathematics. It is based on the concept of “consensus”. In UCP matters what
is right is basically what a majority of the national ICC Committees
considers to be right – and what a national ICC Committee considers to be
right is what a majority of the members of that Committee considers to be
right.
Or perhaps more correctly in most of the cases:
“Right” is the statement that does not have a majority against it – i.e.
silence means “accept”!
It is important to have this in focus when
discussing UCP matters. If e.g. your view turns out to be wrong on a
specific issue, it does not necessarily mean that you have misunderstood the
whole thing – or misunderstood the UCP for that matter. It just means that
you are a minority on this issue.
This is e.g. what has just happened on the case of
Place of receipt <> port of loading. This week the case was decided upon at
the ICC Banking Commission. Read the outcome
here.
Also launched at this meeting was the
Commentary on the UCP 600. As promised: lcviews.com will open a page
on that one soonest possible – so please look out for
it.
Again - we invite you to provide us your views or
comments on this book once you have read it. We will collect those views
on the website for the benefit of others. Thanks in advance.
On the meeting a huge pile of
ICC Opinions were approved. Once we have the updated versions at hand – we
will discuss some of those – so please look out for
it.
Kim
[submit
your comments]
16 October 2007
 There
always is a ”funny” mood just before the meetings in the ICC Banking
Commission. The National Commissions will meet – hot topics will be
discussed – both national and international. E-mails are being exchanged;
will I see you? When will you arrive? Can we meet in the bar?
In just one
week the commission will meet again – and perhaps this time the mood is
“funnier” than ever. It is the first meeting after the “implementation date”
of the UCP 600. This means that we have had almost four months to see how it
works in “real life”. In addition to that it is expected that the
“Commentary on UCP 600” is out “soon”. With ICCs usual perfect sense of
timing my best guess is that it will be released during the ICC
meeting. Perhaps there will be a small “book store” just outside the
conference room.
Read more on
the commentary on ICC Bookstore:
http://www.iccbooks.com/Home/Commentary.aspx
 On this meeting it seems that
there will me many issues to discuss. First of all it seems obvious that the
issue of “exclusions” will be addressed – mainly (but not solely) the issue
of documents being lost in transit (UCP 600 article 35 – second part).
Also recently
another issue emerged; namely the one regarding UCP 600 article 20; where
the bill of lading indicates a place of receipt different from the port of
loading.
This issue has
been presented on lcviews.com
It is expected
that many “practical issues” will fall into place at that meeting. Therefore
it is important that the bankers coming home from the meeting validate the
views from the meeting against how they do business – and adjust where
necessary.
In lcviews.com
we will focus on exactly that after the ICC meeting – trying to guide LC
practitioners through this jungle of various practices – some changed, some
modified and some status quo. One main source – like or not – will no doubt
be the “UCP 600 Commentary”. So that publication will most likely be
the “hottest” publication for the time to come. Surely it will be examined
very carefully by LC specialists around the world.
Already now we
invite you to provide us your views or comments on this book once you have
read it. We will collect those views on the website for the benefit of
others. Thanks in advance.
That was all I
had chosen this time. Feel free to submit your comments directly to me.
I will be back
soon. Take care.
Kim
[submit
your comments]
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It
is a pleasure to welcome Mr. Bodgan Ilie to the editorial board of lcviews.
You may have noted that he has participated often on lcviews via answers to
single windows questions – as well as providing comments to Editors Journal.
You may also have seen the comments of Bogdan if you are a member of the
DC-Pro Focus – as he is an active participant in the Discussion Forum. I
personally believe Bogdan to be a perfect match for lcviews because he is a
practitioner working with real LC transactions – at the same time enjoys
discussing the LC instrument – and for that matter the UCP. That combination
of a hard core practical approach and an intellectual one – is actually the
foundation on which lcviews is build.
me quite a bit to see the chairman of UCP drafting group argue against
providing clarity as to the practical application of the very rules he has
been the driving force in making. 
Also
made available are the 239 words used in ICC Opinion TA.635 to describe what
UCP 500 did in 83 words. More interesting of course is if the practical
application is clear and precise. It seems however that this is still being
discussed by the LC community – where some simply refuse to accept TA.635
(!!) – others are discussing if there are scenarios where the UCP 600 will
differ from the UCP 500 on this issue. One example mentioned is where the
place of receipt is clearly an inland point – mentioning a “truck”. At this
point in time it seems unclear – if such would still require the UCP 500
“extended” on board notation.