Parties

Initiator: Company P ("Principal")

Respondents: 1) Bank C ("Remitting bank")

2) Bank E ("Presenting bank")

3) Company S ("Drawee")

Background and transaction

The principal presented four sets of documents through its bank, the remitting bank, for collection under URC 522 at the counters of the presenting bank totalling EUR 3,226,211.30. The collection instructions stated that documents were to be released by the presenting bank against payment. Two of the sets presented included 1/3 bill of lading made out to order of the presenting bank, while 1/3 bill of lading accompanied the goods and l/3 was retained by the principal. The other two sets included 2/3 bills of lading also made out to order of the presenting bank, and 1/3 accompanied the goods.

The description of the case does not provide any information on whether the bills of lading were made out to order of the presenting bank with its agreement as asked for in sub-article 10 (a) of URC 522.

The remitting bank informed the presenting bank that for one collection instruction its customer accepts payment of the drawee on different dates, and for all four collection instructions that the drawer accepts partial payments.

On different days, the presenting bank endorsed at least one original of the bills of lading to order of the drawee. The remitting bank did not authorize the presenting bank to release documents or to release the goods to the drawee without payment or partial payment.

It is not clear from the information given whether the endorsement was given on the bills of lading being part of the collection instructions or whether the presenting bank endorsed the original accompanying the goods.

In the case of two of the four collection instructions, it is clear that the presenting bank forwarded the documents to the drawer (cases C and D). No information on the fate of documents for cases A and B was given by the presenting bank. The facts given imply that the presenting bank did not return any of the documents.

Issue(s)

Whether the presenting bank was liable to pay the amount of the presented four sets of documents when it neither paid nor rejected the documents, as it accepted the terms and conditions of the collection as stipulated on the collection schedules and the application of URC 522 to which the collections were expressly subject to.

A. Initiators' claim

The Initiator claims that the presenting bank has failed to follow the collection instructions either:

a) by not remitting payment to the remitting bank; and/or

b) by releasing the collection documents to drawee without payment; and/or

c) by failing to return the collection documents to the remitting bank.

B. Reply of Respondent 1 (remitting bank)

The remitting bank stated that it informed the presenting bank of instructions on behalf of the Initiator regarding the dates of payment.

It further stated that it never authorized the presenting bank to deliver documents to the drawee without payment.

C. Respondents 2 and 3 (presenting bank and drawee)

No replies were received from Respondent 2 and 3

Documents submitted by the parties

A. Documents submitted by Initiator (principal)

Request from Initiator of 25 May 2010 to ICC International Centre for Expertise, Paris, requesting a DOCDEX Decision in accordance with ICC DOCDEX Rules, ICC Publication no. 811, stating inter alia

o that a copy of the request and all documentation was sent to the Respondents; and

o Initiator's summary of the dispute

- Copies of four sets of documents (including 1/3 bill of lading for each set) forwarded for collection, including the relevant collection instructions;

- Copies of SWIFT messages and letters between the remitting bank and the presenting bank.

B. Documents submitted by Respondent 1 (remitting bank)

Respondent's 1 answer to Initiator's request for a DOCDEX Decision

Analysis

Initiator has entrusted the remitting bank to handle various documentary collections.

The remitting bank presented the documents, accompanied by its collection instructions, to the presenting bank. The collection instructions clearly indicated that the collections were made subject to URC 522, and stated that documents were to be delivered to the drawee against payment.

Sub-article 1 (c) of URC 522 states: "If a bank elects, for any reason, not to handle a collection or any related instructions received by it, it must advise the party from whom it received the collection or the instructions by telecommunication or, if that is not possible, by other expeditious means, without delay."

There is no evidence in this case that the presenting bank sent such a message and/or returned the documents. Under sub-article 1 (a), therefore, the presenting bank is bound by URC 522 as a whole.

The information given by the Initiator to the presenting bank through the remitting bank, regarding acceptance of delayed and partial payments, cannot be seen to be an amendment in the instructions to deliver documents against payment. Article 19, which applies, does not allow release of documents without specific authorization; which was not given by the remitting bank.

The remitting bank stated that the information was not given by it, but solely on behalf of the Initiator, but it cannot be seen to make a difference.

It is not evident from the information given whether the presenting bank had released the bills of lading included in collections A and B to the drawee. However, it is clear that the presenting bank was not in a position to return any of the four sets of documents and that they endorsed one original bill of lading for each of the four shipments.

The experts wish to underline that the delivery of the documents presented makes the presenting bank liable for the payment thereof.

Conclusion

By accepting the collections received, the presenting bank has agreed to handle the collection in accordance with URC 522 and the conditions stated in the collection instructions.

Therefore, the presenting bank was only entitled to release documents against full payment.

As collection documents have not been returned (as required by URC 522), it cannot be determined whether the bills of lading endorsed by the presenting bank had been part of the collection documents or whether the originals accompanying the goods had been used.

By not returning the documents under collections A and B, and by releasing documents under collections C and D without having received full payment for each of the four collections, the presenting bank is in breach of URC 522 and responsible for payment.

Therefore, the presenting bank was only entitled to release documents against full payment. The fact that the Initiator informed the presenting bank (through the remitting bank) the acceptance of partial payments underlines that no amendment has ever occurred to the instructions to deliver the documents against full payment (sub-article 19 (b) of URC 522 applies).

The presenting bank has no reason to deny liability and must pay the claimed amounts.

The appointed Experts reached a unanimous Decision.