4Understanding Changes to ISBP Pamela Woon, Regional Trade AdvisorCiti Transaction Banking Academy for Financial Institutions Professionals | August 2014
5Changes Separates practices by Sections (A to Q) New inclusions not appearing in previous publicationExpands the application more than what stated in ISBP 681Easier to understand, provides further clarityEach section address a particular UCP article relative to each practice (Transport documents, drafts, invoices etc)Addresses other documents not considered in publication 681 (P/List, W/List, Beneficiary Certificates and other type of certificates ( Analysis, Inspection, Health, etc.))
6Comparison – ISBP 681 vs. ISBP 745 ISBP 2013 RevisionPreliminary Considerations57General Principles37General Principles (A1 – A41)41Drafts and Calculation of Maturity Date14Drafts and Calculation of Maturity Date (B1 – B18)18Invoices11Invoices (C1 – C15)15Transport Document Covering at Least Two Different Modes of Transport23Transport Document Covering at Least Two Different Modes of Transport (“multimodal or combined transport document”) (D1 – D32)32Bill of Lading24Bill of Lading (E1 – E28)28(NONE)Non-Negotiable Sea Waybill (F1 – F25)25Charter Party Bill of Lading19Charter Party Bill of Lading (G1 – G27)27
7Comparison – ISBP 681 vs. ISBP 2013 Revision (Cont’d) Air Transport Document23Air Transport Document (H1 – H27)27Road, Rail or Inland Waterway Transport Document13Road, Rail or Inland Waterway Transport Document (J1 – J20)20Insurance Document and Coverage11Insurance document and Coverage (K1 – K23)Certificate of Origin5Certificate of Origin (L1 – L8)8(NONE)Packing List, Note or Slip (“Packing List”) (M1 – M6)6Weight List, Note or Slip (“Weight List”) (N1 – N6)Beneficiary’s Certificate (P1 – P4)4(NONE)Analysis, Inspection, Health, Phytosanitary, Quantity, Quality and Other Certificates (“certificate”) (Q1 – Q11)11Total185298
8Question Time!The examination of documents is to be completed according to the terms and conditions of the credit and UCP 600.ISBP, publication 681 or 745, only provides an explanation of how to interpret UCP 600.Since most of publication 681 is covered in 745, it is recommended that ISBP 745 be used as the basis for examination of documents.Topic : Examination subject to publication 681 or 745A credit is issued before the publication of ISBP 745 and had stated “the applicable rule: UCP latest version” .Should the examination of documents under that credit be subject to ISBP 681 or ISBP 745?
9PRELIMINARY CONSIDERATIONS Scope of the publicationi – (New)to be read in conjunction with UCP 600 and not in isolation.ii – (New)Practices described highlight how articles of UCP 600 are to be interpreted and applied tocredit and do not expressly modify or exclude an applicable article in UCP 600.
10A GENERAL PRINCIPLES Abbreviations A1 – (expands Para 6) Credit includes an abbreviation in its text allows document to showthe same abbreviation or any other abbreviation that has the samemeaning, or to show the complete spelling of the word or vice versa.A2,a – (expands Para 7)Virgules (i.e., slash marks “/”) when used with no context is to be understood as follows:“Red/Black/Blue” - only Red OR only Black OR only Blue OR any combination of them.A2,b – (New)Comma (“,”) when used to indicate a range of data with no context is to be understood as follows:“Port of Loading: Hamburg, Rotterdam, Antwerp” - only Hamburg OR only Rotterdam OR only Antwerp OR any combination of them.
11û ü A GENERAL PRINCIPLES Certificates, Certifications, Declarations and StatementsA4 – (expands Para13)needs to be dated depends on the type that has been requested,its required wording and the wording that appears within thedocument.LC Certification Requirement:The vessel is no more than 25 years oldTo Comply :Certify the date or year the vessel was built=> such date is no more than 25 years prior to shipment date **=> Date of issuance not requiredCertify as to the wording as stated in the credit=> Date of issuance is required.Date if Issuance :We certify that the vessel was built October 10, 1994 **ûDate of Issuance:We certify that the vessel is no more than 25 years oldü
12A GENERAL PRINCIPLESCourier receipt, post receipt and certificate of posting in respect of sending of documents, notices and the likeA10 – (New)courier receipt, post receipt and certificate of posting required by the creditas evidence of sending documents, notices and the like is to be examinedonly to the extend expressly stated in credit, otherwise according to UCP 600sub-article 14(f) and not under UCP 600 article 25.Documents and the need for completion of a box, field or spaceA17 – (New)a box, field or space for data to be inserted in a document does notnecessarily mean that such box, field or space is to be completed.
