TA879rev
A credit was issued available with the nominated bank whilst also stating that the issuing bank would remit proceeds upon receipt of credit conforming documents. The nominated bank sent an MT 754 to the issuing bank and also forwarded the documents.
The issuing bank received the documents and, as no discrepancies were discovered, paid the nominated bank. However, payment was not made until 22 days after receipt of documents by the issuing bank. On this basis, the nominated bank had claimed delayed payment interest, starting 7 days after the date of the MT 754. In response, the issuing bank stated that they required the nominated bank to provide documentary evidence that they had actually paid the beneficiary. The question was asked as to whether or not such a demand was justified. Furthermore, it was queried if the issuing bank should have paid upon receipt of the MT754 without requiring sight of the original documents.
As stated within the analysis, this indicated that there was a technical flaw in the credit. The appropriate approach would have been for the credit to either include a reimbursing bank, or provide an authorisation to debit the account of the issuing bank with the nominated bank.
The period of 22 days between receipt of the documents by the issuing bank and payment was not considered to be reasonable. In addition, it was emphatically stated that there is absolutely no requirement in UCP 600 for the nominated bank to provide proof of honour to the beneficiary. Having said that, there is no provision within UCP 600 to cover issues surrounding delayed payment - this must be handled outside the credit.
Based upon the flawed wording within the credit, the process of reimbursement could only begin once the issuing bank received complying documents.
TA880
Payments under two credits remained unpaid due to the issuance of an injunction at the request of the applicant. The injunction was based upon a dispute with regard to the underlying sales contract.
The question was asked as to whether the UCP 600 could prevail over an injunction.
The analysis noted that numerous opinions had previously been issued wherein it was clearly stated that disputes in respect of an underlying sales contract are outside the scope of UCP 600. It went on to highlight that whilst banks cannot ignore court injunctions, they should do their utmost to resist any injunctions by providing courts with the necessary information within UCP 600 and the terms and conditions of the credit.
TA881
A credit was issued on mixed payment terms: 80% against presentation of documents and 20% against presentation of an acceptance certificate issued by the applicant or, in case this document is not issued, at 45 days after the bill of lading date (whichever first occurs).
Although the documents for the 80% portion were presented, they were found to non-complying and, therefore, settlement was not forthcoming.
The question was asked as to whether or not the 20% portion would still fall due despite non-payment of the 80% portion. Or, was it fully reliant on the 80% portion being honoured?
It was opined that, in the absence of an acceptance certificate being presented, the issuing bank could only pay the 20% portion 45 days after the bill of lading date if the 80% portion had previously been honoured. It is considered unlikely that any bank, having refused the presentation for 80%, would then proceed to record a commitment to pay the 20% portion.
However, if an acceptance certificate had been presented, then the issuing bank would be obligated to honour.
TA882
A credit was issued including the condition ‘Third party documents not acceptable.'
In view of the fact that ISBP 745 states that this phrase has no meaning and is to be disregarded, it was queried if inclusion of such a phrase modifies UCP 600 or, on the contrary, should it be rejected.
It was highlighted that ISBP 745 does not expressly modify or exclude any article within UCP 600.
Conditions such as the phrase indicated above, should not be used in a credit unless there is an accompanying clarification as to how such phrase should be interpreted.
TA883
Pursuant to a presentation of documents, an issuing bank raised certain discrepancies that were accepted as valid by the confirming bank.
Corrected documents were presented and the issuing bank identified two discrepancies, one of which had not been mentioned with respect to the previous presentation.
The first discrepancy related to an inconsistent carrier name on the AWB. This was not considered to be valid, as the parry that signed the AWB had signed as carrier.
The second discrepancy revolved around an apparent inconsistent contract number. The number was mentioned in two different places within the AWB, one of which omitted a section of the contract number. In view of the fact that the issuing bank did not previously consider this issue to be a discrepancy with respect to the initial presentation, it was assumed that the AWB correctly stated all other details and that, as such, partial omission in one notation could be considered as a typographical error. In any event, the correct contract number was also stated on the AWB.