ICC Banking Commission Opinions October 2023 – Deep-Dive #1
This is the first of five blog posts where I will deep-dive into the Opinions approved by the ICC Banking Commission on their October 2023 meeting.
This blog post will take a closer look at the first part of ICC Opinion TA931rev.
The query describes a requirement to an invoice like the following:
"SIGNED INVOICE. THE INVOICE MUST CONFIRM IT IS AS PER QUOTATION NO. [number]”
The requirement for the “quotation number” was also stated in the goods description; but here there the word “confirm” was not mentioned.
The presented (signed) invoice includes – as part of the goods description:
"[…] AS PER QUOTATION NO. [number] DATED [date]"
And bum: Refused!
The refusal is based upon the fact that the invoice does not “CONFIRM” (i.e., mention the word “confirm”) that it is as per quotation number?
The Analysis of the Opinion refers to UCP 600 article 18(c) which basically says that the goods description in the invoice must correspond with the goods description in the LC. This of course is correct, but since the reference to “confirm” is part of the requirement to the invoice, UCP 600 article 14(d) could also be mentioned. For the purpose of this case it means that the data in the invoice need not be identical to, but must not conflict with the data in the LC, i.e., the requirement for the invoice.
The view of the ICC Banking commission is that the reference to the quotation number in the invoice is a confirmation that the invoice is issued as per the quotation number.
There is in other words no conflict and therefore the refusal is not considered valid.
That is at least good.
What is not so good, is that a bank can even think of making (drafting and sending) a refusal based on this. For anyone that has any knowledge about trade, there can be no doubt that this is not a correct refusal. Even without the word “CONFIRM” the reference to the quotation number in the invoice is of course a confirmation that the invoice is issued as per the quotation number.
This is in other words; clearly a spurious discrepancy.
Oh well – you may say – it is just one wrong discrepancy.
I think however, that it is a problem that a bank can think of raising such discrepancy. It is a problem because the LC is a payment instrument but also because raising discrepancies has a line of consequences: Banks must spend time in arguing about this (and today time is money). Most likely – payment will be delayed. It may also trigger increased fees e.g., discrepancy fees. It also supports the argument that LCs are costly, time consuming and that it is practically impossible to comply with the terms and conditions of the LC.
This is therefore not taking good care of the LC. It is the opposite and let’s encourage all to discourage raising such discrepancies.
Kind regards
Kim
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