ICC Rules Study_ International Chamber of Commerce Opinion
The data of documents required for the letter of credit may involve specialized knowledge in certain industries. The following opinion is a review of a quality inspection certificate that needs to comply with a certain EU standard:
R817
Was a certificate of quality compliant despite it showing a specification above a quoted limit, and referring to other reference methods used in determining the specifications when the credit only referred to one reference method?
The letter of credit requires the submission of a bill of lading and a quality inspection certificate, and requires that the quality inspection certificate complies with the EU EN 15376 standard, with a maximum moisture content of 2000 ppm.
The quality inspection certificate submitted by the beneficiary states compliance with this standard, but in the methods listed in the table, the moisture content was tested using the “EN 15489” method, and there was an additional item not required by the letter of credit, “Electrical Conductivity”, which used the “EN 15938” testing method, with results exceeding the limits specified in the table. The issuing bank raised discrepancies based on the exceeding electrical conductivity limit and the use of standards not specified in the letter of credit. Are these two discrepancies valid?
104
Opinion R817(TA783)
A Review of a Quality Inspection Report Compliant with EU Testing Standards
R817(TA783)2012~16
Issue Review
QUERY
QUOTE
We, as the nominated confirming bank, confirmed a sight documentary credit that required, among other documents, the presentation of a Certificate of Quality with the following condition:
+ONE ORIGINAL AND TWO COPIES OF CERTIFICATE OF QUALITY ISSUED BY ITS [Company C/D] SURVEY SA AT LOADING PORT. QUALITY TO BE BASED ON A COMPOSITE REPRESENTATIVE SAMPLE DRAWN EX SHIP’S TANKS AFTER LOADING. QUALITY CERTIFICATE TO BE BASED ON EN 15376 SPECIFICATIONS WITH A WATER CONTENT OF MAX 2000 PPM, RESULTS OF ANALYSES TO BE STATED ON CERTIFICATE AND TO BE ON LINE WITH CONTRACTUAL SPECIFICATIONS. [Emphasis added]
The description of goods is stated in the documentary credit as:
3000 CBM +/- 10 PCT AT 20 DEG C, UNDENATURED BIOETHANOL PRODUCED FROM GRAIN AND/OR WHEAT THRU FERMANTATION AND CONTINUOUS DISTILLATION. WATER CONTENT 2000 PPM MAXIMUM – SPECIFICATIONS AS PER EN 15376 IN BULK.
Documents for EUR1,826,649.76, which constituted a complying presentation, were honoured and sent to the issuing bank on 24 December 2012.
We, as the nominated confirming bank, confirmed a sight documentary credit that required, among other documents, the submission of a Certificate of Quality with the following conditions:
One original and two copies of the Certificate of Quality issued by [Company C/D] Survey SA at the loading port.
Testing requirements: Based on a composite representative sample drawn from the ship’s tanks after loading. The quality certificate must comply with EN 15376 standards, with a maximum moisture content of 2000 ppm. The results of the tests must be stated on the certificate and be consistent with the contractual specifications.
The description of goods in the letter of credit is:
3000 cubic meters (±10%, at 20°C) of un-denatured bioethanol produced from grain and/or wheat through fermentation and continuous distillation. Water content ≤2000 ppm, in bulk, specifications must comply with EN 15376 standards.
The document amount of EUR1,826,649.76 constituted a complying presentation, and after our bank honored it, the documents were sent to the issuing bank on December 24, 2012.
On January 2, 2013, we received an MT734 message from the issuing bank citing the following discrepancies in respect of the Certificate of Quality:
-
Result of electrical conductivity is above the limits
-
Different specifications used (EN 1572, 15489, 15492, 15938 etc.) although L/C required specification is only EN 15376
Related fields of the Certificate of Quality are shown below for your review:
CERTIFICATE OF QUALITY
REFERANS STANDARD: EU Standard EN 15376
QUALITY IS BASED ON A COMPOSITE REPRESENTATIVE SAMPLE DRAWN EX SHIP’S TANKS AFTER LOADING.
