Article

Decision No. 282

UCP 600 article 16; sub-articles 14 (b), 16 (c) (i), 16 (c) (iii), 16 (f) and 7 (b)

Was the FCR presented under the credit discrepant? Did the beneficiary require the issuing bank's authorization to submit revised documents following a discrepant presentation? Was the issuing bank entitled to claim a refund, with interest, of reimbursement made to the respondent when its refusal notice did not accord with the requirements stated under UCP 600 sub-articles 16 (c) (i) and 16 (c) (iii)?

Parties

Initiators: Company S (Applicant) jointly with Bank S (issuing bank)

Respondent: Bank A (advising and nominated bank)

Documents related to this decision have been submitted only by the Initiators. This Decision is rendered without the Respondent's response.

Background

- documentary credit subject to UCP 600, issued on 8 August 2008

- issuing bank and applicant: Initiators

- advising and nominated bank: Respondent

- availability: by sight payment with the Respondent

- amount: EUR 7,200,000.00 +/- 5 pct

- place and date of expiry: the place of the Respondent on 20 September 2008

- form: irrevocable

- confirmation: "may add". Not confirmed by Respondent

- documents required (SWIFT MT700, field 46A) (among others):

"1. FORWARDERS CERTIFICATE OF RECEIPT FCR IN 1 ORIGINAL AND 1 COPY DATED NOT LATER THAN 30th AUGUST 2008 ISSUED BY COMPANY N STATING THE FOLLOWING:
(5 items not related to the question in hand)
(6th item)
SIGNED AND STAMPED BY THE FREIGHT FORWARDERS ... NAME AND TITLE OF THE SIGNING PERSON WILL BE DULY INDICATED AT TIME OF ISSUANCE OF THE FCR."

- Period of presentation: within 21 days from FCR date but within validity of the credit

- Instructions to the paying bank (SWIFT MT 700, field 78)
"UPON RECEIPT AT OUR COUNTERS OF YOUR DULY AUTHENTICATED MESSAGE CONFIRMING THAT YOU HAVE HONOURED A COMPLYING PRESENTATION AND FORWARDED THE DOCUMENTS BY SPECIAL COURIER SERVICE ON THE SAME DATE (INDICATING AWB NUMBER AND DATE) TO OUR ADDRESS, WE HEREBY UNDERTAKE TO REIMBURSE YOU AS PER YOUR INSTRUCTIONS VALUE DATE FOUR EURO/ PARIS BANKING WORKING DAYS AS PER YOUR INSTRUCTIONS."

UCP 600 sub-article 16 (c) (i)
"c. When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter.
The notice must state:
i. that the bank is refusing to honour or negotiate; and ... "

Summary of the case

- On 8 August 2008, the issuing bank issued the documentary credit.

- On 10 September 2008, the issuing bank received a claim, by SWIFT message, from the Respondent for EUR 7,199,870.40 certifying that the documents were in compliance with the credit terms and conditions and claiming reimbursement value date 16 September 2008;

- On 11 September 2008, the issuing bank received the documents;

- On 16 September 2008, the issuing bank paid the Respondent on the basis of its previous clean claim;

- On 17 September 2008, the issuing bank checked the documents and noticed a discrepancy on the FCR, i.e., the FCR did not indicate the name and the title of the person who had signed it, contrary to the explicit requirement in the credit. On the same date this discrepancy was notified to the Respondent via SWIFT MT 799 and the applicant by fax.

The content of the MT 799 sent by the issuing bank to the Respondent was as follows:

"79: PLEASE BE INFORMED WE CHECKED DOCUMENTS AND NOTED THE FOLLOWING DISCREPANCY WHICH HAS BEEN NOTIFIED TO THE ORDERER: NAME AND TITLE OF PERSON NOT INDICATED ON FORWARDERS CERTIFICATE OF RECEIPT. WE WAIT FOR ORDERERS' INSTRUCTIONS. BRGDS."

- On 18 September 2008, the issuing bank informed the Respondent that it reserved the right to ask for the funds back.

- On 19 September 2008, the Respondent replied informing the issuing bank (a) that the beneficiary was in a position to send a new FCR and (b) that it was waiting for the issuing bank's request for a new FCR. On the same date, the issuing bank advised the Respondent that the documents were refused by the applicant, asked the Respondent to provide instructions for the return of the documents and claimed a refund of the funds paid to the Respondent on 16 September 2008.

- On 24 September 2008, the issuing bank received a new FCR from the Respondent with a cover letter dated 19 September 2008, wherein the Respondent certified that the new FCR was presented within the credit validity.

