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Understanding Changes to ISBP Pamela Woon, Regional Trade Advisor Citi Transaction Banking Academy for Financial Institutions Professionals | August.

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Presentation on theme: "Understanding Changes to ISBP Pamela Woon, Regional Trade Advisor Citi Transaction Banking Academy for Financial Institutions Professionals | August."— Presentation transcript:

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4 Understanding Changes to ISBP Pamela Woon, Regional Trade Advisor Citi Transaction Banking Academy for Financial Institutions Professionals | August 2014

5 Changes  Separates practices by Sections (A to Q)  New inclusions not appearing in previous publication  Expands the application more than what stated in ISBP 681  Easier to understand, provides further clarity  Each 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.)) 5

6 Comparison – ISBP 681 vs. ISBP 745 ISBP 681ISBP 2013 Revision Preliminary Considerations5 7 General Principles37General Principles (A1 – A41)41 Drafts and Calculation of Maturity Date14Drafts and Calculation of Maturity Date (B1 – B18) 18 Invoices11Invoices (C1 – C15)15 Transport Document Covering at Least Two Different Modes of Transport 23Transport Document Covering at Least Two Different Modes of Transport (“multimodal or combined transport document”) (D1 – D32) 32 Bill of Lading24Bill of Lading (E1 – E28)28 (NONE)Non-Negotiable Sea Waybill (F1 – F25)25 Charter Party Bill of Lading19Charter Party Bill of Lading (G1 – G27)27 6

7 Air Transport Document23Air Transport Document (H1 – H27)27 Road, Rail or Inland Waterway Transport Document 13Road, Rail or Inland Waterway Transport Document (J1 – J20) 20 Insurance Document and Coverage11Insurance document and Coverage (K1 – K23) 23 Certificate of Origin5Certificate of Origin (L1 – L8)8 (NONE) Packing List, Note or Slip (“Packing List”) (M1 – M6) 6 (NONE)Weight List, Note or Slip (“Weight List”) (N1 – N6) 6 (NONE)Beneficiary’s Certificate (P1 – P4)4 (NONE)Analysis, Inspection, Health, Phytosanitary, Quantity, Quality and Other Certificates (“certificate”) (Q1 – Q11) 11 Total185 Total 298 Comparison – ISBP 681 vs. ISBP 2013 Revision (Cont’d) 7

8 Topic : Examination subject to publication 681 or 745 A 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?  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.  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. 8 Question Time!

9 PRELIMINARY CONSIDERATIONS i – (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 to credit and do not expressly modify or exclude an applicable article in UCP 600. Scope of the publication 9

10 A1 – (expands Para 6) Credit includes an abbreviation in its text allows document to show the same abbreviation or any other abbreviation that has the same meaning, 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. Abbreviations 10

11 A4 – (expands Para13) needs to be dated depends on the type that has been requested, its required wording and the wording that appears within the document. LC Certification Requirement: The vessel is no more than 25 years old To 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 required Certify as to the wording as stated in the credit => Date of issuance is required. Certificates, Certifications, Declarations and Statements Date if Issuance : We certify that the vessel was built October 10, 1994 ** Date of Issuance: We certify that the vessel is no more than 25 years old  11

12 Courier receipt, post receipt and certificate of posting in respect of sending of documents, notices and the like A10 – (New) - courier receipt, post receipt and certificate of posting required by the credit as evidence of sending documents, notices and the like is to be examined only to the extend expressly stated in credit, otherwise according to UCP 600 sub-article 14(f) and not under UCP 600 article 25. A17 – (New) - a box, field or space for data to be inserted in a document does not necessarily mean that such box, field or space is to be completed. Documents and the need for completion of a box, field or space 12

