Notes

Only the Initiator submitted documents related to this decision. This decision was rendered without the participation of the Respondent.

Parties

Initiator: Company P (Principal)

Respondent: Bank D (Presenting Bank)

Background and transaction

The remitting bank sent a documentary collection, subject to URC 522, to the Respondent on 22 January 2014. The documents were received on 23 January 2014.

• A sight bill of exchange was included among the documents.

• Instructions from the collection instruction: "Please deliver the documents against payment to drawee" pursuant to URC 522 sub-article 2 (a) (ii).

• Other instructions were given in the collection instruction as below:

a) Payment instruction,

b) Collection charges payment,

c) Interest payment,

d) "Do not protest in case of non acceptance or non payment".

Absent any information as to the fate of the collection, on 3 February 2014 the remitting bank sent a tracer message to the Respondent via SWIFT. The Respondent did not respond.

On 4, 5 and 6 February 2014, the remitting bank sent further tracer messages to the Respondent via SWIFT and, under instructions of the Initiator, requested in each message to have the documents returned.

On 7 February 2014, the Respondent replied to the remitting bank as follows "Appreciate if you could urgently email us copy of the documents that was sent to our branch [...]".

On 7 February 2014, the Initiator, duly informed, instructed the remitting bank to send the copies requested, via email and fax, to the Respondent. Same day the remitting bank sent the documents requested.

On 14 February 2014, the Respondent requested copy of the back page of the bill of lading. There was no evidence that this copy was sent. On same date the remitting bank requested again to have the original documents returned.

On 14 February 2014 the Respondent informed: "[...] we are unable to effect payment as we have filed a police report".

Between 18 February and 7 March 2014 the remitting bank sent four additional tracer messages and quoted URC articles/sub-articles 1 (c), 5 (a), 16 (a) and 26 in order to underline the responsibility of the Respondent.

On 6 March 2014 the Respondent replied: "[...] we regret we are unable to pay at this juncture, as we have filed a police report".

Despite a further exchange of messages, the Respondent neither made payment nor returned the documents.

Issues

The Initiator requested the Centre to give a decision on: "whether the collecting/Respondent had the right for non payment or non return original documents based on the simple argument that the collecting/Respondent had filed a police report".

Analysis

This collection was subject to the ICC Rules for Collection "URC 522" as stated in the cover letter accompanying the documents. The collection instruction given by the remitting bank to the Respondent stated that the documents were to be delivered against payment.

Absent any instruction about the time of presentation, URC 522 article 6 applied: "In the case of documents payable at sight the presenting bank must make presentation for payment without delay".

After presentation, URC 522 article 26 applied: "Collecting banks are to advice fate in accordance with the following rules [...]".

Further, URC 522 sub-article 26 (c) (iii) states: "The presenting bank should endeavour to ascertain the reasons for non-payment and/or non-acceptance and advise accordingly without delay the bank from which it received the collection instruction. The presenting bank must send without delay advice of non-payment and/or advice of non-acceptance to the bank from which it received the collection instruction."

It was only after four tracer messages and three requests to return the documents that the Respondent sent a response.

In a collection operation, the owner of the documents is the seller (i.e. the Principal to the Collection) and the remitting bank acts on its behalf. As a consequence, non-paid documents remain in the care of the Respondent and the remitting bank has the right to request return of documents thereby obligating the Respondent to accommodate such request.

The Respondent acted contrary to the provisions of URC 522 as quoted above and was liable for payment of the collection value plus appropriate interests and costs.

All further events concerning this collection (i.e. request of copy documents, additional tracer messages and information about filing a police report) did not affect the application of URC 522 governing this collection and such acts (and the background for them) are outside the existing scope of the DOCDEX procedure which deals only with ICC Rules and not applicable law.

On this matter the clear provision of URC 522 sub-article 1 (a) is important: "The Uniform Rules for Collections, 1995 Revision, ICC Publication No. 522, shall apply to all collections as defined in Article 2 where such rules are incorporated into the text of the "collection instruction" referred to in Article 4 and are binding on all parties thereto unless otherwise expressly agreed or contrary to the provisions of a national, state or local law and/or regulation which cannot be departed from".

Such legal or regulatory provisions prevail over contractual agreements when the fulfilment of the contract is in conflict with such provisions. In such circumstances, any ensuing acts, behaviours and/or events are to be addressed in accordance with the applicable law and under the relevant jurisdiction.

Conclusion

The Respondent acted contrary to the provisions of URC 522 and, as such, was liable for payment of the collection value plus appropriate interests and costs.

Only questions concerning compliance with URC 522 fall into the scope of the DOCDEX decision.

This decision was rendered unanimously.