13A GENERAL PRINCIPLES Expressions Not Defined in UCP 600 A19 – (expands and adds 3 new expressions to Para 21)“shipping documents” : all documents, except drafts, teletransmissionreports and courier receipts, postal receipt or certificates of postingevidencing the sending of documents.“stale documents acceptable” (with or without specifying presentation period) : presented later than 21 days, but within validity.“third party documents not acceptable” : has no meaning and is to be disregarded.“shipping company” as issuer relating to a transport document : carrier; master or,when a charter party bill of lading is presented, the master, owner or charterer, or anyentity identified as an agent of any one of the aforementioned, regardless of whether itissued or signed the presented transport document.“documents acceptable as presented” :1. presentation consist of one or more of the stipulated documents2. within expiry and within credit amount.3. Documents will not be examined including whether they are presented in therequired number of originals or copies.
14A GENERAL PRINCIPLES Issuer of documents Language A21 – (expands Para 23)credit stipulates the language, data required by the credit or UCP 600 are to be inthat language.credit silent, any languagecredit allows multiple languages, confirming or nominated bank acting on itsnomination may restrict the language. Else, required to examine the data in all ofthe acceptable languages.no examination of data inserted in a language that is additional to creditrequirement.information in language other than that required in the credit may be acceptable.(eg. name of person/entity, stamps, legalization, endorsements or similar, pre-printed text not limited to field headings)
15A GENERAL PRINCIPLES Non-documentary conditions and conflict of data A26 – (New)compliance need not be evidenced on any stipulated document.Data contained in a stipulated document are not to be in conflict.
16A GENERAL PRINCIPLES Originals and copies A27 – (New) document bearing an apparently original signature, mark, stamp or label of issueris an original unless it states that it is a copy.A29 – ( expands Para 29, 30)credit requires 2/3 original BLs without disposition instructions for the remainingand presentation of 3/3 original BLs is acceptable.“photocopy of a signed invoice” requires presentation of either a photocopy or copyof original invoice duly signed or, when not prohibited, a signed original invoice.
17ORIGINAL A GENERAL PRINCIPLES Originals and copies A30 – (Para 31) LC must prohibit original if only copy is acceptable.where credit calls for copy & indicates disposal of original,presentation of original not acceptable.A31 – (New)- original document be signed when required by credit .original document be signed when required by document itselfTo be countersigned to be valid ……
18A GENERAL PRINCIPLES Signatures A35 – ( expands Para 39) requirement for signed & stamped will be satisfied by a signature & the name of theparty typed, stamped, handwritten, pre-printed or scanned on the document.“this document has been electronically authenticated” or “this document has beenproduced by electronic means and requires no signature” does not, by itselfrepresent an electronic method of authentication.statement that authentication may be verified or obtained through a specificreference to a website (URL) constitute a form of electronic method ofauthentication. Banks will not access such websites to verify or obtainauthentication.
19ü ü ü A GENERAL PRINCIPLES Title of documents and combined documents Quality & Quantity CertificateDD/MM/YYGoods Description:XXXWe hereby certify that 10,000 widgets shipped are of good qualityüTitle of documents and combined documentsA41 – (New)document required by a credit covering more than one function may be presented as a single document or separate documents that appear fulfill each function and is presented in the number required.ABC CO. LTDQuality CertificateDD/MM/YYGoods Description: XXXWe hereby certify that the goods are of good qualityABC CO. LTDQuantity CertificateDD/MM/YYGoods Description: XXXWe hereby certify that 10,000 widget have been shipped.ABC CO. LTDüüLC Field 45A :Certificate of Quality and Quantity
20Question Time! Topic : Use of a virgule (/) 1. The Certificate of Origin could be issued by the Chamber of Commerce in Country A or Country B or by both (2 certificates) depending on the origin of the goods2. A requirement for a certificate of quality/quantity is requiring two distinct certifications i.e., one relating to quality and one to the quantity and not one or the other, as may be implied by the use of a virgule.The key word to look in for Para A2 is “a virgule is used and no context is apparent”However it is better that the issuing bank indicate s ‘and’ or ‘or’ as appropriate rather than a virgule (/).Topic : Use of a virgule (/)1. In a LC, a certificate of origin is required to be issued by Chamber of Commerce ofCountry A/Country B.In this case should the document be issued by a Chamber of Commerce in Country A or Country B?2. What happens when the LC calls for for a certificate of quality/quantity?Can only a Certificate of Quality or a certificate of Quantity alone be enough to meet the LC condition?
