Article-14-UCP-600, Standard for Examination of Documents

The issuing bank issues the undertaking to honour the complying presentation so final liability comes to an issuing bank who examines the documents as per documentary credit, UCP-600, ISBP-745 and, in the case of conforming documents, honours in accordance with its terms and conditions. Usually opening banks require original transport document to present at their counter or consign to them (to order) as a primary security for an undertaking issued in the form of credit, and releases the document with further endorsement to applicant upon payment or acceptance/debit authority, the applicant will then surrender one original bill of lading to the carrier or its agent to take the delivery of the goods.

This “Document of examination” is one of the important and considerable topic, we will touch upon basic standard for examination of documents as per below article. 

Article-14-UCP-600, Standard for Examination of Documents 

a. A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank must examine a presentation to determine, on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation.

Once the documents are presented to the nominated bank counter and that nominated bank acting on its nomination, confirming bank or issuing bank counter they must need to examine the document on the basis of the documents alone.

This means that whether the documents comply with the terms and conditions of a documentary credit, UCP-600 and ISBP-745; is only based upon the bank’s visual examination of the documents. It cannot hold someone else’s understanding nor information obtained from some other sources. The sentence ‘on their face’ does not refer to a simple front and the back of the document but extends to the review of data within a document in order to determine that a presentation complies with ISBP-745 and with the rules described in UCP 600.

Example: Credit calls for a certificate of origin certifying that “Goods must be Chinese” and certificate of origin presented and shown that goods are for “Chinese Origin”, we are not responsible to use any search engine or any other source to inquire about the origin of the goods, apart from sanction, money laundering or law perspective. Documents must be checked on the basis of their content as per credit terms, UCP-600 and ISBP-745, if subject to These rules.

b. A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of five banking days following the day of presentation to determine if a presentation is complying. This period is not curtailed or otherwise affected by the occurrence on or after the date of presentation of any expiry date or last day for presentation.

Above sub-article states that a nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank each has a maximum of five banking days after the day when presentation received at their counter, to examine and determine whether a presentation is complying or not.

The maximum period of five banking days is not reduced even if presentation is received one or two days before credit expiry or the latest presentation date.

Example: A presentation is received at issuing bank counter on dated Nov-18, 2022 (Friday) within banking hours, which is a banking day in issuing bank country and banks are open to perform trade business, so that issuing bank will have 21, 22, 23, 24 and 25-Nov-2022 to examine and determine whether docs are clean or discrepant. In the same example if credit expiry and last day for presentation is 22^nd of Nov, 2022, then even if presenter/beneficiary asks to expedite the examination process before the expiry of both the event in order to get the time to rectify if any document (s) is/are discrepant within credit validity and presentation period, the issuing bank is not responsible and bound to do that, they still can take five banking days to determine the presentation for further handling, same applies to confirming bank and nominated bank if its acting on the nomination.

c. A presentation including one or more original transport documents subject to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit.

The ‘period for presentation’ is the period of time (in terms of calendar days) after the date of shipment within which the documents are to be presented to a nominated bank, confirming or issuing bank indicated usually in field 78 of the credit. Period of presentation should be indicated in filed 48 of the credit, however, this is an optional field and in the absence of any specific period, the default of 21 calendar days are applied only when original transport documents are presented and banks are able to identify the actual shipment date.

Shipment date must be before 21 days from the expiry date of the credit if field 48 is silent and original transport docs are presented or field 48 contains value as “21”; latest shipment date plus presentation period should be equal to the expiry date of the credit.

Example: If the latest shipment date were 9 June 2022 and the presentation period were 21 days, the expiry date must be 30 June 2022.

d. Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit.

This sub-article states that data appearing in a document must not be in conflict with other data appearing on that document, any other stipulated document or in credit itself. If data in documents is found to be in conflict, the documents are to be regarded as discrepant.

Example: An analysis certificate shows that sodium content as 2% as required by the credit, however, presented invoice shows the sodium content at 5%. In this situation, data on the invoice will be considered to be in conflict with that data shown on the analysis certificate and will be recorded as a discrepancy as per this sub-article.

e. In documents other than the commercial invoice, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit.

