DOES AN L/C REQUIRE WORD-FOR-WORD COMPLIANCE?

A certificate of origin says “produced in Vietnam” instead of “Vietnamese origin.” Is that a discrepancy?

Over the years, I have come across many cases where a bank raises a discrepancy simply because the wording on a document is not identical to the wording of the L/C.
But does compliance with an L/C mean copying its wording word for word onto the relevant document?

QUESTION

Dear Mr. Old Man,

The L/C stipulates:

“C/O certifying goods of Vietnamese origin”

The C/O presented states:

“The goods are produced in Vietnam.”

The issuing bank raised a discrepancy on the grounds that the C/O did not contain the exact wording required by the L/C.

Is the discrepancy raised by the issuing bank valid? Is there any ICC Opinion dealing with this case?

By the way, could you also advise me how I can find ICC Opinions, whether in hard copy or soft copy?

Best regards,

DDT
______

ANSWER

Dear DDT,

I am of the view that this is not a valid discrepancy that would justify refusal of the documents.
Not every requirement in an L/C has to be reproduced word for word on the relevant document. What matters is whether the document, as presented, adequately demonstrates compliance with the requirement of the L/C.

For example, if an L/C requires:

“All the goods must be brand new”

wording such as:

“Goods are brand new”
“Goods: brand new”
“Brand new goods”

could satisfy the requirement. There is no need for the document to reproduce the entire wording “All the goods must be brand new.”

Similarly, where the L/C requires:

“C/O certifying goods of Vietnamese origin”

a C/O stating:

“The goods are produced in Vietnam”

should, in my view, adequately establish that the goods are of Vietnamese origin. There is no requirement for the C/O to reproduce the exact wording of the L/C.

This approach is consistent with UCP 600 sub-article 14(d), under which data in a document, when read in context with the L/C, the document itself and international standard banking practice, need not be identical to, but must not conflict with, the data in the L/C.

It is also consistent with ISBP 821 paragraph L1, which deals specifically with certificates of origin and focuses on whether the certificate establishes the origin of the goods, rather than requiring the wording to be identical to that of the L/C.

Interestingly, a very similar example can be found in DOCDEX Decision No. 205. The DOCDEX experts stated:

“We believe that to satisfy a requirement in an L/C does not necessarily mean that such a requirement should be copied word-by-word on the related documents.”

They then gave the following example:

“For instance, if a L/C requires that the goods be of German origin, the certificate of origin can attest that the goods are made in Germany. There is no need for the wording ‘The goods are of German origin’ to appear on a document.”

Although DOCDEX Decision No. 205 was issued under UCP 500, this example provides useful support for the principle that an L/C requirement does not necessarily have to be reproduced word for word on the relevant document.

I did not find any ICC Opinion dealing directly with this particular case.

Best regards,

Mr. Old Man