ICC clarifies
"orig
inal document" language in UCP 500
Paris, 12
July 1999 - The Banking
Commission of the International Chamber of Commerce has issued an official Decision
clarifying what constitutes an "original document" under UCP 500,
its universally accepted rules on letters of credit.
The clarification, which
does not amend UCP 500, proved necessary because a 1996 UK court case, Glencore
International AG v Bank of China, narrowly construed the meaning of "original"
in sub-Article 20(b) of the ICC rules. As a result, document checkers worldwide
tended to take an overly conservative view of what constituted an original for
the purpose of the rules and were often unnecessarily stamping documents "original"
as a precaution.
The ICC Decision follows
closely on the reasoning of a more recent UK case, Kredietbank N.V. v Midland
Bank PLC, which clarified the Glencore decision. The Lord Justice in the Kredietbank
case said that the real intention of sub-Article 20(b) was "to widen the
category of acceptable documents", not to narrow them.
The ICC Decision makes clear
that "Banks do not undertake to determine whether a document is original
in fact". It continues: "The UCP neither requires nor permits an examination
beyond the face of a document to determine how the document was in fact produced,
unless the document was produced by a bank, e.g. on a telefax, telex, e-mail
or other system that prints out messages received by the bank."
The ICC Decision, which
will be distributed to banks worldwide, offers a comprehensive overview of all
possible situations – from documents that appear to be original but which
are not, to hand signed, facsimile signed and photocopied documents as well.
It should relieve document checkers from the uncertainty caused by the Glencore
case.
ICC Decisions, while they
do not carry legal force nor overturn court decisions, are widely read by the
courts as an indication of how UCP 500 should be interpreted.
Full
text of the ICC Decision on original documents
Commission on Banking Technique and Practice