21Question Time! Topic : Courier Receipt evidencing The courier receipt required for evidencing dispatch of documents is to be examined in accordance with UCP sub Art 14(f).They cannot be treated as transport document and hence Sub Art 25 of UCP will not applyThe courier receipt is acceptableTopic : Courier Receipt evidencingdispatch of non-negotiableDocumentsAn LC requires presentation of a courier receipt to evidence that one set of non-negotiable documents must be sent to the applicant within 5 days after shipment.The courier receipt presented does not bear the signature or stamp of the courier company. Is this acceptable?
22B DRAFTS AND CALCULATION OF MATURITY DATE Drawing and signingB8 – (New)draft must be drawn by the beneficiary and to indicate a date of issuance.beneficiary or second beneficiary changed its name, credit mentions the formername, draft may be drawn using the new name provided that it indicates “formerlyknown as (name of beneficiary or second beneficiary).B9 – (New)credit indicates drawee as the bank’s SWIFT address, draft may show the same orthe full name of the bank.B10 – (New)credit available by negotiation with nominated or any bank, draft is to be drawn on abank other than the nominated bank.B11 – (New)credit available by acceptance with any bank, draft is to be drawn on the bank thatagrees to accept the draft thereby willing to act on its nomination.
23B DRAFTS AND CALCULATION OF MATURITY DATE Drawing and signingB12 – (New)Credit available by acceptance with:a nominated bank (not a confirming bank), and it decides not to act on itsnomination, the beneficiary may:> draw the draft on the confirming bank, if any, or request presentation be forwarded to confirming bank as is.> if credit available with any bank, draw the draft on the bank that agrees to accept it thereby act on its nomination.> request presentation be forwarded to the issuing bank as presented, with or without a draft drawn on the issuing bank.a confirming bank and it decides not to reinstate its confirmation, the beneficiarymay request presentation be forwarded to the issuing as presented, with or without adraft drawn on the issuing bank.
24B DRAFTS AND CALCULATION OF MATURITY DATE AmountsB13 – (New)for the amount demanded under the presentation.B14 – (expands Para 50)when shown, amount in words and figures is to be the same, and currency asstated in credit.when in conflict, the amount in words is to be examined as the amount of demand..
25C INVOICES Title of invoice C1 – ( expands Para 57) A credit requiring a “ commercial invoice”:document titled “invoice” is sufficient enough to satisfy credit requirement evencontaining statement that it has been issued for tax purposes.Issuer of an invoiceC2 – (New)appear to have been issued by the beneficiary or, in the case of transferred credit,the second beneficiary.when beneficiary or second beneficiary has changed its name and the creditmentions the former name, an invoice may be issued in the name of the new entityprovided it contains indication of “formerly known as (name of the beneficiary orsecond beneficiary)” or words of similar effect.
26C INVOICES LC Goods Description INVOICE SHOWS Suede Shoes Description of the goods, services or performance and other general issues related to invoicesC5 – (New)may also indicate additional data provided they do not appear to refer to adifferent nature, classification or category of goods, services or performance.LC Goods DescriptionINVOICE SHOWSSuede ShoesImitation Suede ShoesHydraulic Drilling RigSecond Hand Hydraulic Drilling Rig
27û ü C INVOICES Instalment drawings or shipments C15 – ( expands Para 67)credit ceases to be available for that and subsequent instalment for any instalmentnot drawn or shipped within period allowed,given periods are a sequence of dates or timelines that determine a start and enddate for each installment.if credit allows partial drawings or shipments, partial drawings or shipments ispermitted within each installment.credit indicating number of latest dates, and not given periods is not an installmentschedule per article 32, UCP 600 but article 31.PeriodQuantityMax . QuantityJan1000 mt XXFebMarScheduleQuantityMax . QuantityLatest by Jan1000 mt XX3000 mt XXLatest by Feb2000 mt XXLatest by Marûü
28D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL Issuance, carrier, identification of the carrier and signing of a multimodal transport document47A: Additional Conditions+ Freight Forwarder’s / House…….[type of transport document ] are notacceptable“+” has no meaning.If no specific requirements is provided in credit, it is to be disregarded and be examined according to UCP 600 article 19, 20 and 21.
