ICC Digital Library Forum

I kindly ask you for your opinion to the following case:

1. Discrepant documents (discrepancy in the packing list) have been sent to the issuing bank, within L/C validity.
2. Documents have been refused by issuing bank according to UCP art. 16.
3. Later on (after expiry of the L/C !), documents have been taken up by applicant and the issuing bank sent their authorization to claim reimbursement to the nominated bank.
4. Nominated Bank claimed reimbursement from reimbursing bank, but they refused payment, as their irrevocable reimbursement undertaking already expired.
5. L/C is subject to "UCP latest version".

The question now is: Is the issuing bank obliged to pay under the L/C, according to UCP art. 13c, although they have taken up the documents AFTER L/C-expiry.

Thanks for your comments.

Gerhard

I cannot see any grounds on which they could avoid responsibility for payment.

Doubtless the presentation schedule contained clear instructions that the documents were sent under the protection of the credit and that they were only to be released against payment.

Therefore, even if it was felt in some quarters that the issuing bank could avoid their responsibilities under UCP600 given that the credit had expired, the very action of taking up the documents and releasing them to the beneficiary obliges them to make payment (either directly or by placing the reimbursing bank in a position to honour a claim) as they would otherwise be in breach of the instructions given to them in the presentation schedule.

Andy

While the issuing bank has no obligation under the LC post expiry, it has undertaken a "new" obligation to pay by taking up the documents. Seems it could simply have paid the proceeds upon acceptance of discrepancies by the applicant and avoided any confusion. Nonetheless, the act of communicating its taking up of the documents would seem to create a separate undertaking.