ICC Digital Library Forum

Bank B received an L/C from Bank A with a request to advise it to beneficiary who is in a different country. There is no second advising bank in the L/C.

Can Bank B advise the L/C to beneficiary through their correspondent at beneficiary's country without obtaining any permission from Bank A ?

UCP 9C says, an advising bank may utilize the services of another bank (second advising bank) to advise the credit and any amendment to the beneficiary.

There is no condition of any instruction of the issuing bank.

The following extract from "The Comparison of UCP 600 & UCP 500" by Professor James E. Byrne may help:

Page 101 point 12a (ii) & (iii)

12a(ii)
"Where, however, the issuer requests that the advising bank advise the credit through anothr bank, using, for example, SWIFT MT700 field 57a ('Advise Through' Bank), the bank can be said to fall within the definition of an 'advising bank' since it has advised (indirectly) at the request of the issuer. Argualbly, it is also a second advising bank since that request has been relayed through and by the advising bank."

12a(iii)

"The better interpretation of this provision is that the second advising bank is one that acts exclusively at the request of the advising bank and not at the request, directly or indirectly, of the issuer. The implication of the reference to the advising bank utilizing the services of another bank is that it is the advising bank that is the actor. Were it merely acting on the request of the issuer, it would be less correct to say that the second advising bank was utilizing the service of the second advising bank."

regards
Abdulkader
[edited 6/23/2007 11:19:43 AM]

Can anybody help me out with my querries as mentioned on the top.

It may be mentioned that UCP 600 article 9 c says, An advising bank may utilize the services of another bank ("second advising bank") to advise the credit and any amendment to the beneficiary whereas in Upskill 600 it stated - A second advising bank could be used due to instructions in the credit itself or as a result of the terms and conditions of the credit -which contradict with each other.

Shahed
Toronto

Can anybody please help me out regarding the use of 2nd advising bank that was not nominated by the issuing bank.

It may be mentioned that UCP 600 article 9 c says, An advising bank may utilize the services of another bank ("second advising bank") to advise the credit and any amendment to the beneficiary whereas in Upskill 600 it stated - A second advising bank could be used due to instructions in the credit itself or as a result of the terms and conditions of the credit -which contradict with each other.

Shahed
Toronto

Dear Shahed,

Suggest:

1) That you look to the posting by Abdulkader above (23/6).
[in my view the best interpretation at this point in time]

2) Wait and see what the “Commentary to UCP 600” says

Best regards
Kim

Kim, I am not clear about Abdulkader's comment. My question is whether the advising bank choose to route the L/C to another advising bank (2nd advising bank) that is not nominated by the issuing bank?

Shahed
Toronto

Dear Shahed,

The quote from the posting by Abudulkader includes the following:

“The better interpretation of this provision is that the second advising bank is one that acts exclusively at the request of the advising bank and not at the request, directly or indirectly, of the issuer…”

In response to your question this would mean that a second advising bank is acting only at the request of the advising bank – and not of the issuing bank.
My best guess would be that it is not the intention to apply such narrow interpretation – but I simply do not know. We will see what practice comes out of this – hopefully from the UCP 600 Commentary (??)

I actually have an interesting case on this:

Bank A issues an LC to Bank B (confirming and advising bank). The LC includes the following statement: “Advise through bank: Bank C”.
So bank B advises the LC to Bank C – who advises it to the beneficiary.
The beneficiary then decides not to use the LC – hence not to pay the advising commission incurred at Bank C.

So the questions are

1) who is (as per UCP 600 sub-article 37(c)) responsible for paying the advising commission incurred at Bank C; Bank A or Bank B.

2) is Bank C a second advising bank in the context of UCP 600 – since it is mentioned as “advise through bank”.

3) would the answer to question 1 be different had bank C not been mentioned as “advise through” bank in the LC.

These questions - and many others - will be answered in the next episode of…... UCP 600

Have a nice weekend

Kim

[edited 9/22/2007 4:35:26 PM]