13 Expressions Not Defined in UCP 600 A19 – (expands and adds 3 new expressions to Para 21) - “shipping documents” : all documents, except drafts, teletransmission reports and courier receipts, postal receipt or certificates of posting evidencing 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 any entity identified as an agent of any one of the aforementioned, regardless of whether it issued or signed the presented transport document. - “documents acceptable as presented” : 1. presentation consist of one or more of the stipulated documents 2. within expiry and within credit amount. 3. Documents will not be examined including whether they are presented in the required number of originals or copies. 13

14 Issuer of documents Language A21 – (expands Para 23) - credit stipulates the language, data required by the credit or UCP 600 are to be in that language. - credit silent, any language - credit allows multiple languages, confirming or nominated bank acting on its nomination may restrict the language. Else, required to examine the data in all of the acceptable languages. - no examination of data inserted in a language that is additional to credit requirement. - 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) 14

15 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. 15

16 Originals and copies A27 – (New) - document bearing an apparently original signature, mark, stamp or label of issuer is 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 remaining and presentation of 3/3 original BLs is acceptable. - “photocopy of a signed invoice” requires presentation of either a photocopy or copy of original invoice duly signed or, when not prohibited, a signed original invoice. 16

17 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 itself To be countersigned to be valid …… 17

18 Signatures A35 – ( expands Para 39) - requirement for signed & stamped will be satisfied by a signature & the name of the party typed, stamped, handwritten, pre-printed or scanned on the document. - “this document has been electronically authenticated” or “this document has been produced by electronic means and requires no signature” does not, by itself represent an electronic method of authentication. - statement that authentication may be verified or obtained through a specific reference to a website (URL) constitute a form of electronic method of authentication. Banks will not access such websites to verify or obtain authentication. 18

19 Title of documents and combined documents A41 – (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. LC Field 45A : Certificate of Quality and Quantity Quality & Quantity Certificate DD/MM/YY Goods Description:XXX We hereby certify that 10,000 widgets shipped are of good quality Quality Certificate DD/MM/YY Goods Description: XXX We hereby certify that the goods are of good quality Quantity Certificate DD/MM/YY Goods Description: XXX We hereby certify that 10,000 widget have been shipped. 19

20 Topic : Use of a virgule (/) 1. In a LC, a certificate of origin is required to be issued by Chamber of Commerce of Country 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?  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 goods  2. 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 (/).  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 goods  2. 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 (/). 20 Question Time!

21 Topic : Courier Receipt evidencing dispatch of non-negotiable Documents An 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?  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 apply  The courier receipt is acceptable  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 apply  The courier receipt is acceptable 21 Question Time!

22 Drawing and signing B8 – (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 former name, draft may be drawn using the new name provided that it indicates “formerly known as (name of beneficiary or second beneficiary). B9 – (New) - credit indicates drawee as the bank’s SWIFT address, draft may show the same or the full name of the bank. B10 – (New) - credit available by negotiation with nominated or any bank, draft is to be drawn on a bank other than the nominated bank. B11 – (New) - credit available by acceptance with any bank, draft is to be drawn on the bank that agrees to accept the draft thereby willing to act on its nomination. 22

23 Drawing and signing B12 – (New) Credit available by acceptance with: - a nominated bank (not a confirming bank), and it decides not to act on its nomination, 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 beneficiary may request presentation be forwarded to the issuing as presented, with or without a draft drawn on the issuing bank. 23

24 Amounts B13 – (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 as stated in credit. - when in conflict, the amount in words is to be examined as the amount of demand.. 24

25 Title of invoice C1 – ( expands Para 57) A credit requiring a “ commercial invoice”: - document titled “invoice” is sufficient enough to satisfy credit requirement even containing statement that it has been issued for tax purposes. Issuer of an invoice C2 – (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 credit mentions the former name, an invoice may be issued in the name of the new entity provided it contains indication of “formerly known as (name of the beneficiary or second beneficiary)” or words of similar effect. 25

26 Description of the goods, services or performance and other general issues related to invoices C5 – (New) - may also indicate additional data provided they do not appear to refer to a different nature, classification or category of goods, services or performance. LC Goods Description INVOICE SHOWS Suede ShoesImitation Suede Shoes Hydraulic Drilling RigSecond Hand Hydraulic Drilling Rig 26

