LC calls for a Beneficiary Certificate. LC additional condition evidences third party documents acceptable.
Some feel that Beneficiary Certificate can also be issued by third party. The argument they give is that if Invoice can be issued by a third party why not the Beneficiary Certificate. Some give argument against it stating that as the issuer is specific (Beneficiary), it can be issued by third party.
May we have your views please.
Para 21(c) - Third party documents acceptable
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DeepakRastogi
- Posts: 4
- Joined: Fri Apr 05, 2019 5:17 pm
Para 21(c) - Third party documents acceptable
Based on the statement, in para 21, that ‘If used in a credit, their meaning should be made apparent. If not, they have the following meaning …’, I would take the view that the beneficiary’s certificate could be issued by a party other than the beneficiary. However, I would not go into court confident of my position.
Para 21(c) - Third party documents acceptable
Hi there, this clause is confusing and discouraged by ICC. Since some applicants still insist on showing it in their LCs, ISBP gives the definition. Due to the ambiguity in the clause, it is hard for ICC to give crystal clear definition. Based on the ISBP, I believe bene certficiate can be issued by a party other than the bene named in the LC.
To make the case worse, we have also come across a couple of LCs showing "Third party dox unacceptable". This is even hard to understand or interpret. We therefore refused to advise the LC unless the clause would be deleted.
Best regards
Jack Chan
To make the case worse, we have also come across a couple of LCs showing "Third party dox unacceptable". This is even hard to understand or interpret. We therefore refused to advise the LC unless the clause would be deleted.
Best regards
Jack Chan
Para 21(c) - Third party documents acceptable
Since l/c clearly ask for "beneficiary certificate" I think the certificate should be issued by the bnf.
you must ask yourself if other party than bnf can confirm what certificate ask for. or maybe it is imperious necessary for the applicant to be in possesion of this docuemnt issued by the bnf of the l/c.
are many questions that, unless properly answered to, could affect relationship between bnf and applicant.
It might be possible for the condition "third party docs acceptable" to be related to the shipper of the transport document.
the best option would be to ask for issuing bank's clarifiation in this regard.
regards,
bogdan
you must ask yourself if other party than bnf can confirm what certificate ask for. or maybe it is imperious necessary for the applicant to be in possesion of this docuemnt issued by the bnf of the l/c.
are many questions that, unless properly answered to, could affect relationship between bnf and applicant.
It might be possible for the condition "third party docs acceptable" to be related to the shipper of the transport document.
the best option would be to ask for issuing bank's clarifiation in this regard.
regards,
bogdan
Para 21(c) - Third party documents acceptable
Bogdan,
I do not agree with the basis on which you arrive at your view. In other words I do not consider it appropriate for a banker -involved in documentary credit operations- to consider the question ‘if other party than bnf can confirm what certificate ask for’ or if ‘it is imperious necessary for the applicant to be in possession of this document issued by the bnf of the l/c’ or anything else that ‘could affect relationship between bnf and applicant’.
As the English courts’ have said: ‘The banker is not concerned as to whether the documents for which the buyer has stipulated serve any useful purpose or as to why the customer [= applicant] called for tender of a document of a particular description’ [Commercial Banking Co. of Sydney Ltd v Jalsard Pty Ltd (1973)]. I take this to mean one should interpret the terms of a credit without consideration to ‘external’ factors, such as the ones you describe.
Regards, Jeremy
I do not agree with the basis on which you arrive at your view. In other words I do not consider it appropriate for a banker -involved in documentary credit operations- to consider the question ‘if other party than bnf can confirm what certificate ask for’ or if ‘it is imperious necessary for the applicant to be in possession of this document issued by the bnf of the l/c’ or anything else that ‘could affect relationship between bnf and applicant’.