An examiner must need to ensure that invoice contain the goods description as per field 45a of the credit, it is not necessary to have a mirror image, however, all the details and description provided in filed 45a should be there in the invoice. Though, other stipulated documents should not contain a goods description that conflicts with that shown on the invoice or the documentary credit. When a goods description is shown on other stipulated documents, it may be given in general terms not conflicting with the description in the documentary credit and invoice. Any shipment terms or Incoterms stipulated as part of the goods description should be evidenced on the invoice.

Example: Credit calls for 1000 pieces of white shirts, invoice states “1000 pieces of white shirts” in goods description, wherein transport documents may only contains “shipment of shirts” in general terms.

f. If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).

There are dedicated articles described in UCP-600 for the issuance and handling of invoice, transport document and insurance document. However, if credit calls for any other documents apart from these three, and indicates specific data requirements, the document must comply with those conditions. If the documentary credit is silent in respect of the required data that by whom the document is to be issued or what should be the data content, then bank will accept the document as presented issued by anyone; if its data content fulfils the function of the required document and not contradicting with same or any other stipulated document.

Example: If a credit calls for a certificate of origin without stipulating that by whom it should be issued or what should be the country of origin for the goods, then the certificate of origin may be issued by anyone and may contains any country as origin of the goods, however, that should not conflict with any other stipulated document and should be checked for compliance and regulatory purpose as well.

g. A document presented but not required by the credit will be disregarded and may be returned to the presenter.

If additional documents are presented other than stipulated in the documentary credit, they are not to be examined and may be returned to the presenter 

h. If a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it.

A condition should not be stipulated in a documentary credit field “47a” if it is not specific to a document or no related documents are called for, via field “46a” of the credit. If such a condition is stipulated, and no documents calls for to support that stipulated condition, a document examiner may disregard that, this is called “non-documentary conditions”.

However, even if any non-documentary condition in the credit, stipulated on any document, will be subject to examination, according to sub-article 14(d) to check the data conflict with other documents.

i. A document may be dated prior to the issuance date of the credit, but must not be dated later than its date of presentation.

This sub-article states that a document may be prior to the issuance date of the credit, however, there is no possibility to have issuance date after the presentation, a presented document can’t contain issue date after its presentation and not logical.

j. When the addresses of the beneficiary and the applicant appear in any stipulated document, they need not be the same as those stated in the credit or in any other stipulated document, but must be within the same country as the respective addresses mentioned in the credit. Contact details (telefax, telephone, email and the like) stated as part of the beneficiary's and the applicant's address will be disregarded. However, when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document subject to articles 19, 20, 21, 22, 23, 24 or 25, they must be as stated in the credit.

This sub –article states that address of the beneficiary or applicant in any stipulated documents (invoice, any certificate etc.) need not to be same as given in filed 50 or 59 in credit apart from country, logic behind that, an applicant or beneficiary may have different branches in the same country due to that; they may have different contact details like email or telephone number, any stipulated document containing email, telefax, telephone will be disregarded.

However, if a transport document indicates applicant as consignee or notify party, In this context, it should be noted that whether this is requested in the documentary credit or not, those details must not be in conflict with those stated in the documentary credit including the contact details. 

k. The shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit.

Any party can be named as shipper or consignor unless the documentary credit states otherwise. Even an applicant may be shipper if credit does not restrict the same, as it may depends upon incoterms.

l. A transport document may be issued by any party other than a carrier, owner, master or charterer provided that the transport document meets the requirements of articles 19, 20, 21, 22, 23 or 24 of these rules.

It is not necessary that transport document to be issued by carrier, owner, and master or charterer only, it can also be issued by a freight forwarders in the capacity of contractual carriers. A contractual carrier is a company that undertakes responsibility for the carriage of the goods without being the actual carrier that operates the means of transport. This is acceptable as long as the documentary credit does not prohibit a transport document issued by a freight forwarder and the documentary credit indicates the type of document that will or will not be acceptable under such a condition. However, this must need to meets the requirements as per articles 19 to 24 UCP-600.