27 Instalment drawings or shipments C15 – ( expands Para 67) - credit ceases to be available for that and subsequent instalment for any instalment not drawn or shipped within period allowed, - given periods are a sequence of dates or timelines that determine a start and end date for each installment. - if credit allows partial drawings or shipments, partial drawings or shipments is permitted within each installment. - credit indicating number of latest dates, and not given periods is not an installment schedule per article 32, UCP 600 but article 31. PeriodQuantityMax. Quantity Jan1000 mt XX Feb1000 mt XX Mar1000 mt XX ScheduleQuantityMax. Quantity Latest by Jan 1000 mt XX 3000 mt XX Latest by Feb 1000 mt XX 2000 mt XX Latest by Mar 1000 mt XX  27

28 Issuance, carrier, identification of the carrier and signing of a multimodal transport document – “+” 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.  47A: Additional Conditions + Freight Forwarder’s / House…….[type of transport document ] are not acceptable 28

29 Issuance, carrier, identification of the carrier and signing of a multimodal transport document – when signed by a named branch of the carrier, the signature is considered to have been made by the carrier Issued by: As Carrier 29

30 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 loading may be stated in “Place of receipt”, in which case the dated on board notation to also 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 destination – named 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 30

31 NAMED POL /POD IN LC STATED IN PLACE OF RECEIPT/ FINAL DESTINATION FIELD PLACE OF RECEIPT PORT OF LOADING PORT OF DISCHARGE PLACE OF FINAL DESTINATION CONSIGNEE: TO ORDER OF BUYER BANK SHIPPER: SELLER CO. LTD. PRE-CARRIAGE: OCEAN CARRIAGE: VESSEL A GOODS ISSUED IN 3 ORIGINALS BILL OF LADING AS MASTER GOODS RECEIVED IN APPARENT GOOD ORDER… XYZ SHIPPING LINES [ CARRIER ] QUILIN CHINA PORT KLANG, MALAYSIA SHENZHEN CHINA PORT PRAI, PENANG DATE OF ISSUE: 06/05/2008 SIGNATURE D.8 ON BOARD : DD / MM /YY VESSEL PORT PRAI 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 destination :44E: (port of loading) Port Prai, Penang :44F: (port of discharge) Shenzhen, China D-12 SHENZHEN, CHINA D. 12 Port of Discharge : Shenzhen 31

32 - 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. Consignee, order party, shipper and endorsement, and notify party - 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 destination – when 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. 32

33 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/L indicates : i. a place of receipt that is the same as the port of loading and there is no indication 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 on board notation is required and the date of issuance will be the date of shipment (b) in case of a pre-printed “received for shipment” bill of lading => on board notation is required and the date of the on board notation will be the date of shipment. 33

34 On board notation, date of shipment, pre-carriage, place of receipt and port of loading – Notwithstanding credit requires evidence a port-to-port shipment, when a B/L indicates : 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 LADING Place of Receipt : Amsterdam Port of Loading : Rotterdam Pre-carriage * : V 1 Main-Carriage: V2 On-Board : a)dd/mm/yy b)vessel name c) POL in LC 34

35 On board notation, date of shipment, pre-carriage, place of receipt and port of loading – Notwithstanding credit requires evidence of a port-to-port shipment, when a B/L indicates : 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 LADING Place of Receipt : NONE Port of Loading : Rotterdam Pre-carriage * : V1 Main-Carriage : V2 On-Board : a)dd/mm/yy b)vessel name c) POL in LC 35

36 On board notation, date of shipment, pre-carriage, place of receipt and port of loading – a bill of lading with wordings such as “on board” means the carriage is from the place of receipt to the port of loading, and the place of receipt is also indicated, it must bear a dated on board notation indicating the name of vessel and port of loading stated in the credit. The date of the on board notation will be the date of shipment – if 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 on board notation with relevant port of loading is required Notwithstanding credit requires evidence of a port-to-port shipment, when a B/L indicates : When 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. 36

