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PORT IN HO CHI MINH CITY

By Mr Old Man
Posted on March 12, 2010
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QUERY FROM NGUYEN LOAN

Dear Mr Old Man,

Nice to contact you again! 

There is a seminar hold on August 2008, Viet Nam by Wachovia Bank I am writing to ask you something about the case named “ANY PORT IN HOCHIMINH CITY “ as you are the credit specialist, i guess you update the information quickly.

I will summary the conclusion of case such as : Reference to “port in HoChiMinh City” is not included within the scope pf paragraph 100 ISBP 681, i/e in the field Port of discharge, we can show: PORT IN HOCHIMINH. It's not a discrepancy.

Is it a DOCDEX decision ? That was a discrepancy that we gave for 2 years ago.

In particular,
In 2007, at the request of my customer – the buyer A , we issue a credit in favour of Ben B . L/C was subject to UCP 500 and was a negotiation credit.

Docs presented, we rejected on basis of discrepancy and refused payment . MT 734 was sent no later the close of the seventh banking day following the day receipt of the docs . As the instruction of Beneficiary via their bank , we returned docs to the presenter and collected post free fully. As regular banking practice, we archived our files a month later . Has the issuing bank undertaking already finished ?

The bebeficiary brough this matter to ICC ( as he informed us ) and got the answer contradicting with ours in 2008.

Basing on ICC decision , the beneficiary contact us to make a claim for damages from giving incorrect discrepancy .

If not, they will bring matter to court for trial. 

If it is DOCDEX decision , because the DOCDEX process is a non-binding arbitration , so that it does not bind us unless we agree in our submission.

On the other hand, we strictly apply UCP rules for all actions in this transaction. Is there any retroactive effect of UCP rules ?

Could you please give me your valuable comments about beneficiary’s action. Is it valid and acceptable ?

Do you mind if I need some relative source support your answer !!! 

I look forward to hearing from you a.s.a.p ! Thanks a bunch in advance !

Best regards,
Kim Loan

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COMMENT

Dear Kim Loan,

Thanks for asking for Mr. Old Man’s comment.

I would like to affirm that it is ICC Official Opinion TA 628rev, not DOCDEX Decision. For your ease of reference, the full text of the opinion is attached below.

It is true and correct that a DOCDEX Decision shall not be binding upon the parties unless otherwise agreed (See DOCDEX Rules Article 1.4).

In this particular case, if you choose to have the dispute settled by DOCDEX, you will certainly lose the case as DOCDEX Decisions are normally made based on ICC Offcial Opinions.

Best regards,
Mr. Old Man (Nguyen Huu Duc)

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Attached:

Official Opinion TA628rev – Unpublished

QUERY

Recently, one of our exporter members, contracted with a buyer from Country V to export zinc ingot in terms of a L/C available at sight, and the shipment was completed. The issuing bank refused to effect settlement due to a discrepancy under ISBP paragraph 83.

The issuing bank insists that the bill of lading must indicate the actual port of discharge if the L/C states a range of port of discharge (Any Port in HoChiMinh City, Vietnam). The details of the L/C and bill of lading are as follows:

– Port of loading in L/C Any port in Korea
– Port of discharge in L/C Any port in HoChiMinh City, Vietnam

– Port of loading in B/L "Ulsan port in Korea"
– Port of discharge in B/L "Port in HoChiMinh City, Vietnam"

The opinion of the beneficiary is that the interpretation of the issuing bank is too strict to apply the paragraph, because the geographical area is much more limited than the example given, i.e., "Any European Port", and the cargo arrived at the port inside HoChiMinh city.

In fact, ISBP 645 paragraph 83 stipulates "If a credit gives a geographical area or range of port of loading and/or discharge (e.g. "Any European Port") the bill of lading must indicate the actual port of loading and/or discharge, which must be within the geographical area or range quoted."
In this case, is the exporter's claim valid?

ANALYSIS/CONCLUSION

The credit required shipment from "any port in Korea" to "any port in HoChiMinh City". The bill of lading that was presented stated "Ulsan port inKorea" as the port of loading and "port in HoChiMinh City, Vietnam" as the port of discharge. Clearly, the issuance of the bill of lading was to create wording in line with that which appeared in the credit. Paragraph 83 of ISBP, ICC Publication 645, refers to a geographical area or range. Reference to "port in HoChiMinh City, Vietnam" is not included within the scope of that paragraph. The bill of lading as issued and one which would have stated just " HoChiMinh City" would be acceptable under the referenced credit (emphasis added by Mr. Old Man).

It should be noted that whilst the content of the ISBP publication 645 is an integral element of the reference to "international standard banking practice" which appears in sub-article 13(a) of UCP 500, a refusal must be based upon a discrepancy under the terms of the credit and/or the UCP 500, which may then be supported by the reference to a particular paragraph or paragraphs of the ISBP. …

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