Certificates of Origin and Letters of Credit

One important point to remember is that the consignee on the Certificate of Origin needs to relate to the delivery address on the invoice. However, what happens when the Letter of Credit appears not to allow this? For example, if the Letter of Credit has been opened in China, but the instructions on the Letter of Credit request that the Bill of Lading indicates that shipment is going to Ethiopia, what consignee address is used on the Certificate of Origin?
The answer lies in the International Standard Banking Practice (ISBP). Please note that the present publication no. 645 can only be used with UCP 500. I am advised by a very helpful and experienced Letter of Credit specialist at HSBC that a new publication of ISBP for use with UCP 600 will be coming out soon, but probably not until September 2007. Therefore, the information given here might have a use-by date since it only relates to UCP 500 and ISBP 645.

Under article 199 in ISBP 645, it states that the consignee information must not be inconsistent with the consignee information in the transport document. However, if the credit requires the transport document to be issued “to order”, “to the order of shipper”, “to order of the issuing bank”, or “consigned to the issuing bank”, the Certificate of Origin can show the applicant of the credit or another party named therein, as consignee.

Therefore, if the Letter of Credit states that the Bills of Lading are made out “To Order and Blank Endorsed” (Blank Endorsed means simply that the shipper signs on the back of the Bill of Lading) but notify the address in Ethiopia, then the Certificate of Origin can show the address in Ethiopia as the consignee address.

This is quite important because it should always be remembered that the documents issued on a Letter of Credit are not only there to obtain payment for the shipper, but to assist the consignee to import the goods into the country of import. In this particular case, if the Certificate of Origin had been issued with the name of the Chinese company as consignee, it would have been in accordance with the Letter of Credit, but useless to the Ethiopian customer for purposes of clearing their goods through Ethiopian Customs.

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training.  She is based in the United Kingdom.  If you require any further assistance with the matters mentioned above, please do contact us by e-mail on info@point-point.com or check out other international trade articles on the Point to Point Export Services website at www.point-point.com
 

Comments are closed.