The International Chamber of Commerce Banking Commission released the document "Notes On the Principle of Strict Compliance" in May in an effort to analyze what is considered to be "strict compliance" in documentary credit issues. The document was drafted by David Meynell,the senior technical advisor to the ICC Banking Commission,and represents the position of the ICC Banking Commission Executive Committee.

This article aims to analyze and determine the "documentary examination standard according to UCP 600," (Uniform Customs and Practice for Documentary Credits),the latest international rules on the issuance and use of letters of credit. It was also to identify the challenges arising during the documentary credit examination phase,mainly in respect of wrong or spurious refusals of presentations made under a documentary credit subject to UCP 600.

It has been said that an exporter presenting documents under a documentary credit is under far more pressure than any student sitting for an examination. In order to pass,the exporter must achieve a 100% result on papers submitted. There is no margin for error. A mark of 99% results in failure -- failure to comply with the terms and conditions of the credit.

In this case "failure" has both actual and potential consequences. An actual consequence is that the issuing bank and/or confirming bank are not obligated under their undertaking towards the beneficiary. That is the cost of having the documentary credit issued and "lost." Perhaps worse is the potential consequence that payment is received late - or not at all.