ARE FACSIMILE SIGNATURES ALLOWED ON A NEGOTIABLE B/L?

By: Jacob Katsman, L/C Monitor

For nearly 5 years, in North America, ocean carriers, like APL Ltd., have distributed their Sea Waybills and Original Bills of Lading via the Internet to their customers.  Given the enhancement and acceptability of the Internet this evolution / innovation was a logical step in the distribution of paper Bills of Lading. The parties to the transaction have accepted these Bills of Lading with minimal disruption. ”As former Manager of Export Documentation for American President Lines, Art Thomas was often questioned about the validity of the Internet Bills of Lading and in particular, whether its facsimile signature is acceptable to the banks. Thomas would refer to article 20 (b) (ii) of UCP 500 which reads:

”...A document may be signed by handwriting, by facsimile signature, by perforated signature, by stamp, by symbol, or by another mechanical or electronic method of authentication.”

“This answer usually satisfied the exporter or importer raising the issue,” said Thomas.

As this innovation was expanded into other markets some resistance was encountered. Certain countries struggled with the idea of an Adobe PDF (Portable Document Format) Bill of Lading, which is a graphical representation of a paper Bill of Lading, being acceptable, nevertheless, a signature incorporated into such document. So to address this issue on a global scale, Thomas has sent a query to the ICC Banking Commission.

”My concern was that bankers were reading too much into the Internet Bill of Lading,” said Thomas. “Their concern over issues like, whether the signature was an original and how it was created or placed on the document, in my opinion, was going a bit too far,” he added.

At the recent ICC Banking Commission meeting in Turkey, Thomas has asked participating bankers about the facsimile signatures present on Internet Bills of Lading, the following questions:

1) In today’s practice when you see a correction stamp on a carrier’s Bill of Lading, do you call the carrier to verify and/or authenticate the signature? They responded NO stating that they review the documents “on their face.”

2) Would you accept the Internet Bill of Lading if the facsimile signature printed blue instead of its current black image? The majority of bankers said they would.

“My concern is the ocean carrier industry today is offering an Internet based solution to their customers and volumes are expected to grow,” says Thomas. “These are the same customers that utilize the services of the financial institutions unwilling to accept the facsimile signature. As such, the facsimile signature present on the Internet Bills of Lading being distributed by APL LTD. Maersk-Sealand, K-Line, P&O Nedlloyd, OOCL and others should not be held to a higher standard of authentication.  Doing so has the potential of impeding not only customer satisfaction but the improvements and efficiencies available in the new net economy.”

The actual query and the opinion of the banking commission review are reprinted below with permission from the ICC.

QUOTE

The purpose of this query is to clarify whether Article 20(b)(ii) applies in relationship to APL’s Bills of Lading. As background, APL has used imaging technology to produce bills of lading since 1996.

The Bills of Lading are distributed by direct printing and subsequently are couriered to our customers. For approved customers, we send the bills of lading via the Internet. The documents are identical whether they are printed internally or sent via the Web as the signature is imaged onto the document.

As we expand our Bills of Lading into other markets, some banks have raised the question as to whether or not the facsimile signature qualifies under Article 20(b),which reads;

‘b. Unless otherwise stipulated in the Credit, banks will also accept as an original document(s), a document(s) produced or appearing to have been produced:

i. by reprographic, automated or computerized systems;

ii. as carbon copies,

provided that it is marked as original and, where necessary, appears to be signed.

A document may be signed by handwriting, by facsimile signature, by perforated signature, by stamp, by symbol, or by any other mechanical or electronic method of authentication.’

It is my understanding that the IFSA (formerly known as USCIB) has previously supported the fact that APL’s Bill of Lading is in compliance with article 20(b) as stated above. Furthermore, we have issued in excess of 500,000 Bills of Lading, in North America, signed with the facsimile signature, since 1996. I believe the confusion lies in our ability to deliver the aforementioned Bill of Lading via the Internet, which may be incorrectly interpreted as a electronic document.

Any opinion regarding this matter is appreciated.

ANALYSIS & CONCLUSION

The text of the query includes the wording of Sub-article 20b that is relevant to this issue. In
addition, the content of the ICC Decision on Original Documents dated 12 July 1999 needs to be recognised.

Section 2, Determination of Originality states:

‘Banks undertake to determine whether a document appears on its face to be an original document, as distinguished from a copy. Except as expressly required by a letter of credit (including an incorporated term such as UCP 500 Sub-articles 23(a)(iv) or 34b), banks do not undertake to determine whether an apparent original is the sole original. Banks rely on the apparent intent of the issuer of the document that it be treated as an original rather than a copy. In this regard, a person sending a telefax or making a photocopy on plain paper or pressing through carbon paper presumably intends to produce a copy. On the other hand, a person printing a document on plain paper from a text that that person created and electronically stored presumably intends to produce an original. Accordingly, documents bearing facsimile signatures or printed in their entirety (even including the issuer’s letterhead and/or signature) from electronically stored text are presumably intended by the document issuer to be original and in practice are accepted by banks as original.’

Section 3.3 looks at documents which bear a facsimile signature, and states: ‘Banks treat a facsimile signature as the equivalent of a hand signature. Accordingly, a document that appears to bear the document issuer’s facsimile signature is also treated as an original document.’

The issue of originality with regards to Bills of Lading is covered in the context that Articles 23 and 26, for example, require the presentation of a sole original Bill of Lading or multimodal transport document. Such documents either specify on their face that the document is original or within the printed text on the face that ‘in witness whereof X original Bills of Lading have been signed ...’ or similar wording.

The signature on the Bill of Lading is classified as being a facsimile one and as such is acceptable under the terms of Sub-article 20b.

In the context of the printed wording that appears on the face of the Bill of Lading or multimodal transport document, ‘originality’ can be established. The signature on the Bill of Lading is classified as being a facsimile one and as such is acceptable under the terms of Sub-article 20b.

The document, issued as described above, would be acceptable under UCP500.

The opinion(s) rendered on this query reflect the opinion of the ICC Banking Commission’s officers. They do not necessarily reflect the opinion of the ICC Banking Commission until the Banking Commission renders its approval or disapproval of these opinion(s) at the next scheduled meeting.

The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.

If this query relates to a matter currently under consideration by the courts, the ICC Bank
Commission will refrain from considering it for adoption as an opinion.

Neither the ICC nor any of its employees, nor any member of the Banking Commission, including the Chairman, Vice-Chairmen, or Technical Adviser shall be liable to any person for any loss or damage arising out of any act or omission in connection with the rendered opinion(s).

The ICC Banking Commission at its 21-22 November 2000 meeting in Istanbul,Turkey officially approved the response to this query.

Jacob Katsman is the Managing Editor of the L/C Monitor and author of ‘The Art of Transferable
Letters of Credit and Assignments of Proceeds,’ www.cceweb.com/book. He is also the founder of the International Trade & Banking Institute, www.itbi.net.