37 - This is a new addition since ISBP 681 did not address Non Negotiable Sea Waybills; - Reaffirms the application of UCP 600 article 21 - It is similar to Bill of Lading in many parameters, with the below exceptions : Section F does not address the “however titled’’ concept as in E2 the 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 LadingNNSWB To ABC To Order ABC To Order ABC/ To ABC To OrderTo Order & endorsed by shipper To Issuing Bank or Applicant 37

38 Application of UCP 600 article 22 G3 – (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 lading to be surrendered G26 – (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 contracts G27 – (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. 38

39 Issuance, carrier, identification of the carrier and signing of an air transport document H5 – (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 shipment H8 – (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. 39

40 Topic: Date of issuance field on bill of lading left blank LC 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?  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.  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. 40 Question Time!

41 Topic : Photocopy of Transport Document called for in the LC A 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?  This will be considered as a discrepancy.  Copy of Transport documents need not be examined under Art  However 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.  This will be considered as a discrepancy.  Copy of Transport documents need not be examined under Art  However 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 Question Time!

42 Issuer, signing and original of an insurance document K2 – (New) - when identified as “insurer”, the insurance document need not indicate that it is an insurance company or underwriter. eg. Mitsubishi Sumitomo Insurance Group K3 – (New) - a broker may sign as agent/proxy for (or on behalf of) a named insurance company /underwriter K4 – (New) - insurance document signed by an agent or proxy is to indicate the name of the insurance company or underwriter for [or on behalf of] which the agent or proxy is signing, unless it has been identified elsewhere in the document eg. John Doe (by proxy) on behalf of the insurer, MSIG 42

43 Issuer, signing and original of an insurance document K5 – (New) - when insurance document requires a countersignature by the issuer, the assured 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 identified elsewhere on the document. Eg. AGCS Marine Insurance Co 33 West Monroe street Signed by: Chicago, IL Tel: K7 – (New) - insurance document indicating cover is provided by more than one insurer may be signed by a single agent or proxy on behalf of all insurers or be signed by an insurer for [or on behalf] of all co-insurers. - need not show the names of each insurer or the percentage of cover of each insurer. 43

44 Dates K9 – (simplifies Para 175) - insurance document is not to indicate an expiry date for the presentation of any claims there under. K10 – (New) - insurance document indicating cover effective from a date later than shipment date is not permitted. - insurance document indicating issue date later than date of shipment is to include additional 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 effect dated after date of shipment does not signify that coverage was effective from a date not later than the shipment date. K11 – (New) - in the absence of issuance date or effective date of coverage the countersignature date will be treated as the effective date. 44

45 Amount of cover and percentage K13 – (New) - no requirement for insurance coverage to be calculated to more than two decimal places. K14 – (New) - is not to contain a franchise or an excess (deductible) clause, if credit requires 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 by percentage: a) value of each insurer’s cover, b) each insurer will bear its share of the liability severally and without preconditions, and c) insurance coverage, when totalled, equals at least the insured amount required by credit or UCP 600 sub-article 28 (f)(ii). K18 – (addition to Para 173) - an Institute Cargo Clause (A) or Institute Cargo Clauses (Air) when dispatch is effected by air = “all risk” coverage required by the credit. Risks to be covered 45

46 MILL 4 No:08483 INSURANCE POLICY Policy Issued To Order of SELLER CO. LTD. Survey Agent: Sum Insured (figures): Sum Insured (words): Vessel: Sailing Date: Voyage from: To: Settling Agents: Important Notice CARRIERS' AND / OR BAILEES' LIABILITY All 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. Goods Insured: INSURANCE COMPANY LIMITED USD110, One Hundred & Ten Thousand U.S. Dollars Only Titanic V001 DD/MM/YY Hanoi HK ABC Company Ltd, HK Countersigned to be valid Date: For and on behalf of Insurance Co. Ltd Authorised Signature Covering: Institute Cargo Clause A Claims payable at destination Subject to 5% Excess/Franchise 1 BMW 5.0 series Excluding Terrorism Risk  Credit 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. K15 – for gross value of goods K17 – exclusion clause K14 – irrespective of percentage need not state “irrespective of percentage” 46

