Parties

Initiator: Citizen B

Respondents: Country A Chamber of Finances

and

Bank J

Background and transaction

The Initiator is the holder of 11 promissory notes listed in the table below purportedly issued by the First Respondent. Each note is stated to be governed by Country S law and refers to UCP 222. Details are as follows:

1. The Second Respondent certified the validity and authenticity of the First Respondent's signature on each note, other than note 3 and note 4, which only carry a stamp "verified".

2. The notes were all issued on 30 May 1975 and matured on various dates between 30 December 1985 and 30 December 1988 as indicated in the table above.

3. The Initiator claimed payment under the notes by addressing on 26 June 2007 to the Respondents a summons to pay followed by a claim filed before a court in Country A on 7 October 2007.

4. On 24 June 2008 the court rejected the claim as being time-barred under Country A laws.

Issues

The Initiator seeks a DOCDEX decision to decide on the Initiator's right to obtain payment under the notes, whether from the First Respondent as issuer or the Second Respondent that is characterized in the Request as acting as guarantor.

Initiator's claim

In the Request dated 10 September 2011, the Initiator contends that:

1. the court of Country A has wrongfully applied its law leading to the rejection of the Initiator's claim when the notes in dispute are governed by UCP 222 and Country S law;

2. it is entitled to payment under the notes pursuant to the applicable law, UCP and article 48-2 of the Geneva Convention on bills of exchange of 7 June 1930 as integrated into Country S law; and

3. it is entitled to an interest rate of 6% from the maturity date;

4. if its claim against the issuer (the First Respondent) is denied, it is entitled to claim payment from the Second Respondent, purportedly acting as guarantor, for undue enrichment pursuant to articles 54 of the aforesaid Convention, article 1052 of the Country S Code of Obligations and article 1235 of the Country S Civil Code.

Respondents' Answers

Neither Respondent has answered the Request.

Documents submitted by the parties

Documents submitted by the Initiator (all of which are copies).

1. Copies of the 11 notes in dispute;

2. Free translation of the first instance Tribunal of Country A's judgment of 24 June 2008.

No documents were submitted by the Respondents.

Analysis

Article 1.1 of the DOCDEX Rules states that the rules are available in connection with any dispute related to a documentary credit incorporating UCP or URR, a collection incorporating URC or a demand guarantee incorporating URDG.

The same article provides that DOCDEX Experts are empowered to resolve disputes on the basis of the terms and conditions of the relevant instrument and the applicable ICC rules.

UCP 222, applicable to the case, defines in paragraph (b) of the General Provisions and Definitions, a documentary credit as any arrangement, however named or described, whereby a bank (the issuing bank), acting at the request and in accordance with the instructions of a customer (the applicant for the credit) is to make payment to or to the order of a third party (the beneficiary) or is to pay, accept or negotiate bills of exchange (drafts) drawn by the beneficiary, or authorizes such payments to be made or such drafts to be paid, accepted or negotiated by another bank against stipulated documents and compliance with stipulated terms and conditions.

The Experts find that the 11 notes in dispute are not a "documentary credit" as defined in UCP 222 (see paragraph 3 above). The reason for this finding is two-fold. First, the issuer of the notes in dispute is not a bank acting at the request and in accordance with the instructions of a customer as required in the definition of credit provided in UCP 222. Second, there is a fundamental difference between a documentary credit providing for payment by means of presentation by the beneficiary to the issuer of a negotiable instrument and the negotiable instrument itself. In the first case, the credit is not subsumed in the draft. The draft is accessory to the credit and constitutes merely the payment means of that credit. In the promissory notes in dispute, there is no credit other than the promissory notes themselves. They merge the credit and the payment means. While there is nothing wrong with that, the concept and the instrument in a promissory note are both conceptually and mechanically different from those in a documentary credit as defined in UCP 222. Accordingly, the rules stated in UCP 222 do not allow us to evidence any of the claims put forward by the Initiator.

Furthermore, as indicated above, a DOCDEX panel is not empowered to go beyond the terms and conditions of the relevant credit, collection or guarantee and the applicable ICC rules to adjudicate the dispute. Specifically, the DOCDEX rules do not empower the Experts to examine legal issues under Country S law or Country A laws in order to accept or reject the Initiator's claims, whether the claim relates to the determination of the applicable law, the right of the holder to obtain payment under the notes from the issuer or the guarantor, the relevance or the correct application of the Country A statute of limitations, or award any interest due thereon. Legal issues of this nature are to be resolved before the court of law that is competent under the disputed notes.

Conclusion

The Panel of Experts unanimously makes the following Decision under the ICC DOCDEX Rules:

The Initiator's claims find no supporting evidence under UCP 222 and, as such, are denied in their totality.