Letter of Credit Forum

Hi, 
We have a deal on the table to sell 22 cars to China. Our supplier has worked with LC's before and has a standard template already that he uses all the time. However that LC is for truck and sea transport while our deal is meant to go by train to China.
Our supplier usually gets a multimodal BL once the cars leave his dealership with which he can already collect payment from the bank. However since the train doesn't work with BL's there is no such document as a mutlimodal BL. 

The supplier won't work with an LC that contains railway bill because we will only get the railway bill a couple days after the cars have been delivered to the train terminal. He wants to be able to enforce the payment of the LC with a document that he will receive once the cars are put on transport from his dealership to the train in Germany. 

Does anyone have experience with railtransport and LC's that can give us advice on this?

The transport would go as following:
Cars being picked up in Belgium and would need to go by truck to Duisburg Train terminal. Then by train the cars would need to go to Chongqing, China.

Attached you see the LC terms that the dealership uses with another client for sea transport. 

Thanks in advance for your input! 

phill doran replies

Hello Dries

Firstly, I am not a banker and so I apologise if I have missed some finer point here. Secondly, I have technical challenges posting, hence my need to attach my reply to your original post.
I am also assuming that the underlying intention of the parties is some sort of FCA sale…
If the contract is concluded on handover to the haulier who collects – e.g. an FCA Seller’s Site contract – then Article 24 allowing for a road transport document indicating receipt of the goods (by the haulier) should suffice I would think: the rail journey is not the seller’s concern.
However, if the seller has the contractual obligation to get the cars to the railhead i.e. if the collecting haulier is working for the seller on an “FCA Duisburg Railhead” basis, then the rail document is consistent with the underlying sales contract, and the delay your client is experiencing is a cost of doing business with the railways. Alternatively, if the handover to the railhead is the trigger, perhaps the railways issue ‘receipts’ and the receipt ‘evidencing the taking in charge by [named rail service]’ as the ‘transport document’ (Article 19 with specific attention paid to D1 b i of the ISBP) ) may work for you?
Just some thoughts

I wish you well with this

Cheers

phill
“...in the kingdom of the blind; what you see is what you get...”