ICC Digital Library Forum

Issuing Bank: Bank A in country X
Beneficiary's Bank: Bank B in country Y
L/C No. 123, amount USD100.000,00; subject to UCP 500.

On 03/01/2008: Bank B presented shipping docs to Bank A
On 10/01/2008: Docs reached bank A.
On 13/01/2008: Bank A released Docs and prepared for payment
On 14/01/2008: Bank A received official document from Applicant and local Authorities - Chamber of Commerce and Industry, requiring Bank A to temporarily stop payment as the shipment was fraud.
On 17/01/2008: Bank A received Court Order, stoping bank A to pay Bank B temporarily.

On 30/01/2008: Bank A received final judgement from Court, stating that "Applicant have to pay only USD 20,000.00 to Beneficiary. (equivalent to the real amount of goods received as per L/C No.123), payment must be made through Issuing Bank".

Bank B continuously claimed bank A to pay full amount as the Beneficiary had gone bankcrupt and bank B had negotiated the docs. When required, Bank B provided bank A with account statement and credit advice.

Upon investigating the credit advice, Bank A discovered that the negotiation was with recourse, and the maturity date of the negotiation was 08/01/2008 (before the date when Bank A received docs).

Questions:
1/ As Bank B had negotiated the docs with recourse and negotiation agreement between Bank B and Ben. hađ expired when the docs reached Bank A, then Does Bank B have the right to claim reimbursement the negotiated amount from Bank A?

2/ Could Bank A follow the Local Court decision and pay only USD20,000.00?

3/ In case Bank B brings the case to International Court/ICC, which Bank will be in strong position to win the case?

How was the credit available, and where?

Without such information, it is impossible to even give an educated guess.

Regards
Judith

The credit was available with any bank by negotiation.
Date and place of expiry was in Beneficiary's country.

[edited 1/18/2010 1:22:16 AM]

Assuming Bank B negotiated, in accordance with UCP500, a complying presentation made to it on or before expiry:
1. the fact that Bank B negotiated with recourse ought not to affect its reimbursement rights under UCP500 (sub-) Articles 9(a)(iv), 10(d) & 14(a). Nor should the fact that the credit expired before receipt of documents by Bank A but prior to their presentation to Bank B.
2. Bank A is obliged to abide by the order of a competent court. However, provided it knew, it should have explained to the court that Bank B had negotiated, and thus the beneficiary had already been paid, and that Bank A was obliged to reimburse Bank B and that not to reimburse Bank B could affect its reputation.
3. What ‘international court’? And why bother with the ICC? The ICC has absolutely no power in such matters. What Bank B needs to do is to get the court to alter its order to Bank A in the light of the facts (best option by far) or sue Bank A for reimbursement in a different jurisdiction where Bank A has assets.