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  UCP IN DREAMLAND

IN DREAM A BANKER REVISES ARTICLE 23

 
 

Editor's note: Jia Hao is a beautiful Asian mind. This beautiful mind is a thinking mind. The thinking mind is a dreaming mind too. In dream it thinks. On earth it thinks. On earth it comments on the UCP revision draft but does not draft because it is not a member of the earthly drafting group. In dream it drafts because in Dreamland it gets an opportunity   to work as  one member drafting commission. Earthly UCP, it is said, can never be perfect Is dream UCP perfect? May be. It can be.  Kim Christensen  as a one man consulting commission in Dreamland judges Jia Hao's dream draft revision. In Dreamland there are no national committees. In Dreamland those beautiful young minds who have no opportunity on earth  to work as a drafting or consulting group member,   get an opportunity to work in that capacity to  speak , apply their mind.  DREAMLAND IS A LAND OF OPPORTUNITIES FOR ACHIEVEMENT-ORIENTED YOUNG LC SPECIALISTS, TO DREAM WHAT THEY DON'T DO ON EARTH BECAUSE THEY HAVE NO OPPORTUNITY ON EARTH VIS-À-VIS OLD GENERATION OF LC SPECIALISTS.

 
  Jia Hao on earth is so addicted to, so obsessed with,  the banking aspect of transport matters, that in dream  too he  utters earthly UCP's  transport article.  What in dream he reviews and revises? 

 

Let us listen to his dream story, as below

 

 
 

   

Jia Hao's Dream UCP  Article 23

 

Article 23 Bill of Lading Covering Port-to-Port Shipment or Multimodal Transport [1]

 

A. Bill(s) of lading, however named, must appear to

i) cover the entire carriage stipulated in the credit, even if the port of loading stipulated in the credit is filled in “place of receipt” or the like, or even the port of discharge stipulated in the credit is filled in “place of delivery” or the like. [2]

ii) state the name of the carrier or multimodal transport operator, identified as carrier or multimodal transport operator, and be signed by:

• the carrier or multimodal transport operator, or a named agent for or on behalf of the carrier or multimodal transport operator, or

• the master or a named agent for or on behalf of the master.

Any signature by the carrier, multimodal transport operator, master or agent must be identified as that of the carrier, multimodal transport operator, master or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier, multimodal transport operator, or for or on behalf of the master.

iii) be a full set indicating the number of original bill(s) of lading issued. [3]

iv) contain terms and conditions of carriage or make reference to another source that contains the terms and conditions of carriage (short form/blank back bill of lading). Contents of terms and conditions of carriage on the back of Bill(s) of lading will not be examined. [4]

v) contain no reference to a charter party.

 

B. Where a bill of lading covers port-to-port shipment , it must appear to

i) identify that the cargo has been shipped on board a named vessel at the port of lading stipulated in the credit. [5]

ii) indicate the shipment date. Where the bill of lading does not state an on  board date, but states by pre-printed wording that the cargo has been shipped on board, the date of issuance of it will be deemed to be the shipment date. Where the bill of lading states an on-board-date, such date will be deemed to be the shipment date.

 

C. Where a bill of lading covers multimodal transport, it must appear to

i) identify at least that the cargo has been taken in charge or accepted for carriage at the place or port stipulated in the credit.

ii) indicate the shipment date. Where the bill of lading does not state a date of taking in charge or the like, or an on board date, the date of issuance of it will be deemed to be the shipment date. Where the bill of lading states a date of taking in charge or the like, or an on board date, such date will be deemed to be the shipment date. Where the bill of lading states a date of taking in charge or the like, and an on board date, the date of taking in charge or the like will be deemed to be the shipment date.

 

D. For the purpose of this article, transshipment means unloading and reloading from one vessel to another vessel during the carriage stipulated in the credit.

• Unless the credit prohibits transshipment, a bill of lading may state that the cargo will be transshipped provided the entire carriage stipulated in the credit is covered by one and the same bill of lading.

• Even if the credit prohibits transshipment, a bank will accept a bill of lading which:

i) indicates that transshipment will take place, as long as the cargo are shipped in a container, trailer or LASH barge as evidenced by the bill of lading, provided that the entire carriage is covered by one and the same bill of lading,

or

ii) incorporates clauses stating that the carrier reserves the right to transship.

Footnotes

[1] Combine the port-to-port shipment and multimodal transport.

 

[2] Christopher J. Gillespie, FIATA commented that “ the contract of carriage entered into between the shipper and the carrier and indicating thereon a “place of receipt”, “port of load”,“port of discharge”, and “place of delivery” effectively commits the carrier to undertake movement of the goods from that place of receipt to that place of delivery.”

 

[3] Merely wording is revised for easier reading, particularly for those whose mother language is not English.

