ICC Digital Library Forum

Dear Sirs,
Bank H had confirmed the LC in Beneficiarys country (Country H) and certified documents complied with the Credit terms and forwarded to issuing bank (Bank B in Country B) claiming the proceeds from the reimbursing bank.

The applicant had obtained a court injunction and served it the issuing bank to stop the payment.

Is the confirming bank liable to pay to the benficiary despite the court notice served by the applicant to issuing bank.
Please advise,
Thanks.

Although you have posted in the UCP500 section I assume the credit is subject to UCP600, given how long UCP600 has been ‘in force’. However, if this is not the case it does not affect the substance of what I say below.

Based on what you say the confirming bank has already honoured or negotiated in accordance with the definitions in Article 2. Therefore, if the confirming bank has not effected settlement already -as you appear to suggest- it must have either incurred a DPU or accepted a draft, but not ‘prepaid’ / ‘purchased’ (i.e. discounted), or has agreed to advance funds -without recourse (sub-Article 8(a)(ii)- to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.

Which ever commitment the confirming bank has incurred, it would be unaffected by an injunction against the issuing bank unless the law in the confirming bank’s country deviated significantly from the norm in such matters. In other words, the answer to your question in my view is ‘yes’.

[edited 4/22/2009 2:06:36 PM]

Hi,

The reason why the beneficiary insists on a confirmed L/C is that they want to avoid the issuing bank risk and the issuing bank’ s country risk.

The confirming bank is not obligated to abide by and should not base on the stop payment order served to the issuing bank to deny their liability as a confirming bank.

Best regards,
N.H. Duc


[edited 4/22/2009 1:15:27 PM]