ABSURD

[NigelHolt]

We have rec'd a credit from a bank that excludes Article 35 and they've asked us to confirm it! Suffice it to say we will refuse to advise it, let alone confirm it.

Incidentally, one thing I find puzzling is that anyone working in credits would not know the second para does no more than reflect the UCP500 position and that the risk lies with the applicant, not the issuing bank.
[edited 7/3/2007 4:43:18 PM]

[KimChristensen]

Dear Jeremy,

Thanks for sharing

A bit curious – did this LC just exclude article 35 – or did it also replace it with something else?

Best regards
Kim

[edited 7/3/2007 6:38:57 PM]

[AbdulkaderBazara]

In one of the seminars I recently attended, this was anticipated by the presenter; my response was we will not confirm any LC that excludes article 35.

regards

[DimitriScoufaridis]

Dear Jeremy,

As long as the application of Art. 1 “unless expressly modified or excluded in the credit” continues to be “misused” such exclusions won’t stop, e.g. we recently saw an exclusion of sub-Articles 13 (b) & 14 (d) under UCP 500 and certainly we did not confirm the credit!

If the issuing bank is worried about the loss of documents in transit, it can refer to ICC’s official opinion R548 / TA566rev “in order that the issuing bank may carry out a review of the documents to establish compliance to the terms and conditions of the credit, it may request that the negotiating bank obtain copies of the transmitted documents.”

Best regards
Dimitri

[KimChristensen]

Dear all,

I would add also that if the issuing bank (suddenly) feels that they have a problem with the risk of documents being lost in transit – I think a better way around it would be to make the LC available with themselves – at its own counters – not nominating any bank to honour or negotiate.
I am not saying that I support that – but in any case that would provide a more precise split of the obligations and responsibilities of the involved banks.

Best regards
Kim


Ps. Jeremy; in my previous posting I forgot to compliment your choice of "title topic" - really an eye catcher

[NigelHolt]

Kim,

The Credit simply excluded Article 35, i.e. in its entirety. It reflects very poorly indeed on the bank concerned and must call into question their understanding of Credit operations as no bank in its right mind would be willing to honour or negotiate documents without the full protection of Article 35.

Jeremy
[edited 7/4/2007 9:03:22 AM]

[DanielD]

Jeremy,
Absurd, sure but the explanation for the exclusion in your case lies maybe in an article in DC World (March 2007) where it is said that for some who have begun a critical study of the new rules, this article has emerged as a likely candidate for modification or exclusion.
Daniel.

[JimBarnes]

I agree that excluding UCP600 Article 35 approaches the absurd, but there is reason to limit the middle paragraph to the situation where documents are lost in transit. (Otherwise, it can be argued that 35 provides for reimburesement in cases where 7c and 8c should govern reimbursement.)

I suggest you all get ready for exclusion and modification of UCP600 Article 14d. A well advised beneficiary of many LCs, including most standby LCs, is likely to insist on it. (Recall there is no inconsistency/conflict rule in ISP98.) Regards, Jim Barnes

[NigelHolt]

Daniel,

I would merely observe I cannot see any reason why an issuing bank would take exception to Article 35. Also, if an issuing bank does modify or exclude an article of 600 it needs first to ask itself how it would react if it were the advising bank or nominated bank on a credit where the article had been modified or excluded as they envisage doing.

Jim,

All in favour of excluding 14(d); makes a document examiner’s life much easier and poses no risk to the nominated or issuing bank.

Regards, Jeremy

[AbdulkaderBazara]

I believing amending article 14d may be beneficial to document examiners but excluding it in its entirety, unless replaced by another wording that will not allow inconsistency between documents presented, would be going too far.

regards
Abdulkader