I really wonder whether I'm missing something regarding the content of Article 16 of UCP600
As you all know that there was a famous clause in credits called "the disclaimer clause" ( UCP500)
it basicly states that if the issuing bank gives a notice of refusal , than it may deliver the docs to the applicant in case of receipt of a waiver from the applicant unless it receives the contrary instruction from the presenter before such a release.
To my understanding , the new UCP now has an option which contained in sub art 16 c iii b provides protection for the issuing bank for such a release of docs.
But some credits coming from different countries are still containing same clause and it commences with the words "nothwithstanding
the content of art 16 of UCP...."
I really appreciate your comments about why banks still need to insert this clause into their credits subject to UCP600.
Best regards,
Yahya
UCP600 Art 16
UCP600 Art 16
I too have seen such credits and can only assume the issuing bank either does not understand Article 16 or it would cause 'system' problems / costs to delete the clause.
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KimChristensen
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- Joined: Fri Apr 05, 2019 5:21 pm
UCP600 Art 16
Dear Yahya,
I have seen those too – and agree with Jeremy.
To me the tricky part is that the wording in the LC may be similar – but NOT identical to article 16(c)(iii)(b) thereby may create a different result.
E.g. in article 16 the presenter has the possibility to object to this procedure (or rather provide the issuing bank with further instructions) – after receiving the notice of refusal. This possibility may not be build into the LC text – hence the advising bank would need to object already at time of receiving the LC.
Best regards
Kim
I have seen those too – and agree with Jeremy.
To me the tricky part is that the wording in the LC may be similar – but NOT identical to article 16(c)(iii)(b) thereby may create a different result.
E.g. in article 16 the presenter has the possibility to object to this procedure (or rather provide the issuing bank with further instructions) – after receiving the notice of refusal. This possibility may not be build into the LC text – hence the advising bank would need to object already at time of receiving the LC.
Best regards
Kim
UCP600 Art 16
Thanks for your valuable comments,
I guess that I get your point , you mean that by inserting this clause the issuing has an intention to specify that it would hardly ever use the option "hold" and wouldn't carry out some possible another instructions would be given by the presenter under sub art 16 c iii d
Is that right ?
Regards,
Yahya
I guess that I get your point , you mean that by inserting this clause the issuing has an intention to specify that it would hardly ever use the option "hold" and wouldn't carry out some possible another instructions would be given by the presenter under sub art 16 c iii d
Is that right ?
Regards,
Yahya
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
UCP600 Art 16
Dear Yahya,
I guess this is perhaps too theoretic – so better not spending too much time on it.
Anyway – my point is that there is a difference between:
1)
From UCP 600, article 16:
..that the issuing bank is holding the documents until it receives a waiver from the applicant and agrees to accept it, or receives further instructions from the presenter prior to agreeing to accept a waiver
2)
“Modified” by the LC:
Documents with discrepancies will be rejected, and by doing so we reserve the right to accept a waiver of discrepancies from the applicant, and subject to our concurrence with such waiver; we reserve the right to release documents against such waiver without notice to the presenter.
Under 1) the issuing bank is obligated to follow an instruction from the presenter – prior to agreeing to accept a waiver.
This is not build into 2). One would of course expect that the presenter can dispose over the refused documents – but since it is not part of the LC text – this may easily cause problems.
So better to persuade issuing banks to use the UCP 600 wording.
Best regards
Kim
I guess this is perhaps too theoretic – so better not spending too much time on it.
Anyway – my point is that there is a difference between:
1)
From UCP 600, article 16:
..that the issuing bank is holding the documents until it receives a waiver from the applicant and agrees to accept it, or receives further instructions from the presenter prior to agreeing to accept a waiver
2)
“Modified” by the LC:
Documents with discrepancies will be rejected, and by doing so we reserve the right to accept a waiver of discrepancies from the applicant, and subject to our concurrence with such waiver; we reserve the right to release documents against such waiver without notice to the presenter.
Under 1) the issuing bank is obligated to follow an instruction from the presenter – prior to agreeing to accept a waiver.
This is not build into 2). One would of course expect that the presenter can dispose over the refused documents – but since it is not part of the LC text – this may easily cause problems.
So better to persuade issuing banks to use the UCP 600 wording.
Best regards
Kim