ICC Digital Library Forum

The query is as follows:

Applicant Nepalese bank issued a L/C favoring Beneficiary for $ 1.8 M. An international bank operating in beneficiary country was the Confirming Bank. It was empowered by the terms of the L/c to negotiate the credit w/i 3 days of Swift notification to Applicant Nepalese bank (issuer).

On 6/17, confirming bank notified that it had laid a claim dated 6/19 with its NY bank. On 6/19 Issuer, asked it to hold claim till originals rcvd at counter. On 6/23, originals were rcvd and notified to Confriming bank to be non-compliant.

On 6/23, confriming bank notified that the claim was deducted on 6/20 from Issuer's account with the NY bank as per the Irrevovable reimbursement authorization rcvd.

The L/C documents were not genuine as the seal on the B/L was not genuine. Applicant did not accept documents.

Issuer bank has been trying to get a refund with interest of its funds from the NY and/or beneficiary country bank without success so far.

what are the possible legal wrangles a developing country bank/ company is looking at in terms of actions, time-frame and costs?

Without liability/responsibility, my personal thoughts are:
1. There are too many variables to be able to answer your question, as well as matters that are not clear. Among other factors, there will be the jurisdiction in which action takes place (assuming you sue), the basis and strength of your claim, whether it is suitable for ‘summary judgment’ (if the jurisdiction has such a system), the lawyers you employ etc.
2. I do not see how the ‘Issuer’ can ask the Confirming Bank to ‘hold [its] claim till original recvd at counter’. The Confirming Bank is obliged to honour facially complying documents (Art 9b), unless evidence that meets the test -in the relevant jurisdiction- for the ‘fraud exception’ is presented to the Confirming Bank. In turn the Issuing Bank is obliged to reimburse the Confirming Bank for documents so honoured.
3. It is unclear if your claim against the Confirming Bank is based on the documents being non-compliant with the credit terms or fraud (forged documents that meet -on their face- the credit terms are compliant, not non-compliant). If the latter, unless evidence that meets the test -in the relevant jurisdiction- for the ‘fraud exception’ was presented to the Confirming Bank before it effected settlement, I would not anticipate your succeeding in legal action.