q: Dear sirs,

We would be much appreciated if you would kindly offer your opinion of such issue as follows:

LC terms:

• 40E: UCPURR latest version
   
• Transhipment: allowed
   
• 44A:(taking in charge):XIAMEN
   
• 44B:(for transportation to) BILBAO, SPAIN
  (no other stipulated particulars for 44E & 44F)
   
• 46A:(documents required) full set clean on board bill of lading, as per article 20 UCP600 made out to the order of applicant, notified to the same marked freight prepaid

B/L information:

• B/L titled "port to port or combined transport bill of lading":
• Combined transport*place of receipt:Xiamen
• Port of loading:Xiamen
• Port of discharge:Rotterdam
• Combined transport*Place of delivery:BILBAO, SPAIN

Documents were refused by the issuing bank stating that "port of discharge not in compliance with LC terms; combined transport document presented".

In my view, as per the latest version of swift MT700, field 44B specifies the place of delivery to be indicated on the transport document. Therefore "BILBAO, SPAIN" shown under "place of delivery" other than "port of discharge" in B/L has complies with the credit, hasn't it?

Also the B/L has made out with all other requirement of both the LC and ART.20 UCP600, except the fact that the column "place of delivery” is in conjunction with the wording "combined transport". Does this signify a combined transport document? Even so, is it a justified reason for rejection merely because of the indication of "combine transport "in the column of the B/L?

Thanks and Best Regards

Frank

According to UCP 600, Art 20 deals with the bill of lading

According to Art 20 a (iii) bill of lading must indicate shipment from the port of loading to the port of discharge as stipulated in the credit

The Credit stipulated port of discharge (by virtue of application of Art 20) as opposed to “For transportation” which appears in the swift.

Bilbao, Spain should have been shown as the port of discharge in the BL

Hence it is a discrepancy. The title combined BL is not a discrepancy since a bill of lading can however be named.

Cheers

Zahoor

Discrepancy.

As the LC clearly stipulates that BL subject to art 20 of UCP600 is required, you should drawn issuing bank attention to the no-correlation between SWIFT field 44B and 46A, asking them to clearly indicate the port of discharge.

The problem is that you did present another transport document than the one required. Even though the LC doesn't indicate 44F, you're in the middle of a debate with no point of return.

Regards,

Bogdan

I agree to the above conclusions – and just want to add a few quotes from UCP and ISBP. First of all the lines quoted by Zahoor is the key to understanding this:

UCP 600, sub article 20(a)(iii):

indicate shipment from the port of loading to the port of discharge stated in the credit.

The situation where the “discharge port” required by the LC is stated in “place of final destination field” is actually addressed in the ISBP, namely in paragraph 99 which reads:

While the named port of discharge, as required by the credit, should appear in the port of discharge field within the bill of lading, it may be stated in the field headed "Place of final destination" or the like if it is clear that the goods were to be transported to that place of final destination by vessel and provided there is a notation evidencing that the port of discharge is that stated under "Place of final destination" or like term.

This means that in such case you may have a statement on the B/L e.g. saying that the transportation from the port of discharge to the place of final destination is done by vessel.

I would also briefly address the fields used in the LC. As such you can argue that it is in fact the wrong fields used, as 44a and 44b refers to places – where 44e and 44f refers to ports (both sea and air). My best guess however would be that the specific reference to article 20 in the document requirement would have more weight – i.e. being a clear signal that it is in fact a port to port shipment the bank is looking for – otherwise the LC should have required a multimodal transport document.

I hope this helps you.

Best regards

Kim

Thanks and regards

George Devassy Nedumparambil

Hence the applicant and/or the issuing bank should have asked for multimodal transport documents rather than a set of bill of lading. Naming Bilbao as the port of discharge in the credit would only create blockage and inflexibility for the carrier to provide "3S" (Speed, Safety & Savings) services, which transport is all about.

Referring to international maritime transport practice, 100% pure sea transport MAY NOT exist, particularly for long haul voyage. After the goods are discharged in Rotterdam, theoretically the goods will be transported by either sea, train or truck (in "land bridge" mode when both Holland and Spain are members of the European Union, where there is no taxation, import, export declaration and customs clearance problems) although on- carriage from Rotterdam to Bilbao by sea is more likely in this case.

From a pragmatic point of view, for general cargoes, multimodal transport documents subject to UNCTAD/ICC Rules for Multimodal Transport Documents (such as those from BIMCO or FIATA) should be acceptable even if the credit is silent on this, although this is not clearly stipulated in UCP 600 or ISBP 681.

I will contribute a long article to explain the facts and the rationale behind this and it will appear in the later issue of the ICC publication Documentary Credit Insight in 2008, provided space is available. For the time being, please trust me!

From common sense point of view, I do not understand the reasons why the applicant and/or the issuing bank has to be so picky on Bilbao as the port of discharge, requiring it to appear only in port of discharge box other than in place of destination box?

In this case the fact that Bilbao being declared as a place of final destination (instead of being the port of discharge) in the bill of lading is a discrepancy under the terms of the credit (asking for Bilbao as the port of discharge) and article 20 of UCP 600. This is most unfortunate.

Article 20 of UCP 600 should be interpreted with common sense, not entirely based on literal and robotic approach. Otherwise the credit will be used less and less in international trade.

Best regards,

T. O.

First, as the requirement for transport document in the LC is “full set clean on board bill of lading”, Art.20 UCP 600 is accordingly applicable. The wording “as per article 20 UCP600” in the transport document requirement is actually superfluous.

According to Art.20 a (iii) UCP 600, bill of lading must indicate shipment from the port of loading to port of discharge as stipulated in the credit. However, in this case, we have to raise a question:

Did the LC effectively specify the port of discharge in its SWIFT message?

Obviously, it didn’t. It failed to do so. It only referred to 44A (place of receipt) and 44B (place of delivery) with omission of 44E (port of loading) and 44F(port of discharge). Therefore, the credit may be regarded as no particular requirement for port of loading and port of discharge; instead, it could be interpreted to stipulate the place of receipt and place of delivery as to the shipping route under ocean bill of lading, because a bill of lading evidencing a place of final destination different from the port of discharge would be also acceptable (as stated in P92 of Commentary on UCP600). If not so, why not to show them in 44E (port of loading) and 44F (port of discharge)? Hence, it is a somewhat intruding thought that “BILBAO, SPAIN” in “place of receipt” of the LC, must be, taken for granted, necessarily correspondent to the port of discharge in B/L (when Art.20 UCP600 applicable), regardless of the new rules for SWIFT message which has specified place of receipt, port of loading, port of discharge and place of delivery separately and definitely. In practice, the LC should be interpreted on a case-by –case basis as it appears on its surface; however, by no means as the issuing bank’s thought if the LC is written otherwise. It is too far off.

Frankly speaking, the LC was issued contradictorily in the outfit of latest version of Swift MT700. It is unjustified to refuse the documents which were made out as the LC appears to require.

Best regards

Sheilar t. Shaffer