ICC Digital Library Forum

Daniel et all

This situation has turned into a real problem for one of my colleagues in an associate bank.

The problem is that the issuing bank waited to receive the second mail package of documents before examination.

Then the issuing bank took three banking days to examine the combined packages as a ‘presentation’ and found discrepancies in the B/L (part of first package).

The issuing bank issued notice of refusal before close of 4th banking day following date of second mail which contained a document (cert of origin) not included in first mail.

The Confirming Bank is not arguing about the discrepancy but maintains that the Issuing Bank is precluded as they did not issue a notice of refusal by close of business of fifth banking day following date of receipt delivery of first set of documents which they maintain was ‘presentation’. (even though their covering schedule makes it clear that documents were split for mailing purposes).

It would be my interpretation but not a very confident interpretation that when a Confirming Bank sends documents in two mails it clearly means they themselves as confirming bank got documents as one ‘presentation’ from beneficiary but for operational risk purposes are sending that ‘presentation’ in two mailings to the Issuing Bank.

My view would be that with the covering schedule indicating the presentation has been split into two mailings this means the issuing bank is on notice of this splitting of the presentation and has a maximum of 5 banking days for examination and refusal following the date of receipt of second mail including some document which formed part of the beneficiary’s presentation.

While I consider my conclusion as logical – I am not confident that it reflects the correct stance.

If I am not correct it means that should a presentation be sent by the confirming bank in two mails then an issuing bank should check the first mail as a ‘presentation’ and issue a notice of refusal if there are any discrepancies by close of fifth banking day following the date of receipt of that first mail package.

Comments please?

Svetlana

Bogdan is right. If C/O had been sent with the first mail, no problem would have occured. That was the mistake.
I can imagine the reasoning of IB:
as C/O is missing, we'll wait until the arrival of the second mail to check the documents. It is reasonable enough if the C/O was listed on the cover. But if the C/O was not listed, IB could not have known if it was to arrive with the second set or not. In that case, it should have checked the first set and raised the following discrepancies:
1. the one in the B/L 2. C/O missing.
So, I think that the point now is: was the C/O listed on the cover?
Daniel

Dear Daniel

All the documents were listed on covering letters for first and second mail with an x in a box beside each listed document.

The certificate of origin was listed on both first and second mail letters but the x did not appear on the first mail as certificate of origin was not included in first mail but x appeared on second mail letter as certificate of origin included in second mail.

I think it is a tricky question as the ‘presentation’ under the credit to the confirming bank contained all documents and it was just for operational risk I guess that the documents were split.

It is being argued strongly that when Issuing Bank receives documents, i.e, any documents, even one document out of many called for in the credit, then it has received a ‘presentation’ and the clock begins to tick, regardless of whether the original presentation was split or not.

I am not so sure this is the correct approach.

Svetlana

Dear Svetlana,
C/o being listed but not "x"-ed on 1st cover letter is, in my opinion, a good reason for considering that the 5 banking days should have been numbered begining with arrival of 2nd set of documents.
Otherwise we should think that in such a case the iss.bank/confirming bank should, upon receiving the 1st set, draw remitting bank's attn that will apply art.14b followiong the day of 2nd set presentation.
I think ICC is the only one able to give the right answer in this matter.
One thing is for sure: you may argue and argue and argue for a lot of time from now on and finally go to court. It is a case on which every part involved will maintain his own opinion.
I wish you luck.
Bogdan

I agree with Bogdan.
Knowing that the C/O would arrive with the second mail, IB was right to wait for it before beginning the checking. It would would have been ridiculouas for IB to raise a discrepancy for the missing C/O while it was known that it would arrive with the second mail. Now what if second mail had not arrived, I think that art. 35 would have applied.
Things can be really very tricky at times. I still wonder why the C/O was sent with the second mail
Daniel

“I still wonder why the C/O was sent with the second mail”

I don’t know why the C/O was sent with the second mail and I too see thing most every day in documentary credits that make me ‘wonder’

Thank you

Svetlana