Article 16(c) (iii)

[PhanThanhNhan]

I have the following case. Could you pls give me your comment and advice:
Issuing bank raise the discpreancy under MT999 (because there is no Swift key to create MT734). In this msg, Issuing bank stated:
“WE ARE HOLDING THE DOCUMENTS AT OUR COUNTER AT YOUR RISKS AND DISPOSAL.
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HOWEVER, IN THE CASE THE APPLICANT ACCEPTS YOUR DISCPREPANT DOCUMENTS, WE WILL RELEASE THEM WITHOUT FURTHER REFER TO YOU UNLESS WE RECEIVE YOUR CONTRARY INSTRUCTIONS BEFOREHAND.”.
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The presenting bank argue that they disagree with Issuing bank’s disposal instruction because Issuing bank do not act as per Art16c UCP600. The 1st above paragraph refers to Art16c(iii)a. The 2nd paragraph refers to Art 16c (iii)b. Hence, Issuing bank has combined two instructions in one discrepancy notice which explicitly violates Art16c(iii) and therefore not valid. Each disposal instruction is separate and clearly differentiated by the word ‘OR’.
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For the above case, pls give me your kind advice. Whether the Issuing bank, or the Presenting bank, is correct? Is the refusal notice of Issuing bank is valid?
Thanks and best regards

[NigelHolt]

I do not see that the words “WE ARE HOLDING THE DOCUMENTS AT OUR COUNTER AT YOUR RISKS AND DISPOSAL” equate to the words “that the bank is holding the documents pending further instructions from the presenter” in 16(c)(iii)(a), so I would not agree that the issuing bank has mixed elements of 16(c)(iii)(a) & (b). Overall, I think the issuing bank is correct and that the notice meets the requirements of 16(c)(iii).

[GSham]

In my opinion, the issuing bank's rejection notice meets the requirement of UCP article 16(c)(iii)(b).

[ZErsamut]

Hello;

I simply refer to Coastline Solutions Newsletter by Gary Collyer Issue No: 17 "to Refuse or Not to Refuse" which states that:

Quote
Document status

Sub-article 16 (c) (iii) (a)-(d) provide the 4 options that are available to indicate the status of the documents. In most cases, it is expected that options (a) or (b) will be utilized. Banks must remember that the 4 options are separate and should not be combined. For example, it has been seen in more than one refusal notice "Documents held pending your instructions. Meanwhile we are contacting the applicant for a waiver to the discrepancies and upon receipt of an acceptable waiver we shall release the documents and effect settlement unless we have heard from you to the contrary". This wording effectively combines the content of (a) and (b) where the rule clearly indicates the word "or" between the 4 options.

Unquote

Regards.

Zeynep ERSAMUT

[NigelHolt]

I would not disagree Zeynep, but still hold the view that the refusal notice quoted in the first posting does not combine elements of 16(c)(iii).

[PhanThanhNhan]

Thanks JSMITH,
Could you pls give us relating ICC Opinions or case study that support yr ideas because the negotiating bank still disagree with our point.
Tks

[NigelHolt]

I am sorry I cannot. My views are based simply on my own 'analysis' of 16(c)(iii) and the wording of the refusal.

[BAKHTEYERH]

Dear All,
the basic point ,in one hand of the disposition of document stipulated that the issuing bank holding the document... on the other hand the same issuing bank mentioned that upon receive of applicant waiver they will release the documents... is the two statement not conflicted each others.
your comments appreciated.

[GlennRansier_olsABN]

16 c iii section b. mandates that an issuer "hold" the documents after which they can seek an applicant's waiver and then agree to accept that waiver.

[BAKHTEYERH]

yes i do agree but when the issuing bank mentioned the document holding at the disposal of the presenter... the issuing bank can not seek waiver from the applicant and release the documents after receiving waiver from the applicant acceptable to them.... that why it is contradict....
what do u think sir...