Partial Preferential Origin? Parsing EUR.1 Compliance in Mixed Shipments

Intro:

When a letter of credit calls for a EUR.1 certificate, can a beneficiary submit one that covers only part of the shipment—while the rest of the goods lack preferential origin? In this thought-provoking question from Domenico, we examine whether such a presentation is compliant or discrepant under UCP and ISBP rules. As always, when it comes to documentary credits, the devil is in the details—and in this case, also in the kilograms.

QUESTION

Dear Nguyen,

I hope you don’t mind if I take the opportunity to ask for your opinion
on another matter.

A client of mine received a letter of credit requiring, among other
documents, a EUR.1 certificate attesting to the preferential origin of
the goods.

The beneficiary, after shipping the goods, prepared the documents
indicating only a portion of the goods on the EUR.1, as only part of the
shipment qualifies for preferential origin.

The advising bank suggested including the following wording in the
certificate:

“GOODS OF EUROPEAN PREFERENTIAL ORIGIN FOR A NET WEIGHT OF 631.20 KG.
(in the other docs the net weight was 900.00 KGS)
ITEMS OF DIFFERENT ORIGIN, ALSO INCLUDED IN THIS SHIPMENT, ARE EXCLUDED
FROM THIS CERTIFICATE.”

In my view, this constitutes a discrepancy, as I believe the applicant
intends to receive only goods of preferential origin.

In another letter of credit, I’ve seen the following condition:

6- EUR.1 CERTIFICATE IN 1 ORIGINAL.
‘THIS CERTIFICATE WILL ONLY BE PRESENTED IF GOODS HAVE
EUROPEAN UNION PREFERENTIAL ORIGIN’
OR
BENEFICIARY DECLARATION IN 1 ORIGINAL CONFIRMING THAT THE
GOODS DON’T HAVE EUROPEAN PREFERENTIAL ORIGIN.

Do you think mixed shipments are acceptable in this context, or would
they be considered non-compliant?

In my view, this constitutes a discrepancy. Either all of the goods must
have preferential origin, or none of them should.

Thank you very much in advance for your insights.

What’s your take on this?

Thank you very much in advance.

Warm regards,

Domenico

—-

ANSWER

Dear Domenico,

Thank you for your thoughtful question.

Here is my take on the situation you described:

1. EUR.1 Certificate – Treated as Certificate of Origin

A EUR.1 certificate is a specific form of certificate of origin attesting to preferential origin, and its examination falls under ISBP 821 paragraphs L1, L2 and L4.

According to ISBP, when a credit requires a EUR.1 certificate attesting to the preferential origin of “the goods”, then the certificate must:

+ Be titled appropriately (e.g., “EUR.1 Certificate of Origin”),

+ Clearly state that the goods have preferential origin, and

+ Cover all goods in the shipment, unless partial coverage is expressly permitted by the LC.

2. Partial Origin – Discrepancy Risk

In your client’s case, the EUR.1 covers only part of the shipment (631.20 kg out of 900 kg), while the remainder does not qualify.

The proposed solution — adding a note that “items of different origin are excluded” — may reflect the commercial reality, but unless the LC allows for mixed origin shipments, this would be treated as a discrepancy, because:

+ The LC requires a EUR.1 certificate attesting to the preferential origin of the goods, and

+ The certificate in this case does not cover the entire shipment.

3. No Substitution with Beneficiary Declaration

A beneficiary declaration (e.g., stating that the goods do not have preferential origin) is not an acceptable substitute for a EUR.1 certificate unless the LC expressly allows it, as in the second LC example you shared.

This second LC is more flexible — it permits:

+ A EUR.1 certificate if goods have preferential origin, or

+ A declaration by the beneficiary if they do not.

That wording avoids ambiguity. Unfortunately, the first LC does not offer this option.

4. Conclusion

Unless the credit specifically permits partial or mixed origin, I agree with your assessment: the presentation of a EUR.1 certificate covering only part of the shipment constitutes a discrepancy.

The applicant may have expected that all goods shipped under the credit have preferential origin — a reasonable assumption based on the way the LC is worded.

Warm regards,

Mr. Old Man