AIM YOUR CANNON TO THE RIGHT TARGET
Unless we can clear up certain issues that are nevertheless not being addressed in the UCP or the ISBP, otherwise there is no ending for such arguments amongst the members, whether or not the confirming bank has an obligation to pay in the situation that discrepancies are however waived by the issuing bank.
Here are those issues:
(1) The confirming bank has an independent payment undertaking. But has it also an INDEPENDENT decision on the discrepancies that may be different from or already waived by the issuing bank?
(2) After serving its refusal notice in accordance with Articles 13 and 14 of UCP 500, has the confirming bank the RIGHT TO DISHONOUR relying on discrepancies already waived by the issuing bank?
So it is only a waste of time to argue further unless the above two issues are cleared. If members’ opinions are different in these two issues, then it is only natural that they hold different opinions on the confirming bank’s payment obligation on a drawing with discrepancies waived by the issuing bank.
Having said that, for a DC allowing partial shipments and drawings, the confirming bank still has a payment undertaking for those pending or balance shipments and drawings, despite the previous drawings are dishonoured due to discrepancies.
www.tolee.com
confirmation of D/C
-
larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
confirmation of D/C
My previous comments are supported by Opinion no. R429, the conclusion of which is :
"The content of UCP Article 14 requires the issuing bank to provide a valid notice of rejection within a reasonable time not to exceed seven banking days following the day of receipt of the documents. As part of that advice, the issuing bank is required to confirm that documents are being held at the disposal of the presenter or being returned. If the issuing bank has told the presenter that it is holding documents at his disposal, when the applicant provides a waiver (in an acceptable form to the issuing bank) of those discrepancies, the issuing bank should approach the presenters and request their approval to continue with the payment. If the bank chooses to make settlement without any communications having taken place, then the issuing bank will bear the risk(s) associated with that action."
Laurence
"The content of UCP Article 14 requires the issuing bank to provide a valid notice of rejection within a reasonable time not to exceed seven banking days following the day of receipt of the documents. As part of that advice, the issuing bank is required to confirm that documents are being held at the disposal of the presenter or being returned. If the issuing bank has told the presenter that it is holding documents at his disposal, when the applicant provides a waiver (in an acceptable form to the issuing bank) of those discrepancies, the issuing bank should approach the presenters and request their approval to continue with the payment. If the bank chooses to make settlement without any communications having taken place, then the issuing bank will bear the risk(s) associated with that action."
Laurence
confirmation of D/C
Here I am trying to cut down significantly on my discussion forum participation, yet finding myself unable to resist the trap set me by Laurence.
I do not accept Laurence’s contention that the quoted part of R429 offers any support to his previously expressed views. In the event of the issuing bank sending an Article 14 compliant refusal notice, and where the issuing bank has not overridden its effect in the terms and conditions of the credit, the issuing bank must obtain the presenter’s agreement before taking up the documents as it has stated its holding them to the order of the presenter. (R429 rather curiously describes this as ‘approach[ing] the presenters and request[ing] their approval to continue with the payment’.) The ‘risk’ the issuing bank assumes if it does not contact the presenter is releasing the documents to the applicant when it has stated it is holding them to the order of the presenter.
What R429 does not cover is:
What is the position of a presenter that is a confirming bank that gives its agreement to the documents being taken up?
Or:
What is the position of a confirming bank that refuses the documents, and then at the beneficiary’s request notifies the issuing bank of the discrepancies (usually by teletransmission) requesting authority to take up the discrepant documents, which it duly receives?
Is it bound by its confirmation or not vis-à-vis the beneficiary? To me this may well be a product of what the confirming bank has -or has not- said to the beneficiary (whether at the time of refusal or prior to contacting the issuing bank/sending the documents out), as R14 seems to suggest.
If the uncertainty of the position, in the absence of a clear statement from the confirming bank at the appropriate time, is still not accepted by all then there is little further that I can see that I can add.
