WHETHER ARTICLE 35 IS APPLICABLE?

Hai Van Pass, Da Nang, Vietnam

QUESTION

Dear Mr. Old Man,

The covering schedule shows 3/3 original bills of lading but the issuing bank finds only 2 original bills of lading presented.

1. Can the issuing bank raise the discrepancy “2 instead of 3 original bills of lading presented”?
2. Can the presenter reject the discrepancy based on Article 35?

Your prompt comment is appreciated.

Best regards,

BB

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ANSWER

Hi,

It is understood that Article 35 is applicable to the situation where all the documents sent by post mail have been lost in transit between the nominated bank and the issuing bank or the confirming bank. Article 35 is not applicable to the described case.

I came across a similar case in Gary Collyer’s Frequently Asked Questions under UCP 600. Gary’s suggested answer is as follows:

“This article (Article 35) does not cover situations where there is a dispute between banks as to the number of originals and/or copies that were endorsed with a document schedule”.

Recently I have come across another similar case on LinkedIn Forum the members of which share a common view that UCP 600 does not cover the issue and that this is a relationship issue.

Suresh Kapoor is of the following opinion:

“Article 35 is about missing documents in “full set”. If only one document is missing in the entire lot, and if the nominated bank  had listed that document,(and even certified that it’s a complying presentation) then it’s obvious that either the issuing bank or nominated bank is wrong, so that needs to be settled, and it’s outside the scope of UCP 600”.

Abrar Ahmed opines that the spirit of the article is to protect the bank(s) from misdeeds of the postal authorities or force majeure events. For example, if a first or second mail of documents gets lost (between which the B/Ls have been separated) the issuing bank would have to honour regardless of loss in transit. If, however, the schedule indicates a certain number of documents but on arrival is found to be deficient (and if the envelope has not been tampered with) it would be a matter between the banks to resolve outside UCP.

Perhaps, no need for me to add any further comment!

Kind regards,

Mr. Old Man