 

[4] As the back of a bill of lading always contains terms and conditions of carriage, so banks do not obligate to check the back of a bill of lading except the endorsement hereon. However, it is difficult to judge what contents are terms and conditions of carriage on the face side of a bill of lading, the rule of not checking terms and conditions of carriage can not be applied in practice when banks check the face side of a bill of lading So it seems more appropriate to presume that no terms and conditions are contained on the face side of a bill of lading and the face side must be checked. Moreover, as a matter of fact, in nearly all sorts of bills of ladings in practice , the terms and conditions of carriage even appearing on the face side are far less and simpler than those on the reverse are.

 

[5] This is the essential aspect of shipped bill(s) of lading.

 
 

 
 

DREAM UCP KIM 'S DREAM REVIEW OF JIA HAO'S DREAM REVISION

 

Editor'note: Kim Christensen is a beautiful European mind. When the Asian mind Jia Hao and the European mind get together to debate, the LC world gets lot of  new ideas from the new generation of LC specialists. It is said UCP can never be perfect. Wrong. It can be - if the ICC turns to young beautiful minds like Jia and Kim. Try these beautiful minds. They have better capability for better UCP. Jia's dream revision and Kim's dream revision review is an evidence of their capability. Look at the dream UCP's article 23. Look at their dreams. Look at their dream creativity. Their creativity shows their capability. Their dreams show their concern for better UCP.

 
 

Kim’s comments on  Jia Hao’s ” UCP in Dreamland”

 

 

I am truly fascinated by this way of thinking … and no national committees … that is where I want to be .

 

What I have been trying to – is to enter the same land … or actually “my dreamland” (which of course may prove very different). I have accepted the premises – and will therefore comment loose and wild – without any boundaries .  So now you are warned.

 

I think it is right to “combine” port-to-port and multimodal transport documents. I would however have taken it a step further making it even more generic. In my dreamland there are three transport documents:

 

  • Negotiable
  • Non-negotiable
  • Charter party B/L

 

Whether or not they are port-to-port or multimodal should be determined by the credit.

 

A) I note Jia Hao has chosen to maintain the “however named” principle. There are pros and cons here, but at the end of the day, this signals that the bankers has got things upside down:

 

In the real world a “multimodal transport document” is a “multimodal transport document”. I know this sounds like nonsense – but that is the way that it is. There are standardised forms being used – they are subject to a certain set of rules.

 

In the banking world a “multimodal transport document” is not necessarily a “multimodal transport document”, because what the banker do is the following:

 

  • Check the working in the credit in order to determine which UCP article should apply.
  • Once such is established (which by the way is not always easy), the content of the relevant article are being used to examine the document.

 

So in that respect you can easily have a “port-to-port” bill of lading being accepted as a multimodal (or visa versa). For most bankers that does not matter.  They are however subject to different sets of rules, and may not at all be what the buyer wants/expects.

 

i) Again – in my dreamland the wording should be much more generic – so it goes without saying that any field can be used, as long as the credit requirements are fulfilled. So I would just suggest it to read:

“cover the carriage as stipulated in the credit”.

 

ii) From a banking perspective, I am sure that this is essential – I think however that it is going too far. I have many situations where it is clear who is “carrier” and who is “agent” – but that link tying them together may not be super strong; and I do not think that such “discrepancies” are reasonable on a 50 million USD set of documents.

 

iii) Assuming that both the port-to-port and multimodal are “documents of title” – then this is fine.

I note that Jia Hao has not addressed the “title” issue in this article – and are of course curious to know why not? Is a “bill of lading” by definition a document of title? Should there be a distinction between “straight” and “negotiable” bills of lading? E.g. is the clause “If Required by the Carrier one (1) original Bill of Lading must be surrendered duly endorsed in exchange for the goods or delivery order" acceptable?

 

iv) This is really a tricky one – as Jia Hao indicates. It is one of the great dilemmas in LC banking: What constitutes “terms and conditions” … so perhaps we are all better of just deleting this provision.

 

v) It may be my lack of understanding/knowledge (I was never a “real” shipping man – merely a freight forwarder :-) – but I do not understand why “short form/blank backs bills of lading” are permitted – when charter party bills of lading are not?

 

B/C) I can see the beauty in this sub-article – but in my dreamland it is simplified even more. I think it should be determined by the credit – and in that respect the new SWIFT format (to be implemented in November 2006) may assist. The from/to fields that we have today will be replaced by:

 

  • 44A: Place of Taking in Charge/Dispatch From/Place of Receipt
  • 44E: Port of Loading/Airport of Departure
  • 44F: Port of Discharge/Airport of Destination
  • 44B: Place of Final Destination/For Transportation To/Place of Delivery

 

So in my dreamland, if a “port of loading” is mentioned/required in the credit, the document should contain an “onboard notation”[6] with the following information:

  • Vessel
  • Port
  • Date

 

D) When combining the port-to-port and multimodal – then why address “transhipment” – and in any case why define it as reloading from one vessel to another vessel. In my dreamland no such article exist!

