Parties to the query

Claimant: Beneficiary

Respondent 1: Advising Bank

Respondent 2: Issuing Bank

Detailed description

A credit was issued by Respondent 2 subject to the UCP 600, and advised to the Claimant by Respondent 1. Subsequently, the Claimant forwarded certain documents to Respondent 1 for a pre-check.

Respondent 1 noted a discrepancy during the pre-check for which they informed the Claimant, which then re-submitted corrected documents. However, Respondent 1 cited two discrepancies in the re-submitted documents, neither of which were picked up by Respondent 2 at a later date.

The Claimant requested that documents be sent to Respondent 2 for approval, where two other discrepancies were raised and the presentation rejected. One of the stated discrepancies was corrected in a subsequent re-presentation, but this was not received within the time limits of the credit.

Two issues were raised for this case. Firstly, whether or not Respondent 1 had a duty to review and check the original document presentation according to a standard for examination and, if so, whether Respondent 1 as an advising bank met and satisfied its obligations. Secondly, whether the original documents that the Claimant provided to Respondent 1 constituted a compliant presentation and, if so, whether Respondent 2 was justified to refuse the documents.

Analysis

The UCP 600 sub-article 9 (a) states that an advising bank that is not a confirming bank advises the credit without any undertaking to honour or negotiate. Respondent 1 did not confirm the credit.

As Respondent 1 was additionally a nominated bank, the UCP 600 sub-article 12 (a) also applies, which states that unless a nominated bank is the confirming bank, an authorisation to honour or negotiate does not impose any obligation on the nominated bank to honour or negotiate except when expressly agreed to by that nominated bank and so communicated to the beneficiary.

The UCP 600 sub-article 12 (c) states that receipt or examination and forwarding of documents by a nominated bank that is not a confirming bank does not make that nominated bank liable to honour or negotiate, nor does it constitute honour or negotiation.

Respondent 1 had no duty to honour or negotiate and it advised the Claimant that it would not negotiate the documents.

In respect of a pre-check of documents, this is a service provided outside the scope of the UCP 600.

With respect to the submitted documents, Respondent 2 raised two discrepancies. The first, in respect of a missing statement in the invoice, was considered to be relevant. This was corrected in a subsequent re-submission of documents, but the re-submission was received outside of the period for presentation as stipulated in the credit.

The second discrepancy, in respect of omission of a word from the endorsement on the bill of lading, was not considered as valid.

Decision

Respondent 1 did not add its confirmation to the credit and, therefore, had no duty to honour or negotiate.

Furthermore, any agreement between the Claimant and Respondent 1 to pre-check documents prior to formal presentation falls outside the scope of the UCP 600.

The first discrepancy raised by Respondent 2 was considered as relevant, whereas the second was not.