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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
2007 LC CASE SUMMARIES Civil Judgment (2000); Shen Jing Chu Zi No. 408; Shenyang Intermediate People's Court [China] Abstracted by JIN Saibo*
Topics: Strict Compliance; Inconsistency among Documents, Description of Goods; Discrepancies; Wrongful Dishonor; ICC China Opinions; Amendment
Type of Lawsuit: Negotiating Bank sued Issuer for wrongful dishonor.
Parties: Plaintiff/Negotiating Bank- Korea Exchange Bank
Defendant/Issuer- Agricultural Bank of China (Shenyang Branch)
Underlying Transaction: Sale of Material for Shoes.
LC: Irrevocable LC for US$98,000. Subject to UCP500.
Decision: The Shenyang Intermediate People's Court entered judgment against the Negotiating Bank.
Rationale: Upon receipt of documents, Issuer must determine on the basis of the documents alone whether or not they appear on their face to be in compliance with the terms and conditions of the LC. If the documents are not in compliance, then Issuer may refuse to take up the documents. An issuer is not liable on an LC that has expired.
Article
Factual Summary: Following its examination of the documents within seven banking days, Issuer refused the documents based on three discrepancies. Negotiating Bank subsequently attempted to cure the documents based on the Issuer's referral. Issuer refused the re-presentation, however, since representation occurred after the expiry date of the credit. Negotiating Bank sued Issuer for wrongful dishonor. The trial court rejected the claim.
Legal Analysis:
1. Choice of Law: Since both parties quoted UCP500 to support their claim during the trial, the court applied UCP500.
2. Expiry, Re-presentation: When a credit expires after refusal and before re-presentation, the issuer is not obligated.
[JS/ec]
* JIN Saibo is partner of Tongshang Law Firm, assisted by FENG Jing and SONG Wei.
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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.