29D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL Issuance, carrier, identification of the carrier and signing of a multimodal transport documentwhen signed by a named branch of the carrier, the signature is considered to havebeen made by the carrierAs CarrierIssued by:
30D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL On board notation, date of shipment, place of receipt, dispatch, taking in charge, port of loading or airport of departure.- If a credit requires shipment to commence from a port, named port of loadingmay be stated in “Place of receipt”, in which case the dated on board notation toalso indicate the name of the vessel at the port stated under “Place of receipt”.- name of country of place of receipt, dispatch, taking in charge, port of loading or airport of departure is not required even if stated in the credit.Place of final destination, port of discharge or airport of destinationnamed port of discharge may be stated in “Place of final destination”, in which case notation evidencing port of discharge stated under “Place of final destination acceptable.name of country of place of final destination, port of discharge or airport of destination is not required even stated in the credit.when credit indicates a geographical area or range of places of final destination, ports of discharge, transport document to indicate the actual place of final destination, port of discharge within that geographical area or range of places.Need not indicate the geographical area
31NAMED POL /POD IN LC STATED IN PLACE OF RECEIPT/ FINAL DESTINATION FIELD If named POL as required by Credit is indicated in “Place of Receipt” field=> required a dated on board notation to also indicate the name of the vessel at the port stated under “Place of receipt”.If named POD as required by Credit is indicated in “Place of Final Destination ” field=> required a notation evidencing port of discharge stated under “Place of final destinationPLACE OF RECEIPTPORT OF LOADINGPORT OF DISCHARGEPLACE OF FINAL DESTINATIONCONSIGNEE:TO ORDER OF BUYER BANKSHIPPER:SELLER CO. LTD.PRE-CARRIAGE:OCEAN CARRIAGE:VESSEL AGOODSISSUED IN 3 ORIGINALSBILL OF LADINGAS MASTERGOODS RECEIVED IN APPARENT GOOD ORDER…XYZ SHIPPING LINES [ CARRIER ]QUILIN CHINAPORT KLANG, MALAYSIASHENZHEN CHINAPORT PRAI, PENANGDATE OF ISSUE: 06/05/2008 SIGNATURED.8ON BOARD : DD / MM /YY VESSEL PORT PRAID-12 SHENZHEN, CHINA:44E: (port of loading)Port Prai, Penang:44F: (port of discharge)Shenzhen, ChinaD. 12Port of Discharge : Shenzhen
32D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL Consignee, order party, shipper and endorsement, and notify party- when required by credit to consign to or to the order of “issuing bank” or “applicant” or notify “applicant” or “issuing bank”, transport document indicating the name of the issuing bank or applicant, as applicable, without their respective addresses or any contact details stated in credit is acceptable.- when address and contact details of applicant appear as part of the consignee or notify party details, they are not to conflict with those stated in credit.Indication of name and address of delivery agent at destinationwhen credit requires to indicate the name, address and contact details of a delivery agent, at or for the place of final destination or port of discharge, the address need not be one that is located at place of destination or port of discharge or within the same country.
33D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL On board notation, date of shipment, pre-carriage, place of receipt and port of loading(New – aligning with ICC Position Paper 470 April 22, 2010)Notwithstanding credit requires evidence a port-to-port shipment, when a B/Lindicates : i. a place of receipt that is the same as the port of loading and there is noindication of a means of pre-carriage OR ii. a place of receipt different from port of lading and there is no indication of a means of pre-carriage, then: (a) in case of a pre-printed “shipped on board” bill of lading => no further onboard notation is required and the date of issuance will be the date ofshipment (b) in case of a pre-printed “received for shipment” bill of lading => on boardnotation is required and the date of the on board notation will be the date of shipment.
