Singapore: Letters Of Credit – Issuing Bank vs Confirming Bank (Deutsche Bank AG v CIMB Bank Bhd)

Last Updated: 10 July 2018
Article by Probin Dass and Liew Kai Zee
Most Popular Article in Singapore, July 2018

 Does a term requiring documents to be signed mean that a signature in the traditional sense is required? Does a term allowing presentation of documents at any time before the expiry of the letter of credit, supplant the usual 21-day rule in the UCP 600? These questions came before a judge in Deutsche Bank AG v CIMB Bank Bhd [2017] EWHC 3380 (Comm), when the two reputable international banks took opposing views as issuing bank and confirming bank.


CIMB Bank Bhd ("CIMB") issued a number of letters of credit to facilitate trading transactions involving Indian cotton. Deutsche Bank AG ("Deutsche Bank") was the confirming bank under the said letters of credit, and in that capacity, had accepted documents presented under the letters of credit. However, CIMB refused to pay Deutsche Bank on two grounds. First, that one of the documents tendered did not conform to the terms of the credit; and second, that the documents were presented more than 21 days after the shipment date.

Issue 1 – Did the document in question comply with the requirements of the letter of credit?

The relevant term was found in Field 47A, line 2 which read, "All documents must be presented in English language, dated and signed". By an amendment, it was added, "Copy of registration certificate of overseas supplier enterprise for import cotton issued by AQSIQ". The document in question was the copy of the registration certificate mentioned in the amendment. The document tendered in accordance with this amendment was accepted by Deutsche Bank as a compliant document. However, CIMB rejected it on the basis that it was not signed. Indeed, this document did not bear the signature of an individual but, instead, a red circular stamp. The judge pointed out that article 3 of UCP 600 allows a document to be signed by way of, among other things, stamp, symbol or any other mechanical method of authentication. He then observed that there was a large and clear company stamp on this document and concluded that, on the plain language of article 3 of UCP 600, "that is to my mind a sufficient signature".

CIMB's position was that the company stamp alone was insufficient. It has to also contain some form of signature, initials, whether "wet ink" or embossed within the stamp. CIMB relied on a number of authorities for this proposition but the judge was unimpressed and preferred to rely on the clear meaning of article 3 and the following authorities: paragraph A35 of ISBP 745 and ICC Banking Commission opinion R718. The conclusion to this issue was that a stamp on its own used by way of authenticating mark, i.e. qua signature, is a sufficient signature.

Issue 2 – Was there timely presentation?

The relevant term in the letter of credit was found in Field 48 which read, "Documents to be presented within letter of credit validity". The letter of credit was issued on 6 October 2015 and shipment could be made at any point up to 15 December 2015. The expiry date of the letter of credit was 15 January 2016.

Under article 6e of UCP 600, for a presentation to be valid, it must be made on or before the expiry date. Further, article 14c states that a presentation must be made not later than 21 calendar days after the date of shipment, "but in any event not later than the expiry date of the credit". Therefore, the question was whether a presentation made more than 21 days after the date of shipment but before the expiry date was a valid presentation.

The judge began by pointing out that article 1 of UCP 600 provides that the 21-day presentation rule binds "unless expressly modified or excluded by the credit". He then considered whether the words of Field 48 modified or excluded the 21-day presentation rule. Counsel submitted extensively on this point relying on the SWIFT Message Reference Guide and case law. However, there were no ICC Banking Commission opinions on the question and the judge felt there was nothing in ISBP 745 touching on the point. He approached it as a question of contractual interpretation. The question was – what was conveyed by the language used in Field 48, and whether its effect was to change the 21-day presentation rule.

He concluded that the language in Field 48 "conveys entirely clearly that the period for presenting documents is the period from the date of shipment ... until the expiry date of the credit. That is a period for presentation rule distinctly different from a rule requiring documents to be tendered within 21 days from shipment (whatever the expiry date)".

Therefore, the presentation in this case was within time and could not properly have been rejected by Deutsche Bank as a late presentation. Likewise, it should not have been rejected as a late presentation by CIMB and its customer.

On balance, and particularly given the words of Field 48, the judge's view was probably correct. However, the judge did concede that the words could have been clearer such that there could have been no dispute over its meaning and effect. Therefore, this issue would probably not have arisen if the drafting had been clearer. For instance, Field 48 could have read: "Documents to be presented any time after shipment but within letter of credit validity".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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