Parties to the query

Claimant: Advising Bank

Respondent: Beneficiary

Detailed description

The Respondent was the beneficiary of a credit subject to the UCP 600 under which the Claimant was acting as the advising bank.

An initial amendment was received to the credit, and this appears to have been handled in the normal fashion, i.e. the Claimant informed the Respondent promptly.

Subsequently, the Claimant received a second amendment, but it appears that there was a delay before this was sent to the Respondent.

As a result, the Respondent referred the transaction to the local courts. However, the Claimant raised several questions relating to the responsibilities of an advising bank under the UCP 600.

It was queried whether it is mandatory for an advising bank to advise all amendments to a beneficiary and, if a bank chooses not to notify specific amendments, whether or not the advising bank bears any responsibility. Furthermore if an advising bank is unable to, or elects not to, advise an amendment in a reasonable time, does any responsibility exist towards the beneficiary of the issuing bank?

Analysis

It was clarified that, in accordance with the UCP 600 article 1, the UCP 600 applied to this credit. The UCP 600 sub-article 9 (e) states that an advising bank which has advised a credit may elect not to advise an amendment to the credit. As such, provided the Claimant had complied with all the content of sub-article 9 (e), it was not mandatory for it to advise all amendments to the beneficiary.

The UCP 600 sub-article 9 (e) states that an advising bank which elects not to advise an amendment, must inform the bank from which it received the amendment of its decision without delay. An advising bank has no other responsibilities to any other party under the credit, including the beneficiary in this respect.

Neither the Claimant nor the Respondent indicated any reason for the apparent period of time it took the Claimant to advise the amendment. UCP 600 sub-articles 37 (a) and (b) provide that the issuing bank assumes no liability for the action or non-action of the advising bank and any instructions it has given the advising bank are for the account and risk of the applicant.

The UCP 600 sub-article 9 (b) states that an advising bank which is not a confirming bank, in advising a credit or an amendment, signifies it has satisfied itself as to the apparent authenticity of the credit or amendment and that the advice accurately reflects the terms and conditions of the credit or amendment received.

Decision

The Claimant may elect not to advise an amendment but, as per the UCP 600 sub-article 9 (e), it must inform the issuing bank without delay.

The Claimant had no obligation to the Respondent in this respect.

The UCP 600 does not specify a period of time in which an advising bank should advise an amendment.

‘Apparent authenticity’ means that an amendment appears to originate from the sender and any authentication process has been fulfilled and completed.