34D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL On board notation, date of shipment, pre-carriage, place of receipt and port of loadingNotwithstanding credit requires evidence a port-to-port shipment, when a B/Lindicates :i. a place of receipt different from port of loading and there IS indication of a means of pre-carriage, a dated on board notation indicating the name of the vessel and port of loading stated in credit is required, regardless if it is pre printed “shipped on board” or “received for shipment”. The date of the on board notation will be the date of shipment.BILL OF LADINGPlace of Receipt : AmsterdamPort of Loading : RotterdamPre-carriage * : V 1Main-Carriage: V2On-Board :dd/mm/yyvessel namePOL in LC
35D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL On board notation, date of shipment, pre-carriage, place of receipt and port of loadingNotwithstanding credit requires evidence of a port-to-port shipment, when a B/Lindicates :ii. a means of pre-carriage, no matter if no place of receipt is stated, a dated on board notation indicating the name of the vessel and port of loading stated in credit is required, regardless if it is pre-printed “shipped on board” or “received for shipment”. The date of the on board notation will be the date of shipment.BILL OF LADINGPlace of Receipt : NONEPort of Loading : RotterdamPre-carriage * : V1Main-Carriage : V2On-Board :dd/mm/yyvessel namePOL in LC
36D,E,F & G Common Changes – MMBL, BL, NNSWB and CPBL On board notation, date of shipment, pre-carriage, place of receipt and port of loadingNotwithstanding credit requires evidence of a port-to-port shipment, when a B/Lindicates :a bill of lading with wordings such as “on board” means the carriage is fromthe place of receipt to the port of loading, and the place of receipt is alsoindicated, it must bear a dated on board notation indicating the name of vesseland port of loading stated in the credit. The date of the on board notation will bethe date of shipmentif bill of lading indicates more than one port of loading, regardless if it is pre printed “received for shipment” or “shipped on board”, a separate dated onboard notation with relevant port of loading is requiredWhen the Place of Receipt has been completed, any notation on this BL of “on board”. “loaded on board” or words of like effect shall be deemed to mean on board the means of transportation performing the carriage from the Place of Receipt to the Port of Loading.
37F Non-Negotiable Sea Waybill This is a new addition since ISBP 681 did not address Non Negotiable Sea Waybills;- Reaffirms the application of UCP 600 article 21It is similar to Bill of Lading in many parameters, with the below exceptions :Section F does not address the “however titled’’ concept as in E2the criteria for release of goods with presentation of more than one bill of lading.In addition, due to the nature of these two documents (non-negotiable vs. negotiable)the consignee criteria in E12-E16 obviously differs from the one in F11-F14)LCBills of LadingNNSWBTo ABCTo ABCTo Order ABCTo Order ABC/ To ABCTo OrderTo Order & endorsed by shipperTo Issuing Bank or Applicant
38G Charter Party Bill of Lading Application of UCP 600 article 22G3 – (New)code name or form name, such as, “Congenbill” or “Tanker Bill of Lading”by itself is not an indication of, or reference to, a charter party.G16 – (New)shipment on more than one vessel leaving on same date for same destination is partial shipment.Release of goods with more than one charter party bill of ladingto be surrenderedG26 – (New)is not to expressly state release of goods is dependant on its surrender together with one or more other transport document unless all of the referenced transport document form part of the same presentation under the same credit.Charter party contractsG27 – (New)banks do not examine charter party contract, even required by credit, unless UCP 600 sub-article 22(b) is specifically excluded and credit indicates the data to be examined.
39H Air Transport Document Issuance, carrier, identification of the carrier and signing of an air transport documentH5 – (expands Para 137)when signed by branch of the carrier, it is signed by the carrier.carrier to be identified by its name instead of an IATA airline code.Goods accepted for carriage, date of shipment and requirement of an actual date of shipmentH8 – (clarifies Para 140)other information appearing relative to this information, “For Carrier Use Only”, “Required Flight Date” or “Routing and Destination” to be disregarded as the shipment date.
40Question Time!Provided a bill of lading contains a dated on board notation, a date of issuance is not necessary.If a presented bill of lading was pre-printed 'shipped on board', and indicated a date of issuance and bore an undated on board notation or statement, the date of issuance will be deemed to be the date of shipment.ISBP paragraph A11 (a) (iii) states that original transport documents, are to indicate a date of issuance, a dated on board notation, a date of shipment, a date for receipt for shipment, a date of dispatch or carriage, a date of taking in charge OR a date of pick up or receipt, as applicable.Topic: Date of issuance field on bill of lading left blankLC calls for on board ocean bill of lading.Beneficiary submits a received for shipment bill of lading showing a dated on board notation but the date of issuance field is left blank .Is this acceptable ? Should the date of issuance field be completed ?How about if the presented bill of lading is pre-printed shipped on board instead of received for shipment?
