Parties to the query

Claimant: Remitting Bank

Respondent: Presenting Bank

Detailed description

The Claimant had submitted documents to the Respondent over several years and in relation to several shipments, with instructions to present such documents to the drawee for collection, subject to the URC 522.

The Claimant asserted that payment for one shipment had not been made.

For this particular collection, whilst the Respondent had presented documents to the drawee, no notice of acceptance nor refusal was received from the drawee.

The Respondent did not inform the Claimant of the status of the (non) acceptance of the documents.

As a result of not being informed, the Claimant declared that the Respondent had breached the URC 522 article 10 and sub-article 26 (c) (iii).

The Claimant further stated that, as a consequence, this caused damage to the Claimant resulting from the subsequent attachment of those documents in the hands of the Respondent pursuant to a court order.

The Claimant alleged breaches of a duty of care and the existence of an undisclosed conflict of interest for the Respondent. The drawee later became insolvent and the Claimant alleged that it was not able to recover its goods or to obtain relative payment.

The parties were litigating their dispute before a court in the Netherlands.

Various questions were raised by the Claimant including that documentary collections are a service provided by international banks, that the Respondent had a handling conflict, that confirmation was required for ownership of the goods, and that there was no clear communication between the parties concerned.

In essence, the Claimant maintained that the Respondent had a duty of care of the goods on the basis of the collection instructions and that it should act as a “caretaker of the exported goods”.

Analysis

The URC 522 sub-article 10 (b) states that banks have no obligation to take any action in respect of the goods to which a documentary collection relates, including storage and insurance of the goods even when specific instructions are given to do so. Banks will only take such action if, when and to the extent that they agree to do so in each case.

If the Claimant had required the Respondent to take any action with respect to the goods, this should have indicated that in the collection instructions. The URC 522 do not provide for any such duty.

Contrary to the assertion by the Claimant, it was stated that there was no support either in the URC 522 or in the submitted evidence that the presenting bank was a “caretaker of the exported goods”.

Issues in respect of any alleged conflict of interest are outside the scope of the URC 522 and, as a result, of DOCDEX. It was decided that such issues are a matter of law to be determined by the courts with relevant jurisdiction.

Furthermore, the validity and the effect of security interests and any apparent associated prefinancing are also outside the scope of the URC 522 and DOCDEX and are, therefore, matters of law to be determined by the court with relevant jurisdiction.

The DOCDEX Panel was not provided with any evidence that demonstrated the Respondent had released the documents to the drawee without payment. Had such an act been evidenced, the Respondent would have breached the collection instructions and the URC 522 sub-article 2 (a).

The validity and the effect of the attachment order issued by the Dutch court, and the extent to which the Respondent could have resisted it, as well as the insolvency of the drawee and the acts of the liquidator, were all considered as outside the scope of the URC 522.

The URC 522 sub-article 26 (c) (iii) states that 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. The Respondent denied that the drawee had informed the Respondent that it would not pay the documents or did not accept them. The Claimant was unable to provide evidence to the contrary. On this basis, no duty of the Respondent arose.

As stated, it had been ruled that the DOCDEX process had no jurisdiction to determine alleged conflicts of interest. Associated with this, the process was also not in a position to determine whether any applicable law allowed the Respondent to return the documents to the Claimant.

Decision

All claims by the Claimant were dismissed on the basis for lack of support in the URC 522 sub-article 10 (b).

It was decided that alleged conflicts of interest were outside the scope of the URC 522 and could not be determined by DOCDEX proceedings.

No declaration on the nature of the facility agreement between the Claimant and its customer could be provided as such issue fell outside the scope of the URC 522.

The claim that the Respondent submitted the documents to the drawee without payment being made was dismissed for want of evidence, and the decision declined to rule on the validity of the attachment order issued by the court.