47 Insured party and endorsement K20 – (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 (named entity)”, 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 entity other than the issuing bank / applicant > if claims payable to the order /favor of beneficiary must be endorsed in blank or in favor of the issuing bank / applicant. 47

48 General terms and conditions of an insurance document K22 – (New) - will not be examined by banks. Insurance Premium K23 – (New) - indication on insurance documents is to be disregarded unless there is indication that document is not valid unless premium is paid and there IS indication that premium has not been paid. 48

49 Topic: Rounding up or down for insurance coverage LC called for Insurance Certificate at 110% of the Invoice Value. Invoice is presented for SGD 91, Insurance Certificate is presented for SGD 100, % of invoice amount works out to SGD 100, Is the insurance certificate acceptable?  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 )  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 ) 49 Question Time!

50 Content of a certificate of origin L5 – (expands Para 183) - consignee information, if any, must not be in conflict with transport document. Certificate of Origin Consignee : ABC Co. Ltd Certificate of Origin Consignee : XYZ Co. Ltd Bill of Lading Consignee : ABC Company Limited  50

51 Content of a certificate of origin L5 (continued) - 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 issuing bank”, the document may show any entity named in the credit except the beneficiary as the consignee. Certificate of Origin Consignee : DEF COMPANY LIMITED Certificate of Origin Consignee : IMPORTER BANK Certificate of Origin Consignee: XYZ PRIVATE LIMITED (a name NOT appearing in LC) Letter of Credit Applicant : DEF Company Limited Beneficiary : GHI Company Limited Issuing Bank : Importer Bank B/L to be issued consigned : To order/ order of shipper / issuing bank /nominated bank Bill of Lading Consignee : To order/ order of shipper / issuing bank /nominated bank *  Certificate of Origin Consignee : GHI COMPANY LIMITED  51

52 Content of a certificate of origin L5 (continued) - if credit has been transferred, first beneficiary as consignee is acceptable. Certificate of Origin Consignee: DEF COMPANY LIMITED Transferable Letter of Credit Applicant : DEF Company Limited Beneficiary : GHI Company Limited Issuing Bank : Importer Bank B/L to be issued consigned : To order/ order of shipper / issuing bank /nominated bank Certificate of Origin Consignee : IMPORTER BANK Certificate of Origin Consignee : GHI COMPANY LIMITED Bill of Lading Consignee : To order/ order of shipper / issuing bank /nominated bank * 52

53 Content of a certificate of origin L7 – (New) - in the absence of requiring a certificate of origin, the origin of goods indicated in any document is not to conflict with the requirement of the credit. Example: LC condition: Goods must be of U.S.A. origin L8 – (New) - may indicate a different invoice number, invoice date and shipment routing to that indicated in one or more other documents provided the exporter or consignor shown is not the beneficiary. Made In China We certify goods are of Chinese origin Shipping marks in B/L Certification in Invoice   53

54 Topic : Issuer of Certificate of Origin According to paragraph L3 (c) (ii), a requirement for a certificate of origin issued by a chamber of commerce is satisfied by the presentation of a certificate of origin issued by Department of Trade or the like. However if the LC requires a certificate of origin issued by Department of Trade, is a certificate of origin issued by a chamber of commerce acceptable? How to ensure that a COO is issued only by the Chamber of Commerce and not by the Department of Trade?  The clause is not intended to work the other way around and cannot be applied for vice versa cases. If the LC called for COO to be issued by Dept of Trade, then it cannot be issued by chamber of commerce  If the requirement that the COO is issued only by the Chamber of Commerce the LC can contain a wording "Certificate of origin must be issued by an entity identified as a chamber of commerce” or similar which would override L3 © (ii).  The clause is not intended to work the other way around and cannot be applied for vice versa cases. If the LC called for COO to be issued by Dept of Trade, then it cannot be issued by chamber of commerce  If the requirement that the COO is issued only by the Chamber of Commerce the LC can contain a wording "Certificate of origin must be issued by an entity identified as a chamber of commerce” or similar which would override L3 © (ii). 54 Question Time!

