Bill of Lading or Multimodal Transport Document? Which UCP 600 Article Applies?

A credit requires a “full set clean on board bill of lading” but, at the same time, field 44A specifies an inland place of taking in charge, while fields 44E and 44F indicate the port of loading and port of discharge. A multimodal transport document is subsequently presented, bearing only the notation “Received for Shipment” and no dated on-board notation.

Should the document be examined under UCP 600 article 19 (Multimodal Transport Document) or article 20 (Bill of Lading)? Is the issuing bank justified in raising a discrepancy for the absence of an on-board notation, or does the presence of field 44A indicate that the parties intended a multimodal movement?

The following case highlights the importance of distinguishing between the transport route described in the credit and the transport document actually required by the credit.

Question

Dear Sir,

We request your expert opinion on the following L/C discrepancy.

1. L/C terms

• Transport document: “Full set clean on board bill of lading”
• Field 44A (Place of Taking in Charge): Umea, Sweden
• Field 44E (Port of Loading): Hamburg
• Field 44F (Port of Discharge): Port Jebel Ali, Dubai

2. Documents presented

Multimodal Transport Bill of Lading showing:

• Place of Receipt: Umea, Sweden
• Port of Loading: Hamburg
• Port of Discharge: Port Jebel Ali, Dubai
• Notation: “Received for Shipment”
• No “On Board” notation

3. Discrepancy quoted by the issuing bank

(i) B/L mentions “received for shipment” and does not contain an “on board” notation.

4. Queries

Query 1:

Is the discrepancy raised by the issuing bank valid?

Since the document presented is a multimodal transport document covering the entire carriage from Umea to Port Jebel Ali, and the first leg commences from an inland place, is an “on board” notation required under UCP 600 article 19? Under article 19, a “received for shipment” notation is acceptable, and the date of issuance is deemed to be the date of shipment.

Query 2:

Is the issuing bank correct in demanding an “on board bill of lading” when the document presented is a multimodal transport document?

Given that field 44A (Place of Taking in Charge) is populated, does this indicate that the parties intended a multimodal movement and, therefore, that article 19 should apply instead of article 20? Can a bank insist on an “on board” notation on a multimodal transport document when the credit does not specifically require a marine bill of lading only?

We would appreciate your guidance.

Ravindra

Answer

Dear Ravindra,

Thank you for your question.

Query 1: Is the discrepancy raised by the issuing bank valid?

The credit describes the route of shipment through the following fields:

• Field 44A: Place of Taking in Charge — Umea, Sweden;
• Field 44E: Port of Loading — Hamburg; and
• Field 44F: Port of Discharge — Port Jebel Ali, Dubai.

The use of field 44A, together with fields 44E and 44F, indicates that the shipment includes an inland leg before ocean carriage. From a drafting perspective, the credit should therefore have required a multimodal transport document rather than a bill of lading.

However, according to the ICC recommendation concerning the requirements for an on-board notation, transport documents are examined according to the requirements of the credit, not according to the title of the document actually presented.

In this case, the credit expressly requires presentation of a “full set clean on board bill of lading.” Consequently, the document must be examined under UCP 600 article 20 (Bill of Lading), rather than under article 19 (Multimodal Transport Document).

The document presented bears the notation “Received for Shipment” and does not contain a dated on-board notation. Since article 20 requires evidence that the goods have been loaded on board a named vessel, the discrepancy raised by the issuing bank is valid.

Conclusion:

The discrepancy raised by the issuing bank is valid because the credit requires an on-board bill of lading subject to article 20.

Query 2: Assuming that the credit had required a multimodal transport document, would a dated on-board notation still be required?

Not necessarily.

Under ISBP 821 paragraph D8, an on-board notation is required when the credit requires shipment to commence from a port.

In the present case, however, the shipment commences from Umea, Sweden, which is an inland place of receipt rather than a port. Had the credit expressly required a multimodal transport document under article 19, a mere “received for shipment” notation could have been sufficient, and the requirement for an on-board notation would not have been appropriate.

In summary, the problem arises from the drafting of the credit itself. The insertion of field 44A suggests multimodal transport, while the documentary requirement calls for an on-board bill of lading. Although the credit should arguably have required a multimodal transport document, banks must examine the document against the terms actually stated in the credit.

Best regards,

Mr. Old Man