TWO ADVISING BANKS, POSSIBLE BUT RARE
It is possible that two advising banks may be involved under certain special situations, such as for the first advising bank, there is no branch in the place of the beneficiary. This issue comes in ocassionally in the ICC Banking Commission casual discussion forum and LC experts present admit that two advising banks are possible, although this is quite rare.
DEFINITION OF A NOMINATED BANK
The definition of a nominated bank (most participants, particularly the traders, to our LC workshops are not aware of this) is in UCP 500 sub Article 10 (b). Hence an advising bank is NOT a nominated bank, as rightly pointed out by Mr. Bacon above. If it is, it is merely due to the fact that this same bank is ALSO a nominated paying, deferred paying, accepting or negotiating bank.
UCP 500 sub Articles 13 (b), 14 (b) & (d), regarding refusal notice, are applicable to the issuing bank, confirming bank and the nominated bank only. Sub Article 14 (e), regarding sanctions and preclusion, applies to the issuing bank and the confirming bank only (NOT ALSO to the nominated bank this time because it is not a prime payment obligator. It is an agent of the issuing bank to perform on its behalf its payment obligation overseas). Articles 13 & 14 therefore do not concern the advising bank, although the same advising bank may take up other roles such as being ALSO the nominated bank or confirming bank.
Thinking logically, an advising bank has no duty to examine the documents for this role, then how can it be required to give refusal notice? It can only forward the refusal notice message from the issuing bank, confirming bank or the nominated bank, to the beneficiary, its customer (This is particularly so for the second advising bank).
As far as an advising bank is concerned, UCP 500 is silent on the timing and manner in forwarding a refusal notice. Under such circumstance, this would be governed by the local or applicable law.
DUE DILIGENCE AS A BANKER'S DUTY
However, UCP 500 is not everything. It is wrong to look to the UCP 500 to resolve all the problems, as we have said many times. From our view, a bank, besides taking "reasonable care", must ALSO exercise "due diligence", according to a "vintage" collection in our private consultancy library - ICC Publication "Special Report Due Diligence" by the Intrernational Maritime Bureau, an ICC organisation.
So as an advising bank, it must perform the forwarding of the refusal notice, a very important message, with due diligence, although this is not mentioned in the UCP 500.
As we are not a judge, we would only guess that a judge may require an advising bank to pass on this important refusal notice message "without delay" to fulfill the advising bank's "due diligence" duty. This may be even shorter than "a reasonable time not to exceed 7 banking days" under the UCP 500. At the end of the day, the advising bank (whether it is the first or the second advising bank) has to answer to the court why it takes "three banking days safe harbor" (famous banking practice originated from the USA. By the way, do you agree that "Pearl Harbor", which is now on the movie screen, is not a safe USA harbor, at least during 1939-42?) to forward such a simple message to the beneficiary, its valued customer for which it owes a due diligence duty.
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[edited 7/3/01 5:03:46 AM]