55 Basic requirement and fulfilling its function M1 - document titled, similar titled or untitled containing any information as to the packing of the goods is acceptable. Issuer of a packing list M2 - issued by entity stated in credit. M3 - any entity may issue if issuer not indicated in credit. Content of a packing list M4 - data of packing on packing list, if presented, are not to conflict with data required in credit. M5 - may indicate different invoice number/date and shipment routing from other documents, provided issuer is not the beneficiary. M6 - banks only examine totals to ensure it does not conflict with total shown in credit and any other document. 55

56 Basic requirement and fulfilling its function N1 - document titled,similar titled or untitled containing any information as to the weight of the goods is acceptable. Issuer of a weight list N2 - issued by entity stated in credit. N3 - any entity may issue if issuer not indicated in credit. Content of a weight list N4 - data of weight on a weight list, if presented, are not to conflict with data required in credit. N5 - may indicate different invoice number/date and shipment routing from other documents, provided issuer is not the beneficiary. N6 - banks only examine totals to ensure it does not conflict with total shown in credit and any other document. 56

57 Basic requirement and fulfilling its function P1 - a signed document titled or untitled containing data and certification required by credit is acceptable. Signing of a beneficiary’s certificate P2 - to be signed by, or for [or on behalf of], the beneficiary. Content of a beneficiary’s certificate P3 - not to conflict with credit requirements. P4 - data need not be identical, but are to clearly indicate requirement prescribed by credit has been fulfilled. - need not include goods description or other references to the credit or other document. 57

58 Basic requirement and fulfilling its function Q1 - a signed document titled or untitled certifying the outcome of the required action. Q2 -an 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 certificate Q3 - issued by entity stated in credit. Q4 - any entity, including the beneficiary may issue if issuer not indicated in credit. Q5 - if credit indicated issuer as “independent”, “official”, “qualified” or similar, document issued by any entity, except the beneficiary is acceptable. 58

59 Contents of a certificate Q6 - may indicate: a) only a sample has been tested, analyzed or inspected b) quantity greater than that stated in credit or any other document, or c) more hold, compartment or tank numbers than stated on transport document. Q7 - when credit indicates specific requirements, with or without stipulating document to indicate compliance, data mentioned on the certificate or other document are not to conflict with those requirements. Q8 - when credit is silent as to specific content, certificate may include negative statements, provided not in conflict with credit, other document or UCP

60 Contents of a certificate Q9 - consignee 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 issuing bank”, the document may show any entity named in the credit except the beneficiary as the consignee. Q10 - may indicate an entity other than the beneficiary or the shipper as shown on other document as the consignor or exporter. Q11 - may indicate a different invoice number, invoice date and shipment routing to that indicated in one or more other documents provided the exporter or consignor shown is not the beneficiary. 60

61 Case Study: Identify the Discrepancies NODICREPANCIES 1Invoice not issued by beneficiary as per LC 2Invoice showing “CIF, Malaysia, Incoterm 2010” i/o “CIF, Malaysia 3Inspection Certificate dated after the Shipment date 4 Inspection Certificate not in the language of the Credit 5 Insurance does not evidence “All Risk” coverage 6Insurance shows exclusion of “Theft Pilferage and Non Delivery” 7Insurance is dated after the Shipment date 8Bill of Lading not signed as per UCP 9Port of Loading does not show Country Name as per LC 10B/L does not have on board notation

62 62 Strictly Private and Confidential THANK YOU

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