 

 

I am curious how Jia Hao would handle the issue of Freight Forwarders. It seems that UCP 500 article 30 will be deleted. FIATA is concerned about this, as they feel that some countries will interpret it so that transport documents issued by freight forwarders are no longer acceptable.

FIATA has suggested to include into the heading of the article that also transport documents issued by freight forwarders are acceptable – as well as the remaining of the article has been complied with.

In any case the real problems with Freight Forwarders (as I see it) are the things that are NOT part of the UCP 500. Here I am thinking about e.g.:

 

  • ISBP paragraphs 20, 77, 124 and 148
  • ICC Opinions R219, R221, R225, R230, R287, R343 and (the very strange) TA572

 

So I am curious to know how transport documents should be dealt with under UCP 600 – not last when the credit has a saying about it e.g.:

 

  • B/L issued by a freight forwarder is acceptable
  • B/L issued by a freight forwarder is not acceptable

 

 

 Are perfect rules an option – even in a dreamland? I surely do not know. As far as I see there is probably only one scenario where “perfect” rules are an option – and that is where the there is only one citizen in the dreamland. That citizen has drafted the rules by him/her self - and that citizen is the only one to use them.

 

Footnotes

 

[6] ”On Board Notation” should be interpreted ”wide”, e.g. so that “shipped on board” bills of lading includes need not a specific / added notation if there are no doubt as to when, where and on which vessel the goods are shipped on board.

 
  AND, THE DREAM DEBATE CONTINUES TOWARD PERFECTION OF DREAM UCP

Jia Hao on Kim's Dream Consultancy Report

As to negotiability [7] of bill(s) of lading and issue of document of title

I agree with Kim that bill(s) of lading may be categorized into negotiable and non-negotiable bill(s) of lading, or liner and charter party bill(s) of lading. The former way for categorization depends on “who is consignee”, namely negotiable when consignee indicated as “to order” or “to order of one party”(usually called order bill of lading), non-negotiable when consignee indicated as a specific named party(usually called straight bill of lading). The latter one, however, depends on a clear indication on the face side of a bill of lading. Otherwise, it is difficult to judge whether the bill of lading presented is liner one or charter party one. But all of them should also meet the stipulations of Article 23(as revised by me) when covering port-to-port shipment or multimodal transport.

Regarding the issue of document of title, in my view, it is not proper to mention it in the UCP, as it may be a law problem rather than a UCP problem, which may be better to be settled by courts under local law. Moreover, the definition of document of title seems not to be fully settled in common law. [8] It follows that it is not generally accepted law that a straight bill of lading which is for delivery to a named consignee is not a document of title. [9] Thus, this uncertainty leads to different positions held in different national laws regarding whether a carrier can delivery cargo covered by straight bills of lading without requiring surrender of the document. To my best knowledge, under US law (Pomerene Act 1916/1994) and in Hong kong (The Brij case), no requirement for surrender of straight bill(s) of lading; whilst in Singapore (The Voss Peer v. APL case), Netherlands (The Duke of Yare case), Malaysia (The Taveechai Marine case), France (The MSC Magellanes case) , China [10], the straight bill(s) of lading should be submitted for delivery of cargo; However, UK’s position is uncertain. (The Chitral case，The Rafaela S case，The Happy Ranger case).

Another problem may appear is, it is still not fully settled that multimodal transport documents may be deemed as documents of title. [11]

Additionally, bankers may refer to ISBP Para. 43 which in part guides that “the content of a document must appear to fulfill the function of the requirement document”, when an annoying clause destroys any function of bill(s) of lading, e.g., the awkward clause of Maersk’s bill(s) of lading destroys the function of bill(s) of lading as document of title. And then, this kind of matters may leave to local law to settlement.

A) Yes, it is right that different transport documents may be subject to different rules. However, the application of rules may be indicated by clauses. It is not the problem of “however named”.

 v) In my understanding, the short form/blank back bill of lading in liner transport is acceptable, but charter party bill of lading which is always short form is not acceptable. ICC Opinion TA560rev may be referred to well.

 D) My mistake. The definition of transshipment should be revised as “For the purpose of this article, transshipment means unloading and reloading from one vehicle to another vehicle during the carriage stipulated in the credit.”

And the following provision may be revised as

“• Where a bill of lading covers port-to-port shipment ,

• • unless the credit prohibits transshipment, the bill of lading may state that the cargo will be transshipped provided the entire carriage stipulated in the credit is covered by one and the same bill of lading.

• • even if the credit prohibits transshipment, a bank will accept a bill of lading which:

i) indicates that transshipment will take place, as long as the cargo are shipped in a container, trailer or LASH barge as evidenced by the bill of lading, provided that the entire carriage is covered by one and the same bill of lading,

or

ii) incorporates clauses stating that the carrier reserves the right to transship.