- On 25 September 2008, the issuing bank again requested a refund of the payment plus interest, via SWIFT MT799. For information only, the issuing bank mentioned that the new FCR was still discrepant because it still did not indicate the title of the person who had signed it and that the word "Operations" shown next to the name of the person who had signed the FCR corresponded to a department and not to a personal title.

- On 25 September 2008, the issuing bank returned the documents received on 11 September 2008 and the FCR received on 24 September 2008, to the Respondent.

- On 29 September 2008, the Respondent advised the issuing bank, by SWIFT MT 799, of its rejection of the request for a refund and informed the issuing bank that the beneficiary was disposed to pay late interest from 16/09/08 (date of payment) to 19/09/08 (date of presentation of the new FCR).

- On 30 September 2008, the issuing bank advised the Respondent by SWIFT MT 799 that it maintained its position based on the provisions of UCP 600 article 16: (a) documents were presented with a discrepancy, (b) the discrepancy was not waived by the applicant, and (c) an issuing bank is entitled to claim a refund, with interest, for the reimbursement made.

- On 1 October 2008, the issuing bank received the documents sent back by the Respondent and a SWIFT message in which the Respondent insisted on the right of the beneficiary to present amended documents within the credit's validity.

- On 1 October 2008, the issuing bank replied that no new presentation was requested and that, in any case, the new FCR was still not compliant.

- On 2 October 2008, the issuing bank returned the documents to the Respondent for the second time.

During the month of October 2008, several messages were exchanged between the issuing bank and the Respondent, both insisting on their respective positions.

Issues to be determined

- Is the FCR presented under the credit discrepant?

- Does the beneficiary require the issuing bank's authorization to submit revised documents following a discrepant presentation?

- Is the issuing bank entitled to claim a refund, with interest, of reimbursement made to the respondent?

Analysis

Discrepancy

The documents were received by the Issuing Bank on 11 September 2008 and reimbursement was made on 16 September 2008. Document examination occurred timely on 17 September (UCP 600 sub-article 14 (b) applies) and the following discrepancy was found: "NAME AND TITLE OF PERSON NOT INDICATED ON FORWARDERS CERTIFICATE OF RECEIPT". The discrepancy referred to the stipulation in field 46A of the MT 700 as above (see last bullet point under "Background" above). The FCR presented was signed and stamped by the freight forwarder indicated in the credit (Company N), but the name and the title of the signer were not indicated. The FCR was discrepant. The revised FCR fulfilled the requirement of the credit to indicate the name of the signer of the FCR, but it did not indicate the title of the signing person as required by the credit. The word "Operations", with no other mention whatsoever, cannot be considered a title of a signing person. The revised FCR was also discrepant.

Beneficiary's right to submit amended documents

The beneficiary has the right to present any amended documents within the validity of the credit and/or the latest date for presentation, in order to rectify any discrepancies. The beneficiary was entitled to present an amended FCR without any authorization from the issuing bank, and there was no need for the Respondent to request that the issuing bank provide authorization in this regard.

Issuing bank's right to claim a refund

The issuing bank, being the issuer of a documentary credit available with the nominated bank (Respondent), undertook to reimburse the nominated bank when that bank honoured a complying presentation and the documents were forwarded to the issuing bank. (UCP 600 sub-article 7 (c) applies).

The documentary credit in question allowed for TT reimbursement.

Consequently, the issuing bank duly honoured the reimbursement claim of the Respondent before examination of the documents as per instructions stated in field 78 of its MT 700. However, the refusal notice sent by the issuing bank via MT 799 on 17 September 2008 was not in accordance with UCP 600 sub-article 16 (c). Specifically, the notice did not state that the issuing bank was refusing the documents, which violates sub-article 16 (c) (i), and did not state one of the four options listed under sub-article 16 (c) (iii). For this reason, sub-article 16 (f ) applies and "the issuing bank ... shall be precluded from claiming that the documents do not constitute a complying presentation."

The same analysis is applicable to the second "refusal" notice sent to the Respondent by the issuing bank via MT 799 on 25 September 2008. While the issuing bank's refusal notice complied with sub-articles 16 (c) (ii) and (c) (iii), it failed to comply with sub-article 16 (c) (i), i.e., it did not specifically indicate that the bank was refusing the presentation. Sub-article 16 (f ) applies also to this "refusal" notice.

Conclusion

On the grounds of the "Analysis" above, this Panel decided that the issuing bank is precluded from claiming that the documents did not constitute a complying presentation. The issuing bank is not entitled to claim a refund, with interest, of the reimbursement made to the nominated bank.

This Decision is rendered unanimously.