Parties to the query

Claimant: Beneficiary

Respondent: Issuing Bank

Detailed description

A credit was issued by the Respondent, subject to the UCP 600, and available with the Respondent by deferred payment.

Documents were submitted by the Claimant through an advising bank and were initially rejected by the Respondent due to discrepancies.

A few days later, the Respondent informed the advising bank, by use of an authenticated SWIFT message, that documents were accepted and that it would pay the advising bank at maturity.

The advising bank subsequently informed the Claimant accordingly.

However, the Respondent then cancelled its SWIFT message by another authenticated SWIFT claiming that the first SWIFT message was sent by mistake due to a technical error.

It was questioned whether the Respondent could rescind its original SWIFT message after having confirmed that the documents had been accepted.

Analysis

It was decided that neither the UCP 600 nor the ISBP 745 provided an answer to this question.

Furthermore, no precedent for such a query could be found in past ICC Opinions.

However, it was highlighted that because a credit constitutes an issuing bank’s irrevocable undertaking, all authenticated SWIFT messages/undertakings transferred by an issuing bank pursuant thereto must also be “irrevocable”.

It was considered that a SWIFT message cannot be revoked or cancelled without prior consent of all relevant parties.

Based on the fact that the advising bank had already informed the Claimant that the documents had been accepted by the Respondent, it was deliberated that the Respondent must honour and would be liable for any late payment interest.

Decision

It was possible for the Respondent, having initially accepted the documents, to later rescind the referenced message, provided that the advising bank had not already acted upon the original message.

However, as the advising bank had already acted accordingly, the Respondent remained liable to pay at maturity.

In view of the fact that the Claimant had not consented to the cancellation, the Respondent was obligated to honour.

Furthermore, the Claimant was entitled to late payment interest from the maturity date until the date of actual payment in accordance with international standard banking practice.