41Question Time! Topic : Photocopy of Transport This will be considered as a discrepancy.Copy of Transport documents need not be examined under ArtHowever the document will still be subject t Art 27, which states “ a bank will only accept a clean transport document”Hence even if a photocopy of Transport Document is called for it should not contain any reference to damaged goods or packaging in compliance with Art 27.Topic : Photocopy of TransportDocument called for in the LCA LC calls for a Photocopy of a Bill of Lading. No original transport document is required under the LC.The bill of lading presented contains a clause stating “Packaging is damaged”.Is this a discrepancy ? Do we need to check the copy of Transport Documents for compliance under Art of UCP 600?
42K INSURANCE DOCUMENT AND COVERAGE Issuer, signing and original of an insurance documentK2 – (New)when identified as “insurer”, the insurance document need not indicate that itis an insurance company or underwriter. eg. Mitsubishi Sumitomo InsuranceGroupK3 – (New)a broker may sign as agent/proxy for (or on behalf of) a named insurance company/underwriterK4 – (New)insurance document signed by an agent or proxy is to indicate the name of theinsurance company or underwriter for [or on behalf of] which the agent or proxy issigning, unless it has been identified elsewhere in the document eg. John Doe (byproxy) on behalf of the insurer, MSIG
43K INSURANCE DOCUMENT AND COVERAGE Issuer, signing and original of an insurance documentK5 – (New)when insurance document requires a countersignature by the issuer, theassured or a named entity, it is to be countersigned.K6 – (New)insurance document may show only the trading name in the signing field,provided the insurance company , address and contact information is identifiedelsewhere on the document.Eg. AGCS Marine Insurance Co33 West Monroe street Signed by:Chicago, IL Tel:K7 – (New)insurance document indicating cover is provided by more than one insurer may besigned by a single agent or proxy on behalf of all insurers or be signed by aninsurer for [or on behalf] of all co-insurers.need not show the names of each insurer or the percentage of cover of eachinsurer.
44K INSURANCE DOCUMENT AND COVERAGE DatesK9 – (simplifies Para 175)insurance document is not to indicate an expiry date for thepresentation of any claims there under.NOK10 – (New)insurance document indicating cover effective from a date later than shipment date isnot permitted.insurance document indicating issue date later than date of shipment is to includeadditional note that coverage is effective from a date not later than the date of shipment.insurance document covering “warehouse-to-warehouse” or words of similar effectdated after date of shipment does not signify that coverage was effective from a datenot later than the shipment date.K11 – (New)in the absence of issuance date or effective date of coveragethe countersignature date will be treated as the effective date.
45K INSURANCE DOCUMENT AND COVERAGE Amount of cover and percentageK13 – (New)no requirement for insurance coverage to be calculated to more than twodecimal places.K14 – (New)is not to contain a franchise or an excess (deductible) clause, if creditrequires insurance cover irrespective of percentage.- Document need not state “irrespective of percentage”K16 – (New)covering same risk, same shipment must be under one document, however,multiple documents are acceptable provided each document clearly reflects bypercentage:a) value of each insurer’s cover,b) each insurer will bear its share of the liability severally and withoutpreconditions, andc) insurance coverage, when totalled, equals at least the insured amountrequired by credit or UCP 600 sub-article 28 (f)(ii).Risks to be coveredK18 – (addition to Para 173)an Institute Cargo Clause (A) or Institute Cargo Clauses (Air) when dispatchis effected by air = “all risk” coverage required by the credit.