QUALITY CERTIFICATE IS BASED ON EN 15376 SPECIFICATIONS WITH A WATER CONTENT OF MAX 2000 PPM, RESULTS OF ANALYSES IS STATED ON CERTIFICATE AND IS ON LINE WITH CONTRACTUAL SPECIFICATIONS.
The issuing bank raised the following discrepancies regarding the quality inspection certificate on January 2, 2013, via SWIFT MT734 message:
-
Electrical conductivity test result exceeds the limit;
-
The quality inspection certificate used standards not required by the letter of credit (such as EN 1572, 15489, 15492, 15938, etc.), while the letter of credit only required EN 15376 standards.
Extracts of relevant fields from the quality inspection certificate:
Reference standard: EU EN 15376 standard
(Table as shown above)
Quality is based on a composite representative sample drawn from the ship’s tanks after loading.
The quality inspection certificate complies with EN 15376 standards, with moisture content ≤2000 ppm, and the results stated on the certificate are consistent with the contractual specifications.
The inquirer asks the ICC:
Based on the information given above and our comments provided below, we kindly ask for your official opinion regarding the discrepancies raised by the issuing bank.
For Discrepancy No 1
Since the Certificate of Quality contains a statement “RESULTS OF ANALYSES IS STATED ON CERTIFICATE AND IS ON LINE WITH CONTRACTUAL SPECIFICATIONS”, as required by the documentary credit, and there is no specification provided in the documentary credit as to the electrical conductivity, can the result shown for electrical conductivity, which is above the limit provided within the document, be considered as a discrepancy? Are banks required to examine the results of the analysis according to the limits provided in such documents as quality certificates, inspection certificates, etc. although no specification is given in the documentary credit?
For Discrepancy No 2
Since, on the Certificate of Quality, it is clearly indicated “QUALITY CERTIFICATE IS BASED ON EN 15376 SPECIFICATIONS” and reference standard is stated as “EU STANDARD EN 15376”, can the additional information given within the document regarding the reference method as “EN 1572, EN 15489, EN 15492, EN 15938” be considered as a conflict of data?
Based on the information above and our analysis below, we kindly request the International Chamber of Commerce (ICC) to provide an official opinion regarding the discrepancies raised by the issuing bank.
Discrepancy No 1:
The letter of credit requires the quality inspection certificate to state that “the results stated on the certificate are consistent with the contractual specifications”. Since the letter of credit does not specify the limit for electrical conductivity, does the exceeding result in the certificate constitute a discrepancy? Even if the letter of credit does not specify, are banks required to review the results of the tests according to the limits provided in such documents as quality certificates, inspection certificates, etc.?
Discrepancy No 2:
The quality inspection certificate clearly states “the quality inspection certificate is based on EN 15376 standards”, and the reference standard is “EU EN 15376 standard”. Does the additional listing of testing methods (such as EN 1572, EN 15489, EN 15492, EN 15938) in the document constitute a conflict of data?
ICC Analysis
ANALYSIS
Discrepancy No. 1
UCP 600 sub-article 14 (f) states:
If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).
The credit included a condition “result of analyses to be stated on the certificate and to be on line with contractual specifications”. The presented certificate contained this statement.
Examination of the certificate of quality reveals that one property, electrical conductivity, is above the stated limit. The credit does not provide a specification for electrical conductivity and any such specification is not to be examined as it is outside the terms and conditions of the credit. In any event, the result of the electrical conductivity is stated to be determined under reference method EN 15938 and this is not the basis that was required by the credit. The certificate of quality complies with all the stated specifications in the credit.
Discrepancy No. 1:
UCP 600 sub-article 14 (f) states:
If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).
The credit included a condition “results of analyses to be stated on the certificate and to be on line with contractual specifications”. The presented certificate contained this statement.
Examination of the certificate of quality reveals that one property, electrical conductivity, is above the stated limit. The credit does not provide a specification for electrical conductivity and any such specification is not to be examined as it is outside the terms and conditions of the credit. In any event, the result of the electrical conductivity is stated to be determined under reference method EN 15938 and this is not the basis that was required by the credit. The certificate of quality complies with all the stated specifications in the credit.
Discrepancy No. 2
ICC Opinion R390 highlights the fact that banks are not required to be conversant with any code or item numbers that are specific to various standards.
