Article

Note: While the opinion does not indicate the status of the parties, it appears that the Industrial Bank of Korea (Issuer) issued a US$375,221.42 commercial LC and that USA Bank National Association (Nominated Bank) negotiated and claimed reimbursement from Issuer, either by charging a correspondent account, or obtaining it from a reimbursing bank. While the opinion does not expressly so state, it is likely that the LC was issued subject to either the UCP500 or UCP600. It appears that Issuer sued Nominated Bank to reclaim the reimbursement. The Seoul Central District Court entered judgment for Nominated Bank. On appeal the Seoul High Court, Choi, Kim, Lim, JJ., affirmed.

The appellate opinion focused on whether the description of the goods in a commercial invoice complied. The LC described the goods as "WET BLUE CHROME or PICKLED SPLITS". It appears that the invoices and perhaps other documents described the goods as "blue hide tanned with chrome." The appellate court noted the finding of the trial court that Issuer admitted that they "do not see that describing goods in a commercial invoice inconsistently with the corresponding letter of credit does constitute a defect that makes the commercial invoice illegal and on which [Issuer] is allowed to reject payment for the letter of credit so long as the description of goods set forth in each commercial invoice is consistent with the description of goods of each letter of credit in dispute."

The trial court also noted that Issuer had failed to prove that it gave timely or adequate notice of refusal.

Comments:

1. It is puzzling why the opinion does not refer to UCP500 Article 37(c) Commercial Invoices, or UCP600 Article 18(c) Commercial Invoice, whichever is applicable, which requires that the description of the goods in a commercial invoice correspond to that in the credit. It is highly probable that the LC was subject to one of these rules. Under the UCP, the failure of the goods' description to correspond is a basis for refusal and the fact that the description would pass in the trade as incidental is irrelevant.

2. It would appear, however, that Issuer failed to give timely notice of refusal. In that case, the decision is correct, not because the description of the goods complies, but because the issuer is precluded for asserting the discrepancy under UCP500 Article 14 (Discrepant Documents and Notice) or UCP600 Article 16 (Discrepant Documents, Waiver and Notice), whichever is applicable.

[JEB/jds]

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