benefits of article 12b of UCP 600

[dholat]

Dear all,

i had an opportunity ti go through the ICC opinion TA672rev and that certainly disappoints me. at one part, the opinion said,

Clearly, an issuing bank cannot ignore a court injunction, and its defense for not reimbursing will be based upon the terms of the injunction. However, the basis for the injunction being issued seems to be related to the quality of the goods, and therefore a nominated bank that acted in good faith should be protected.

if the court injunction is to work, the what is the benefit of 12b and all discussion of banco santander?

[picant]

Hi Pal,

just one thought, the court has to protect buyer and seller against problems on goods. Art 12 will protect banks undertaking to effect payments outside litigation on goods.
Banco Santander case was, IMHO, that this bank effected a prepayment when it was not authorized to do, hampering the buyer to stop the deferred payment, that the Banco Santander made outside the L/C. Now, Banco Santander could tell the Court that prepayment was authorized by the issuing bank and any dispute between buyer and seller has to be settled non involving banks.

Difficult to explain!

Other comments appreciated

Ciao

[dholat]

dear picant,

thanks for your answer. but im yet to figure out the ICC position on this issue especially when ICC opinion TA672rev deals with the case of prepayment under the deferred payment credit by the confirming bank.

[jmitra]

from the scenario, it seems that the court has actually put an temporary stay order on the payment. certainly the applicant didnt disclosed the rule of UCP before the court. while the beneficiary got paid, it least likely that he will when all the way to other country to get fight the case. the confirming bank would require to face the case instead. i think after producing the interpretation of the Law, the court would rather instruct the issuing bank to pay.

in every opinion, ICC always says that issuing bank should inform the court.... but in these cases, its much unlikely that the the applicant would pay the issuing bank easily. hence, i think most of the banks will rather prefer to follow the applicant's way.