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Presenting Documents Directly to Issuer – Latest ICC Briefing Paper
While the expectation is that presentation of documents will be made to a nominated bank when one is stipulated in documentary credit subject to UCP600, what happens when a presenter opts to bypass the nominated bank and present documents directly to the issuing bank? This practice situation was taken up in the ICC Banking Commission's Technical Advisory Briefing No. 9, "Direct presentation of documents to an Issuing Bank under a documentary credit subject to UCP 600", released 20 March 2024.
Under such scenario, the briefing addresses important considerations for both the presenter and issuing bank, including whether the issuing bank is responsible for informing the nominated bank of such "direct" presentation.
After laying out the issue, TAB-9 quotes portions of UCP600 Article 2 defining "presentation", "nominated bank", and "presenter" and relevant UCP600 Sub-Articles 6(a), 6(d)(ii), and 7(a).
Although UCP600 Sub-Article 6(a) provides that a credit available with a nominated bank is also available with the issuing bank, a presenter will typically present to a nominated bank. But there are instances where a presenter will choose to present directly to the issuing bank.
ICC Opinion R518 (TA519rev) (2001) reinforced this concept delineated in UCP500 in effect at the time. This Opinion stated: "Where a credit has been made available with a nominated bank, the beneficiary may elect to present documents directly to the nominated bank or to the issuing bank. Presentation to the issuing bank is an acceptable act on the basis that it is the issuing bank that has provided its undertaking to honour complying documents."
When presentation is made directly to the issuing bank, it must examine the presentation and, if complying, must honour.
From the presenter's side, if it elects to send documents directly to the issuing bank in one presentation or two separate lots, documents "must be received by the issuing bank within the expiry date and/or latest date for presentation", TAB-9 states. Moreover, the presenter assumes the risk of documents being lost or delayed en route to the issuing bank if it presents directly. In contrast, if a presenter makes a complying presentation to the nominated bank, the issuing bank bears the risk of lost or delayed documents between the nominated bank and the issuing bank.
UCP600 does not obligate an issuing bank to inform the nominated bank that it has received documents from another presenter, however TAB-9 deems it is good practice and goes on to say: "[T]he issuing bank would be well advised to contact the nominated bank to inform them of the direct presentation (so that the nominated bank’s records can be updated) and to enquire of the details of any presentation(s) that have been made for which the issuing bank may be unaware."
As for confirmation fees, after quoting from UCP600 Sub-Article 37(c), TAB-9 states that when "documents are not presented via an advising bank, second advising bank or confirming bank, the issuing bank remains liable for payment of their charges if they cannot be collected from the beneficiary."
TAB-9 also points out that an issuing bank can insert a clause in its credit prohibiting presentation directly to it by another other than the nominated bank. A presenter must be mindful of such condition.
TAB-9 and previously issued technical advisory briefings are freely available at the ICC Digital Library.