I have received the following interesting question and am looking for your views on same:
The credit issuing bank on receipt of the documents presented by us (negotiating bank)refused the documents due to a discrepancy which is not disputed.However,the notice of refusal through swift 734 was addressed to another branch of ours(different swift address)thereby denying us an opportunity to call back the documents and represent the credit complied documents before the expiry of the lc.In our subsequent correspondence with the issuing bank we pointed thier failure to comply with the above artilces of ucp500 and sought immediate reimbursement alongwith interest for the delayed payment.Now the issuing bank is taking protection under Article 16 (disclaimer on the tranmission of messages).can you please clarify on the stand taken by the issuing bank?
Notice of refusal sent to wrong branch
Notice of refusal sent to wrong branch
Leo,
My personal views without liability / responsibility are:
Sub-Art 14di states ‘Such notice shall be given to the BANK from which it received the documents’ [emphasis added] Therefore, if the issuing bank sent the notice to the right bank, but wrong branch, it may not be considered by a court as a breach of sub-Art 14di. In addition, if a court did consider it a breach of sub-Art 14di I would anticipate that the court would take into a/c, for instance, the action of the wrong branch that received the notice in deciding if the issuing bank had a liability. For example, if the wrong branch failed to take reasonable efforts to identify the right branch and forward asap the notice, but had it done so the presenting bank would have been able to cure the defective presentation, I would not be surprised if the courts considered this as exonerating the issuing bank from liability.
Regards, Jeremy
My personal views without liability / responsibility are:
Sub-Art 14di states ‘Such notice shall be given to the BANK from which it received the documents’ [emphasis added] Therefore, if the issuing bank sent the notice to the right bank, but wrong branch, it may not be considered by a court as a breach of sub-Art 14di. In addition, if a court did consider it a breach of sub-Art 14di I would anticipate that the court would take into a/c, for instance, the action of the wrong branch that received the notice in deciding if the issuing bank had a liability. For example, if the wrong branch failed to take reasonable efforts to identify the right branch and forward asap the notice, but had it done so the presenting bank would have been able to cure the defective presentation, I would not be surprised if the courts considered this as exonerating the issuing bank from liability.
Regards, Jeremy
Notice of refusal sent to wrong branch
Thank you Jeremy.
I received another reply from a friend in the UK who called to point out an ICC Opinion in relation to a very similar case - R425.
Its conclusion reads:
"There are two issues within this particular enquiry.
First, the rejection notice was apparently sent to another branch of the bank in the same country, presumably for relaying to the presenting branch . Second, the rejection notice was, in any event, sent later than seven banking days following the banking day of receipt of the documents.
An advice of discrepancies must be sent, within the prescribed period, to the branch of the bank that remitted the documents. The sending of a message to another office of that presenting bank does not necessarily meet the conditions of sub-Article 14(d)(i), and issuing banks must consider carefully the implications of such actions. This sub-Article allows for the telecommunication of the refusal or, if that is not available (i.e. no direct link), by other expeditious means.
If an issuing bank fails to provide a notice of refusal within a reasonable time, which can be no later than the close of the seventh banking day following the day of receipt of the documents, then it is obliged to honour such documents irrespective of the conformity of the discrepancies that had been identified (sub-Article 14(e))."
I received another reply from a friend in the UK who called to point out an ICC Opinion in relation to a very similar case - R425.
Its conclusion reads:
"There are two issues within this particular enquiry.
First, the rejection notice was apparently sent to another branch of the bank in the same country, presumably for relaying to the presenting branch . Second, the rejection notice was, in any event, sent later than seven banking days following the banking day of receipt of the documents.
An advice of discrepancies must be sent, within the prescribed period, to the branch of the bank that remitted the documents. The sending of a message to another office of that presenting bank does not necessarily meet the conditions of sub-Article 14(d)(i), and issuing banks must consider carefully the implications of such actions. This sub-Article allows for the telecommunication of the refusal or, if that is not available (i.e. no direct link), by other expeditious means.
If an issuing bank fails to provide a notice of refusal within a reasonable time, which can be no later than the close of the seventh banking day following the day of receipt of the documents, then it is obliged to honour such documents irrespective of the conformity of the discrepancies that had been identified (sub-Article 14(e))."
Notice of refusal sent to wrong branch
Leo,
I forgot to add that I do not believe a court would consider Article 16 as exonerating an issuing bank from its own negligence.
Jeremy
I forgot to add that I do not believe a court would consider Article 16 as exonerating an issuing bank from its own negligence.
Jeremy