46“irrespective of percentage” K INSURANCE DOCUMENTOriginalMILL 4 No:08483INSURANCE COMPANY LIMITEDINSURANCE POLICYCredit Term: LC Value: USD90, (after deduction of advance payment of USD10,000.00) Risk to be covered: All Risks Irrespective of Percentage with claims payable at destination.Policy Issued To Order of SELLER CO. LTD.Sum Insured(figures):USD110,000.00Covering:Institute Cargo Clause AClaims payable at destinationSum Insured(words):One Hundred & Ten Thousand U.S. Dollars OnlyVessel:Titanic V001ûSailing Date:DD/MM/YYSubject to 5% Excess/FranchiseVoyage from:To:HanoiHKSettling Agents:ABC Company Ltd, HKSurvey Agent:K14 – irrespective of percentageüGoods Insured:1 BMW 5.0 seriesExcluding Terrorism RiskK15 – for gross value of goodsImportant NoticeK17 – exclusion clauseCARRIERS' AND / OR BAILEES' LIABILITYAll matters relating to this Policy / Certificate shall be referred to Insurance Co. Ltd. Or in the case of claim to the Settling Agents named above.need not state“irrespective of percentage”SELLER COMPANY LTDFor and on behalf of Insurance Co. LtdAuthorised SignatureCountersigned to be validDate:25 JUN 08
47K INSURANCE DOCUMENT AND COVERAGE Insured party and endorsementK20 – (New)credit should not require insurance to be issued “to bearer”, or “to order”- should indicate the name of an insured party.when credit requires insurance document to be issued “to order of (namedentity)”, document not indicating “to order” is acceptable provided :> the named entity is show as insured party or> claims are payable to it,> and assignment by endorsement is not expressly prohibited.K21 – (New)where a credit is silent as to insured party :> not to show claims payable to the order /favor of beneficiary or any entityother than the issuing bank / applicant> if claims payable to the order /favor of beneficiary must be endorsed in blankor in favor of the issuing bank / applicant.
48K INSURANCE DOCUMENT AND COVERAGE General terms and conditions of an insurance documentK22 – (New)will not be examined by banks.Insurance PremiumK23 – (New)indication on insurance documents is to be disregarded unless there is indicationthat document is not valid unless premium is paid and there IS indication thatpremium has not been paid.
49Question Time! Topic: Rounding up or down for insurance coverage The Insurance Certificate presented is acceptable.ISBP 745, paragraph K13 states that there is no requirement for insurance coverage to be calculated to more than two decimal places.This means that if the insurance amount need not be rounded off up or down when it exceeds more than 2 decimal places (i.e need not be rounded off to 0.77 )Topic: Rounding up or down forinsurance coverageLC called for Insurance Certificate at 110% of the Invoice Value.Invoice is presented for SGD 91, Insurance Certificate is presented for SGD 100,132.76110% of invoice amount works out toSGD 100,Is the insurance certificate acceptable?
50L CERTIFICATE OF ORIGIN Content of a certificate of originL5 – (expands Para 183)consignee information, if any, must not be in conflict with transport document.Certificate of OriginConsignee : ABC Co. LtdConsignee : XYZ Co. LtdBill of LadingConsignee :ABC Company Limitedüû
51L CERTIFICATE OF ORIGIN Content of a certificate of originL5 (continued)if credit requires transport document be issued “to order”, “to order ofshipper”, “to order of issuing bank”, “to order of nominated bank” or“consigned to issuing bank”, the document may show any entity named in thecredit except the beneficiary as the consignee.Letter of CreditApplicant : DEF Company LimitedBeneficiary : GHI Company LimitedIssuing Bank : Importer BankB/L to be issued consigned : To order/ order of shipper / issuing bank /nominated bankCertificate of OriginConsignee : DEF COMPANY LIMITEDüCertificate of OriginConsignee : IMPORTER BANKüBill of LadingConsignee :To order/ order of shipper / issuing bank /nominated bank *ûCertificate of OriginConsignee : GHI COMPANY LIMITEDCertificate of OriginConsignee: XYZ PRIVATE LIMITED (a name NOT appearing in LC)û
52L CERTIFICATE OF ORIGIN Content of a certificate of originL5 (continued)if credit has been transferred, first beneficiary as consignee is acceptable.Transferable Letter of CreditApplicant : DEF Company LimitedBeneficiary : GHI Company LimitedIssuing Bank : Importer BankB/L to be issued consigned : To order/ order of shipper / issuing bank /nominated bankCertificate of OriginConsignee: DEF COMPANY LIMITEDüCertificate of OriginConsignee : IMPORTER BANKüBill of LadingConsignee :To order/ order of shipper / issuing bank /nominated bank *Certificate of OriginConsignee : GHI COMPANY LIMITEDü
53L CERTIFICATE OF ORIGIN Content of a certificate of originL7 – (New)in the absence of requiring a certificate of origin, the origin of goods indicated inany document is not to conflict with the requirement of the credit.Example:LC condition: Goods must be of U.S.A. originMadeInChinaûShipping marks in B/LWe certify goods are ofChinese originCertification in InvoiceûL8 – (New)may indicate a different invoice number, invoice date and shipment routing tothat indicated in one or more other documents provided the exporter or consignorshown is not the beneficiary.
