Parties to the query

Claimant: Drawer

Respondent: Collecting and Presenting Bank

Detailed description

Three separate collections, subject to the URC 522, were sent by the remitting bank to the Respondent for presentation to the same drawee. All collections included instructions that the documents were to be delivered against payment.

Numerous tracers were sent to the Respondent by the remitting bank, followed by a SWIFT message informing the Respondent that they had been informed by the Claimant that the drawee had received the goods.

The remitting bank also raised the question as to the whereabouts of the documents and if these were still held by the Respondent at the remitting bank’s risk and disposal, pending payment/rejection by the drawee or for the documents to be returned to the remitting bank without further delay.

The remitting bank additionally cited the URC 522 sub-article 26 (c) (iii), highlighting that the Respondent was in contravention of this sub-article.

The Respondent subsequently informed the remitting bank that the drawee had deposited the counter value in local currency in an account held with them, but the process of the payment instructions was apparently declined due to alleged suspicious activities in the consignment.

It was queried whether the Respondent breached the specific instructions of the remitting bank to release documents against payment only.

Analysis

The URC 522 sub-article 1 (b) states that a bank that receives a collection instruction subject to the URC 522 from a remitting bank has no obligation to handle such collection.

However, under the URC 522 sub-article 1 (c), if a bank refuses to handle a collection, it must inform the bank from which it received such instruction.

The Respondent did not provide any refusal to act under the collection in accordance with the URC 522.

Under the URC 522 sub-article 4 (a) (i), banks are only permitted to act upon the instructions given in the collection instruction and in accordance with the URC 522.

Accordingly, the Respondent was only permitted to act in accordance with the instructions “deliver the documents against payment” as covered by the URC 522 article 2.

The deposit of funds into a local currency account did not meet the requirements of the instructions of the remitting bank.

Decision

Release of the documents to the drawee was only permissible against payment in accordance with the collection instructions, as stated in the URC 522 article 18.

By releasing the document to the drawee and enabling them to access the goods prior to payment, the Respondent acted beyond the permitted instructions given by the remitting bank.

The Respondent breached the specific instructions of the remitting bank which were to only release documents against payment.

The issue relating to an investigation of suspicious activities was subject to applicable law and, therefore, outside the scope of the URC 522.