Thank you for your query regarding UCP 600. We refer to our letter dated 16 May Please find below the opinion of the ICC Banking Commission.

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Ms. Svetlana Derkach Director ICC Russia 21/1 Bolshaya Polyanka Str. 119180 Moscow Russia 28 November 2012 Subject: Document 470/TA.764rev Dear Ms. Derkach, Thank you for your query regarding UCP 600.

QUOTE A documentary credit (available with the beneficiary s bank in Country R by payment), among other terms and conditions, specified the following (as per SWIFT format MT700): 31D: Date and Place

1 Ms. Svetlana Derkach Director ICC Russia 21/1 Bolshaya Polyanka Str Moscow Russia 28 November 2012 Subject: Document 470/TA.764rev Dear Ms. Derkach, Thank you for your query regarding UCP 600. We refer to our letter dated 16 May Please find below the opinion of the ICC Banking Commission. QUOTE A documentary credit (available with the beneficiary s bank in Country R by payment), among other terms and conditions, specified the following (as per SWIFT format MT700): 31D: Date and Place of Expiry: City M, Country R (November 30, 2011) 45A: Description of Goods: Laboratory equipment as per contract [specified number and date] Terms of delivery: DDU City A, Country K (Incoterms 2000). 46A: Documents Required (We list below only the documents in relation to the query): +Invoice 3 originals in Russian; + International road waybill with stamp of Country K customs about putting of goods in temporary storage at City A, Country K 1 original in English or Russian 47A: Additional Conditions: + Total cost of goods indicated in CMR must be EUR [specified amount] 48: Period for Presentation: + Within credit validity Please note since the description of goods and the list of required documents were stated in the letter of credit terms in clear Romanize Russian we give above a strict translation into English. 10 December 2012 TS/wj

2 Beneficiary s bank delivered documents within the credit validity to the issuing bank, instructing the latter to inform them in accordance with UCP 600 article 16. Documents evidenced the following: 1. Invoice was issued in Russian language showing description of goods: Laboratory equipment as per contract [specified number and date]. The terms of delivery were not indicated. 2. International road waybill named as CMR was issued in English and contained the stamp of Country K customs in strict compliance with the credit terms. CMR did not state any cost of goods. On 28 November 2011, the issuing bank refused this presentation in view of the following discrepancy: - Invoice: terms of delivery were not indicated. Disposal of documents: hold Within the L/C validity the beneficiary presented revised invoices and on 1 December 2011 the beneficiary s bank sent them to the issuing bank referring to the previous remittance letter, under SWIFT advice to them, with instruction to deliver the enclosed documents to the applicant and effect payment in case of acceptance. On 9 December 2011, the issuing bank informed the beneficiary s bank by SWIFT MT799 as follows: Applicant under a/m L/C refuse to accept the documents as they was presented after date of L/C expiry. Due to expiry of the credit we closed our files under the L/C and we return the documents by post to yr good bank. Beneficiary s bank counter-arguments: L/C is available at the beneficiary s bank counters and the validity of L/C expired in City M, Country R. So, the issuing bank is unable to fix the presentation date and indicate the presentation was effected after the expiry date. The date of nominated bank s remittance letter cannot be applied in such case. The presentation of the revised invoice is treated as a new presentation under the credit and the issuing bank must act in accordance with the provisions of UCP 600 article 16. The issuing bank s notice dated 9 December 2011 does not contain all necessary information as per UCP 600 sub-article 16 (c) i.e., it does not state the issuing bank s refusal to honour (only the applicant s refusal) and does not indicate discrepancies (the reference to the presentation of the revised documents after the L/C expiry date is not a discrepancy due to reason(s) indicated above). Issuing bank arguments: We have confirmed according instructions indicated in cover letter of your bank, as nominated bank. We delivered the documents to the applicant. 17

3 Applicant refused to accept the documents and returned them. Due to expire [expiry] of the L/C we closed our files and returned the documents to your bank. Beneficiary s bank counter-arguments: The issuing bank delivered the documents to the applicant. This action contradicts with the information indicated in its notice of refusal of 28 November 2011 and the notice of 9 December 2011 and is in conflict with UCP 600 sub-article 16 (c) (iii). Since the issuing bank failed to act in accordance with the provisions of article 16 it is precluded from claiming that the documents do not constitute a complying presentation and must honour. Moreover, since the revised invoices were presented to the nominated bank in due time, i.e., within L/C validity, this fact disposed of the discrepancy indicated in the issuing bank s notice, and the beneficiary s bank insists on immediate payment. Issuing bank arguments: According UCP 600 we have checked the invoices and inform applicant about discrepancy, they refused to accept the documents. We didn t send all documents to the applicant. We checked your cover letter and SWIFT message we can t find any fact that documents were presented in a due time. We can see only the date of cover letter 1 December 2011, according to UCP 600 sub-article 6 (d) (i) and sub-article 16 (b) we closed our files under L/C. Beneficiary bank s counter-arguments: The issuing bank is unable to deliver any original documents to the applicant free of payment without express instructions of the beneficiary s bank to this effect, since it is not provided by UCP 600 sub-article 16 (c) (iii) and contradicts with the issuing bank s information indicated in its refusal notice. The issuing bank may only send to the applicant copies of the documents. What would be the bank s actions if the applicant lost or refused to return the original invoice? The revised invoice sent on 1 December 2011 is treated as a new presentation and the issuing bank must act in accordance with UCP 600 article 16, but failed to do so. Since the L/C is available at beneficiary s bank counters, and the validity of the L/C expired in City M, Country R, and the nominated bank has five banking days to examine the presentation, the issuing bank is not authorized to determine timeliness of presentation and moreover indicate L/C expiry as discrepancy. Issuing bank arguments: We can t pay under L/C because we closed our files under L/C on 12 December According to your cover letter dd documents were presented complying with credit terms and conditions of the L/C, but please be informed that the set of documents under a/m L/C has one more discrepancy with L/C terms and conditions: in CMR not indicated total cost of goods EUR [specified amount]. 18