55M PACKING LIST, NOTE OR SLIP (“Packing List”) - NEW Basic requirement and fulfilling its functionM1document titled , similar titled or untitled containing any information as to the packingof the goods is acceptable.Issuer of a packing listM2issued by entity stated in credit.M3any entity may issue if issuer not indicated in credit.Content of a packing listM4data of packing on packing list, if presented, are not to conflict with data required in credit.M5may indicate different invoice number/date and shipment routing from otherdocuments, provided issuer is not the beneficiary.M6banks only examine totals to ensure it does not conflict with total shown in credit andany other document.
56M PACKING LIST, NOTE OR SLIP (“Packing List”) - NEW Basic requirement and fulfilling its functionN1document titled ,similar titled or untitled containing any information as to the weight ofthe goods is acceptable.Issuer of a weight listN2issued by entity stated in credit.N3any entity may issue if issuer not indicated in credit.Content of a weight listN4data of weight on a weight list, if presented, are not to conflict with data required incredit.N5may indicate different invoice number/date and shipment routing from otherdocuments, provided issuer is not the beneficiary.N6banks only examine totals to ensure it does not conflict with total shown in creditand any other document.
57P BENEFICIARY’S CERTIFICATE - NEW Basic requirement and fulfilling its functionP1a signed document titled or untitled containing data and certification requiredby credit is acceptable.Signing of a beneficiary’s certificateP2to be signed by, or for [or on behalf of], the beneficiary.Content of a beneficiary’s certificateP3not to conflict with credit requirements.P4data need not be identical, but are to clearly indicate requirement prescribed bycredit has been fulfilled.need not include goods description or other references to the credit or otherdocument.
58Q ANALYSIS, INSPECTION, HEALTH, PHYTOSANITARY, QUANTITY QUALITY AND OTHER CERTIFICATES (“certificate”) - NEWBasic requirement and fulfilling its functionQ1a signed document titled or untitled certifying the outcome of the required action.Q2an action required to take place on or prior to shipment date, the document is to issue date is also indicated, it may be subsequent to shipment date but not later than indicate:issue date not later than date of shipment,wording to that effect and if the presentation date.Issuer of a certificateQ3issued by entity stated in credit.Q4any entity, including the beneficiary may issue if issuer not indicated in credit.Q5if credit indicated issuer as “independent”, “official”, “qualified” or similar, documentissued by any entity, except the beneficiary is acceptable.
59Q ANALYSIS, INSPECTION, HEALTH, PHYTOSANITARY, QUANTITY QUALITY AND OTHER CERTIFICATES (“certificate”) - NEWContents of a certificateQ6may indicate:a) only a sample has been tested, analyzed or inspectedb) quantity greater than that stated in credit or any other document, orc) more hold, compartment or tank numbers than stated on transport document.Q7when credit indicates specific requirements, with or without stipulating documentto indicate compliance, data mentioned on the certificate or other document arenot to conflict with those requirements.Q8when credit is silent as to specific content, certificate may include negativestatements, provided not in conflict with credit, other document or UCP 600.
60Q ANALYSIS, INSPECTION, HEALTH, PHYTOSANITARY, QUANTITY QUALITY AND OTHER CERTIFICATES (“certificate”) - NEWContents of a certificateQ9consignee information, when shown, is not to conflict with transport document.if credit requires transport document be issued “to order”, “to order of shipper”,“to order of issuing bank”, “to order of nominated bank” or “consigned to issuingbank”, the document may show any entity named in the credit except thebeneficiary as the consignee.Q10may indicate an entity other than the beneficiary or the shipper as shown onother document as the consignor or exporter.Q11may indicate a different invoice number, invoice date and shipment routing tothat indicated in one or more other documents provided the exporter or consignorshown is not the beneficiary.
61Case Study: Identify the Discrepancies NODICREPANCIES1Invoice not issued by beneficiary as per LC2Invoice showing “CIF , Malaysia, Incoterm 2010” i/o “CIF, Malaysia3Inspection Certificate dated after the Shipment date4Inspection Certificate not in the language of the Credit5Insurance does not evidence “All Risk” coverage6Insurance shows exclusion of “Theft Pilferage and Non Delivery”7Insurance is dated after the Shipment date8Bill of Lading not signed as per UCP9Port of Loading does not show Country Name as per LC10B/L does not have on board notation