[edited 11/6/02 4:47:08 PM]
[edited 11/6/02 4:48:23 PM]
I do not accept Laurence’s contention that the quoted part of R429 offers any support to his previously expressed views. In the event of the issuing bank sending an Article 14 compliant refusal notice, and where the issuing bank has not overridden its effect in the terms and conditions of the credit, the issuing bank must obtain the presenter’s agreement before taking up the documents as it has stated its holding them to the order of the presenter. (R429 rather curiously describes this as ‘approach[ing] the presenters and request[ing] their approval to continue with the payment’.) The ‘risk’ the issuing bank assumes if it does not contact the presenter is releasing the documents to the applicant when it has stated it is holding them to the order of the presenter.
What R429 does not cover is:
What is the position of a presenter that is a confirming bank that gives its agreement to the documents being taken up?
Or:
What is the position of a confirming bank that refuses the documents, and then at the beneficiary’s request notifies the issuing bank of the discrepancies (usually by teletransmission) requesting authority to take up the discrepant documents, which it duly receives?
Is it bound by its confirmation or not vis-à-vis the beneficiary? To me this may well be a product of what the confirming bank has -or has not- said to the beneficiary (whether at the time of refusal or prior to contacting the issuing bank/sending the documents out), as R14 seems to suggest.
If the uncertainty of the position, in the absence of a clear statement from the confirming bank at the appropriate time, is still not accepted by all then there is little further that I can see that I can add.
[edited 11/6/02 4:47:08 PM]
[edited 11/6/02 4:48:23 PM]
confirmation of D/C
One could say "If I was confused before, I am now confused at a much higher level".
No, joking apart, I would just say that I have been impressed by the large number of opinions that have been given under above "dilemna". It is then aslo very interesting to note that opinions, interpretations or solutions given by high qualified experts may completely vary between each others. Those different approachs to the same problem clearly demonstrate that they are still "grey areas" in our field of activities and several possibile interpretations of some rules which make our job interesting.
In order to inform everybody about the issue of this real case, which in the meantime has been settled, I have choosen the proposal of collegues arguing not to consider the documentary credit as confirmed for said presentation of documents.
Thanks to all for your contribution.
Roland
No, joking apart, I would just say that I have been impressed by the large number of opinions that have been given under above "dilemna". It is then aslo very interesting to note that opinions, interpretations or solutions given by high qualified experts may completely vary between each others. Those different approachs to the same problem clearly demonstrate that they are still "grey areas" in our field of activities and several possibile interpretations of some rules which make our job interesting.
In order to inform everybody about the issue of this real case, which in the meantime has been settled, I have choosen the proposal of collegues arguing not to consider the documentary credit as confirmed for said presentation of documents.
Thanks to all for your contribution.
Roland
confirmation of D/C
HANDICAP IN DISCUSSION FORUM
Part of the reasons for varied opinions amongst experts is because a very limited data is known to them. If they could read all the documents, maybe there should be more agreements.
As we do not wish to fall on the ground with one eye blindfolded, we only give some analysis trying to clarify the issues. We have never given any real opinion on the dispute, as we feel not enough data is given to warrant a good response.
NEVER LET YOUR CONSULTANT WALK WITH ONE EYE BLIND-FOLDED.
That is why in our website we have posted an announcement to advise the prospective customers to read our advice first before sending us the documents - all or nothing - and don't screen them in order to save our time in reading and therefore to achieve some savings in professional fees. This would only kill the whole thing.
www.tolee.com
Part of the reasons for varied opinions amongst experts is because a very limited data is known to them. If they could read all the documents, maybe there should be more agreements.
As we do not wish to fall on the ground with one eye blindfolded, we only give some analysis trying to clarify the issues. We have never given any real opinion on the dispute, as we feel not enough data is given to warrant a good response.
NEVER LET YOUR CONSULTANT WALK WITH ONE EYE BLIND-FOLDED.
That is why in our website we have posted an announcement to advise the prospective customers to read our advice first before sending us the documents - all or nothing - and don't screen them in order to save our time in reading and therefore to achieve some savings in professional fees. This would only kill the whole thing.
www.tolee.com