Letter of Credit Forum

Recently I was reviewing a court decision where the issue of fraud came up. The bank had tried to prove via a web-site that the chartered vessel was at a different place and hence the charter party contract a sham.

In order to prove the location of the vessel the bank used a website, however the court was not impressed and found:

"The authoritativeness of the Web site on which Banca Monte relied regarding the location of plaintiff's vessel was questionable and not an appropriate subject of judicial notice."

To support this finding the court refers to an earlier court decision where it did not accept that a an area designated by the Parks department as park, actually was designated a park. The subtle distinction here seems to be a legal one: Are only areas formally or impliedly dedicated as parks,  parks ? These legal semantic exercises however are of a different calibre when compared to the physical location of a ship. 

The website the bank submitted as evidence and which apparently failed to convince the judges is not mentioned in the decision. 

 However, I researched a bit, and came up with the following websites. 

http://www.fleetmon.com/
http://www.shiptracking.eu/
http://www.marinetraffic.com/

I opened a discussion thread, to ask for more information in this regard from our practicioners.

Are there other  websites/services that offer vessel tracking information ?

What is your experience with the reliability of these sites (can it survive the judges's steady gaze) ?

The UCP mentions "however named" so often, that one might get the idea that the drafters and the banking industry in general are a convivial bunch. A bill of lading, however named, an airway bill, no names needed, a sea waybill, I am Joe, what's your name, so you are a letter of credit, your name definitely does not give it away. 

Behind this seeming lack of formality of course lingers the dissecting intellect trying to get to the "Ding an sich", the essence of the piece of paper presented. Who are you, what are you ? If you are a shipping document, are you really signed by a carrier ? You pretend to be an invoice, but are you issued by the beneficiary ?

Even more confusing: the famoulsy dissecting intellect contents itself with appearances, the profundity of surfaces. Thus Oscar Wilde: All art is at once surface and symbol. Those who go beneath the surface do so at their peril.

Documentary payment obligations as art ? Bankers are getting more mysterious by the thought.

Add to the documentary examination the independence principle, the idea that money (read human happiness in the abstract) payments are not influenced by the underlying transaction. 

These dizzying ideas ... I feel my corporal existence being abstracted away and becoming independent of my immaterial soul. 

Doctor, there is an invisible man in the waiting room. 

Tell him, I cannot see him.  

 

The German House of Representatives ("Bundestag") has passed the draft of a new maritime law which is expected to come into effect in the coming weeks. The new law is supposed to simplify and modernize the current rules. 

The discussions so far have focussed on:

• The abolishment of the old rules regarding shipowning partnerships, and protests by the shipmasters to preserve evidence; 
• Streamlining of rules regading loss by sea; 
• Limitation of liability for carriers in case of fire and nautical error only valid if contractually agreed upon. 
• First time rules for bareboat- and time-charters

 Regarding bills of lading the new law will introduce  section 522 ("defenses") which provides

(1) The carrier can defend itself against the party entitled under the bill of lading only with defenses

affecting the validity of clauses contained in the bill of lading, or
are derived from the content of the bill of lading, or
entitling the carrier directly against the party entitled under the B/L.

An agreement, to which the bill of lading refers, is not part of the bill of lading. 

The justification for this change is that the party entitled under the bill of lading   can be sure that no clauses that are hidden in a charter contract will surprise him. Also, getting hold of these charter clauses is impractical. 

This revision is unique, since other legal systems allow the reference to a charter contract in a bill of lading. The revision will lead to a bill of lading being treated differently under German law compared to international laws. The question is whether the intended clarification is worth a special German way that ignores international commercial usance. 

 

 

The Chinese Supreme Court already has issued guidelines for lower courts how to treat letter of credit cases. Now, the Supreme Court is considering guidelines that are supposed to help the Chinese legal system to consistently decide cases involving international bank guarantees. 

Among others the court discusses the following topics:

1. Principle of Independence 
2. Jurisdiction and the Governing Law
3. Criteria for Fraud Exception

I have made available an English translation of  the current draft at:

Chinese Supreme Court Draft Guidelines regarding bank guarantees

These guidelines are very welcome by the banking community since Chinese law does not address bank guarantees and questions arose whether a payment instrument that is not a surety could be valid. 

DC-PRO is an online library (offered by Coastline Solutions) which publishes material from the International Chamber of Commerce. Among the generous offerings in DC-PRO you will find the Queries and responses, the Opinions, the case studies and the DOCDEX decisions. The amount of information is stunning, nevertheless neatly organized according to the original ICC title and publication number.

Anyone dealing in letters of credit will feel the rush of excitement to have this information available at your fingertips. Even better, compared to the print edition, you can search among various volumes at the same time; anyone ever having used google might not consider this surprising, but the speed and accuracy of the results are a great time saver for anyone looking for answers.

Finally, to keep up to date with current events,  DC-PRO offers weekly world news, legal case summaries and informs its readership of upcoming ICC events. There is also a lively Discussion Forum in which members can ask questions of each other and share their experience.

Alas, as any matters related to the ICC (and Coastline Solutions as the "official technology provider of the ICC" is not exempt), this so very helpful site costs money. Subscriptions begin at 2500 Euros per user per year, but discounts are available for multiple subscriptions within the same organisation.

However, comparing the price of subscription with buying the treeware ICC publications you will still save money and more importantly time. A site highly recommended for anyone dealing with letters of credit professionally.