4 Beneficiary s bank counter-arguments: The fact that the issuing bank closed its files cannot be treated as grounds for non-payment since L/C is a bank undertaking, and no reference can be made to nonreimbursement from the applicant. According to UCP 600 sub-article 4 (a) a beneficiary can in no case avail itself of the contractual relationships existing between banks or between the applicant and the issuing bank. Since the issuing bank did not state above discrepancy in its refusal, it is unable to indicate it later as a reason for non-payment taking into account sub-article 16 (c) (single notice of refusal must be given). We kindly request an opinion of the ICC Banking Commission regarding the following questions: 1) In case the bank refused the presentation stating that it holds the documents, may it return them at any time to the presenter as per sub-article 16 (e), precluding the beneficiary from replacing any of the documents in such a situation? 2) Should banks treat the presentation of revised documents as a new presentation? 3) Is the notice of refusal of the issuing bank, given in respect to the revised presentation, valid? 4) Is the discrepancy In CMR not indicated total cost of goods EUR [specified amount], pointed out by the issuing bank in respect of the revised presentation, valid? 5) Since the credit statement Total cost of goods indicated in CMR must be EUR [specified amount] does not clearly require that CMR must indicate any cost of goods, we suppose that it only means that if CMR indicates any cost of goods it must be the specified amount. Is our position correct? 6) Must the issuing bank honour the presentation? Just for your information: the equipment was duly supplied to the applicant. ANALYSIS The initial presentation of documents was refused by the issuing bank on 28 November 2011 due to the discrepancy: Invoice: terms of delivery were not indicated. and the nominated bank was informed that documents were being held. The beneficiary presented revised invoices to the nominated bank within the expiry of the LC. The nominated bank subsequently forwarded the revised invoices to the issuing bank on 1 December 2011 instructing them to deliver documents to the applicant and effect payment in case of acceptance. It appears that the covering schedule did not confirm that documents were presented on or before the expiry of the LC. Previous ICC Opinion R480, making reference to UCP 500 sub-article 44 (c), 19

5 stated that it is advisable for a negotiating bank to include a statement to the effect that the documents were presented within the prescribed date(s) or one which states that all terms and conditions were complied with. Failure by the negotiating bank to include such statement(s) may be grounds for an issuing bank to provide a notice of rejection. However, where no such statement exists and the issuing bank rejects for credit expired, a subsequent message from the negotiating bank confirming compliance with the date(s) would be sufficient evidence for the issuing bank to honour the documents. The same advice and position would prevail under UCP 600. On 9 December 2011, the issuing bank informed the beneficiary s bank by SWIFT MT799 that the applicant refused the revised documents as they were presented after the expiry of the LC, and that documents would be returned by post. It is clear that some of the presented documents had been physically sent to the applicant. This message was not issued according to the requirements of sub-article 16 (c) and therefore preclusion would prevail in accordance with sub-article 16 (f). Subsequent to further correspondence, the nominated bank highlighted the fact that documents should not have been sent to the applicant and that, in any event, the LC expired at the counters of the nominated bank not the issuing bank. As a final point, the issuing bank stated a new discrepancy. UCP 600 clearly does not allow for further discrepancies to be raised that were apparent at the time of the initial presentation, as is also referred to in previous ICC Opinions R196, R328, and R271. CONCLUSION In response to the questions posed: 1) The initial presentation was held pending further instructions from the presenter. The beneficiary had until the expiry of the LC to replace or correct any documents. A bank that is holding documents may return them at any time, as stated in sub-article 16 (e). It should be noted, in the circumstances of this case, that if an issuing bank returns the documents to the nominated bank but in the meantime the beneficiary has corrected or replaced discrepant documents within the expiry of the LC or the presentation period, the issuing bank will be obliged to honour when all the documents are subsequently returned to them and determined to be compliant. 2) The revised documents constituted a new presentation requiring examination in accordance with sub-article 14 (b). 3) The SWIFT MT799 sent on 9 December 2011 was not in accordance with the requirements of sub-article 16 (c). As a result of this failure, the issuing bank is precluded from claiming that the documents do not constitute a complying presentation. 20

6 4) The additional discrepancy is not to be considered as banks only have one opportunity to raise discrepancies for each presentation. In this case, since the additional discrepancy pertained to documents presented in the first presentation it should have been identified at the time the first presentation was made and as part of the initial refusal notice. 5) It appears that the LC does not explicitly state that the CMR must indicate a total cost of goods. If the total cost of goods is indicated, then it must be stated as a specific amount in EUR. 6) The issuing bank must honour. The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission based on the facts under QUOTE above. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered. If this query relates to a matter currently under consideration by the courts, the ICC Banking Commission will refrain from considering it for adoption as an opinion. Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen, Technical Adviser or any of the Group of Experts shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s). Yours sincerely, Thierry Senechal Senior Policy Manager Banking Commission 21

26 January Thank you for your query regarding UCP 600. Please find below the opinion of the officers of the Banking Commission.

26 January Thank you for your query regarding UCP 600. Please find below the opinion of the officers of the Banking Commission. Ms Elena Filatova Policy Director ICC Russia 21/1 Bolshaya Polyanka Str. 119180 Moscow Russia 26 January 2010 Subject: Document 470/TA.714 Dear Ms. Filatova, Thank you for your query regarding UCP 600.