Friday Law Report: Insurance policy was an original document

7 May 1999 Kredietbank Antwerp v Midland Bank plc: Karaganda Ltd v Midland Bank plc and another Court of Appeal (Lord Justice Evans, Lord Justice Mummery and Lord Justice Sedley) 28 April 1999

A DOCUMENT which was clearly an original document, in the sense that it contained the relevant contract, and which was not itself a copy of some other document, was not precluded from being an original document for the purposes of the Uniform Customs and Practice for Documentary Credits, 1993 revision, ICC Publication No 500, because it had been produced by means of a word processor and printer.

The Court of Appeal dismissed the appeals of Midland Bank and Karaganda Ltd against a decision that Kredietbank Antwerp was entitled to accept certain documents tendered under a letter of credit.

The Midland had opened a letter of credit through Kredietbank. The buyer was Karaganda Ltd. The terms of the letter of credit, which was subject to the Uniform Customs and Practice for Documentary Credits, 1993 revision, ICC Publication No 500, (UCP 500), required, inter alia, an "original insurance policy or certificate".

The documents tendered were in fact the original and duplicate of the policy. Both documents bore ink signatures. There were two documents because one of the express insurance conditions provided: "This policy is issued in original and duplicate, one of which to be accomplished, the other to stand void." One document was stamped "DUPLICATE". The other bore no equivalent marking.

The original document was produced by a word processor and printed by a laser printer on to the insurance company's headed paper bearing its logo. The duplicate was a photocopy of that document. Midland refused to accept the original document, notwithstanding that it was the original, because it was not marked "original" as required by article 20(b) of UCP 500.

On that ground, inter alia, Midland refused to indemnify Kredietbank, and Kredietbank issued proceedings. The buyer brought separate proceedings against Midland disputing its own liability to indemnify Midland, and the judge found in favour of Kredietbank. Midland and the buyer appealed.

On the appeal it was submitted for Kredietbank, inter alia, that the two insurance documents clearly satisfied the requirements of article 34 of UCP 500, namely that "insurance documents must appear on their face to be issued and signed by insurance companies or underwriters or their agents".

Midland contended however, that article 20(b), as interpreted in Glencore v Bank of China [1996] 1 Lloyd's Rep 135, meant inevitably that the documents failed to conform. The first document had been produced "by reprographic, automated or computerised systems" within article 20(b)(i) and so was subject to the proviso that it should be "marked as original", which it was not.

Mark Hapgood QC (Slaughter & May) for Kredietbank; Peter Goldsmith QC and Matthew Newick, solicitor advocate (Clifford Chance) for Midland; Stephen Kenny (Russell Cooke Potter & Chapman) for the buyer.

Lord Justice Evans said that the purpose of the rule now contained in article 20(b) of UCP 500, was clear. Previously, banks had been entitled to reject documents which were not originals. Henceforth they would accept certain documents which would previously have been rejected as non-originals, provided that specified safeguards were observed. That applied expressly to photocopies ("reprographic systems") and to carbon copies. Those were by their nature copies of some other document which was their original.

A document which was clearly the original, in the sense that it contained the relevant contract, and which was not itself a copy of some other document, was certainly an original for the purposes of the rule.

In the present case, the first insurance document was clearly the original policy and was not a copy of some other document, nor did it appear that it might be a copy document. Kredietbank had, accordingly, been entitled to accept the document tendered as the original insurance policy, and Midland had been wrong to reject it.

Kate O'Hanlon,

Barrister