The credit required that the content of the certificate of quality and the goods description be based on EN 15376 specifications.
The presented certificate of quality refers to EN 15376 and, additionally, stated that the certificate is based on EN 15376 specifications.
Although the certificate included, in table format, additional reference methods commencing with the letters ‘EN’, it is not for banks to know whether this information is relevant. The fact that it is stated as a ‘Reference Method’ rather than a ‘specification’ does not necessarily provide a basis for any form of comparison.
Discrepancy No. 2:
ICC Opinion R390 highlights the fact that banks are not required to be conversant with any code or item numbers that are specific to various standards.
The credit required that the content of the certificate of quality and the goods description be based on EN 15376 specifications.
The presented certificate of quality refers to EN 15376 and, additionally, stated that the certificate is based on EN 15376 specifications.
Although the certificate included, in table format, additional reference methods commencing with the letters ‘EN’, it is not for banks to know whether this information is relevant. The fact that it is stated as a ‘Reference Method’ rather than a ‘specification’ does not necessarily provide a basis for any form of comparison.
ICC Conclusion
CONCLUSION
The discrepancies are not valid.
These two discrepancies are both invalid.
EN15376 and EN15489
The letter of credit requires that the testing of the goods complies with EN15376 standards, especially regarding moisture content, but the submitted quality inspection report used the EN15489 method for moisture content testing.
Although the conclusion is that the discrepancies are invalid, out of curiosity, I searched online for the relationship between these two codes:
EN 15376 is the standard for bioethanol fuel, while EN 15489 is the standard for water quality testing methods, which is a direct method for determining the moisture content in ethanol used in gasoline mixtures. Therefore, when testing the moisture content in ethanol, the EN 15489 method will be used.
Mingyue | Original
# Music Time and Space
……
Fragmented Thoughts
2025 National College Entrance Examination candidates: 13.35 million
June 7 is the exam day. News reports that this year, a total of 13.35 million people participated in the college entrance examination, although slightly lower than last year, it is still the second highest in history. In the afternoon, this year’s essay topic was announced online, first looking at the national volume one, vaguely feeling it is related to the three attitudes towards suffering:
Regarding the three paragraphs (poems) written by Lao She, Ai Qing, and Mu Dan, I had no idea who Mu Dan was before. Later I learned that this poem was written around 1941-1942 during the Anti-Japanese War, and I had some realization. Some analysts believe that these three paragraphs are related to this year’s commemoration of the 80th anniversary of the victory in the Anti-Japanese War, and writing around this point is probably not wrong, but unfortunately, these are all speculations from outsiders like us. If I were to express freely, I might associate it with the three realms of life proposed by Wang Guowei in “Human Words and Sentences”:
Realm One: “Last night the west wind withered the green trees. Alone on the high building, I look out at the end of the horizon.”
Realm Two: “The belt gradually widens, but I do not regret, for you I have become haggard.”
Realm Three: “Searching for him among the crowd a thousand times. Suddenly turning around, that person is there, in the dim light.”
However, this content is something I learned in university classes, and high school students probably haven’t learned it yet? Moreover, for many years, my understanding of these three paragraphs has not been profound, until I read Ye Jiaying’s “On the Appreciation of Poetry and the Three Realms of ‘Human Words and Sentences’”, I finally had a relatively thorough understanding, making it somewhat difficult for high school students to write an essay in half an hour.
Relatively speaking, the writing about dreams in the national volume two is easier to start. The micro-writing in the Beijing volume is the most novel, for the first time seeing the essay requirement to write a public account promotional phrase, poem, or lyrical text, with a word limit of 150 words. The Shanghai and Tianjin volumes have more restrictions on the essay topics. As college entrance examination candidates, there is no right to choose the volume, and they must give their all regardless of the type of topic encountered.
I wonder how these college entrance examination candidates will recall the most important exam in their lives many years later. Regardless of the outcome, the most important thing is to have no regrets, rather than to say to the self of that year, you could have done better!
WeChat ID: CDCS-2018
1. CDCS Exam Experience
2. Letter of Credit Practice/English
3. International Trade/Settlement Knowledge
4. Interpretation of International Chamber of Commerce Rules
5. Mingyue’s Thoughts