•  Where a bill of lading covers multimodal transport, transshipment is automatically allowed.”

 

As to issue of freight forwarders

In my view, under UCP600, bankers may merely check whether the signer of a bill of lading is identified as carrier or agent for carrier, regardless of whether on face of the bill of lading the signer is a forwarder. Therefore, the clause in the credit “B/L issued by a freight forwarder is acceptable” is meaningless. And the clause “B/L issued by a freight forwarder is acceptable” will be checked according to ISBP Para. 25 to judge who is the issuer of the bill of lading and whether the issuer is a freight forwarder(which may be identified from the printed letterhead or logo).

 

 
 

Footnotes

[7] Technically speaking, it may be more appropriate to be called as transferability of bill(s) of lading.

[8] Generally, see Benjamin’s Sale of Goods(5th Edition), Sweet & Maxwell, 18-005(There is no authoritative definition of “document of title to goods” at common law, but it is submitted that it means a document relating to goods the transfer of which operates as a transfer of the constructive possession of the goods.)

[9] As to the contrary position, see Professor William Tetley unpublished book “Marine Cargo Claims(4th Edition)”,Chapter 8, http://www.mcgill.ca), ( “The nominate bill of lading is a document of title but is not negotiable.”); see also GEORGIOS. I . ZE KOS，The Contractual Role of Straight (non-negotiable)Bills of Lading under US, English and Greek Law. Additionally, according to Ralph De Wit, whether or not the named bill of lading is a document of title is a question which has raised some controversy, especially in continental law, where it is expressly answered in the negative by some authors. Whilst common law authorities seem to have no problem with the named bill as a document of title.(For detailed analysis, see his Multimodal Transport: Carrier liability and Documentation,LLP,1995,P288)

 [10] See George Y. B. Wang: Delivery of Cargo under Straight Bills of Lading under Chinese Law----Controversy is Settled for Chinese Courts,(when the Thirteenth National Seminar on Maritime Adjudication was held in Qing Dao city, judges representing the Supreme Court and all the maritime and higher courts (as courts of appeal) discussed and debated this issue. A conclusion was finally reached that where the Maritime Code of P.R.China is applied, delivery of cargo under straight bills of lading should be against surrender of the original bills of lading, regardless of the nature and negotiability of straight bills.)

[11] Generally, see Ralph De Wit, Multimodal Transport: Carrier liability and Documentation, LLP,1995,6.34--6.44.

 

 
 

Dream UCP vs. Earthly UCP

JIA'S VIEWS ARE GRIST FOR KIM'S MILL

 
 

Kim's Further Comments Fuel the Debate 

 

 

On negotiability

 

I think that the comments from Jia Hao clearly states the  dilemma the banks have placed themselves in in this case. On one hand it is a “local law problem rather than a UCP problem” – on the other hand there are those “annoying clauses destroying the functions of the B/L”. On the third hand (should you have such ) banks are not to examine the terms and conditions of the document. To me this simply does not match. I am really not sure that ISBP paragraph 43 adds anything here – who is to say what should be the “function” of a transport document – if not the transport company )

 

I am not sure whether the “straight” bill of lading presents a real problem. They are very rarely called for in the LC – and I guess that all bankers (now ) understand that the risk exist that it will be treated as a waybill.

 

As to the issue of whether a multimodal transport document is a document of title; as far as I understand that depends on the “form” used. I understand that there are two fiata forms; one being negotiable – one being a waybill.

This also underlines my argument of dealing in negotiable and non-negotiable documents.

 

 

Blank Back / Short Form / Charter Party B/L

I agree that the position stated by Jia Hao is the current one – and seems to be that going forward as well. I merely state that I do not understand why this is so.

 

Transhipment

 

I must say – I really do not understand (or agree with) the statement that “even if the credit prohibits transhipment, banks will accept …”

Since this has been added to the credit … one may get the impression that the applicant really do not want the goods to be transhipped.

In my dreamland there are no such provision – in fact no article on transhipment. I even think that the SWIFT standard fields should be removed …

 

 

Freight Forwarders - my favorite topic

 

I am not sure whether the comments by Jia Hao reflect how he believe it to be now under UCP 500 (in which case I am not sure that I agree) or reflect how he would like it to be – in which case I (think that I) agree with the principle – but do not understand the need to check the issuer – since transport documents issued by freight forwarders are already acceptable.

(I have made a ‘BOOTLEG’ DECISION PAPER ON DOCUMENTS ISSUED BY FREIGHT FORWARDERS FOR PRESENTATION UNDER DOCUMENTARY CREDITS” (LC Monitor Volume 7 / Issue 3) – and I take the liberty to recommend this one )