As the English courts’ have said: ‘The banker is not concerned as to whether the documents for which the buyer has stipulated serve any useful purpose or as to why the customer [= applicant] called for tender of a document of a particular description’ [Commercial Banking Co. of Sydney Ltd v Jalsard Pty Ltd (1973)]. I take this to mean one should interpret the terms of a credit without consideration to ‘external’ factors, such as the ones you describe.
Regards, Jeremy
Para 21(c) - Third party documents acceptable
Dear Jeremy,
I think in the moment a checker will cease to take into consideration the outside world, l/cs will die. We cannot base our work exclusively on UCP and ISBP. There is a real world out there we interact with and must respect.
"external factors" might have serious impact on l/cs when disregarded.
Anyway, what I ment to say is :
asking issuing bank for clarification would be helpful.
In the end I can only say that a checker must know when and how to take "external factors" into consideration upon SERVING A CLIENT.
Regards,
Bogdan
I think in the moment a checker will cease to take into consideration the outside world, l/cs will die. We cannot base our work exclusively on UCP and ISBP. There is a real world out there we interact with and must respect.
"external factors" might have serious impact on l/cs when disregarded.
Anyway, what I ment to say is :
asking issuing bank for clarification would be helpful.
In the end I can only say that a checker must know when and how to take "external factors" into consideration upon SERVING A CLIENT.
Regards,
Bogdan
Para 21(c) - Third party documents acceptable
Bogdan,
I do not see that whether or not the legally required approach to document examination (whatever that may be) would result in the death of the doc'y credit is relevant.
Also, the more 'judgement' required to determine if documents comply the greater the scope for error and thus the higher the operational risk and therefore the less attractive is the doc'y credit as a banking product.
Regards, Jeremy
I do not see that whether or not the legally required approach to document examination (whatever that may be) would result in the death of the doc'y credit is relevant.
Also, the more 'judgement' required to determine if documents comply the greater the scope for error and thus the higher the operational risk and therefore the less attractive is the doc'y credit as a banking product.
Regards, Jeremy
Para 21(c) - Third party documents acceptable
Dear Jeremy,
I agree with you but I think you'll, from time to time, find a circumstance under which you might need to take external factors into consideration.
Of course, the best way is, when you have doubts, to ask for issuing bank's clarification from the start or to just say that unless otherwise stipulated by the issuing bank, you will understand a document/a condition in a certain way.
Regards,
Bogdan
I agree with you but I think you'll, from time to time, find a circumstance under which you might need to take external factors into consideration.
Of course, the best way is, when you have doubts, to ask for issuing bank's clarification from the start or to just say that unless otherwise stipulated by the issuing bank, you will understand a document/a condition in a certain way.
Regards,
Bogdan
Para 21(c) - Third party documents acceptable
My view , the relevant para of ISBP is itself ambiguous and leads to the conclusion that "a third party condition" in a credit would prevail all the conditions regarding by whom the required docs except drafts would be issued. Since we already have arts of UCP600 about description of unclear issuer of docs , and there is no need such a superfluous definition that outlined in the ISBP Publ.
But by virtue of having such a definition in the ISBP most bankers have to consider that if a credit states such a condition it allows any issuer other than the benef even the credit has already been providing the data for the issuers of the stipulated docs.
Regards ,
Yahya
But by virtue of having such a definition in the ISBP most bankers have to consider that if a credit states such a condition it allows any issuer other than the benef even the credit has already been providing the data for the issuers of the stipulated docs.
Regards ,
Yahya
Para 21(c) - Third party documents acceptable
Dear Bogdan,
I suppose it depends on what one defines as ‘external factors’. I certainly agree, for example, that if one has a requirement ‘Shipment from India’ one cannot establish that the name of the port quoted in the BL is in fact in India by reference to the DC terms alone.
Best regards, Jeremy
I suppose it depends on what one defines as ‘external factors’. I certainly agree, for example, that if one has a requirement ‘Shipment from India’ one cannot establish that the name of the port quoted in the BL is in fact in India by reference to the DC terms alone.
Best regards, Jeremy