DEar friends,
.
We (issuing bank) received docs from nominated bank after the expiry date of L/C. (L/c available with nominated bank, date and place of expiry 05.06.2008, country of nominated bank)
.
Nominated bank sent documents stating discrepancy as presentation after LC expired (12.06.2008).
.
When received docs, we failed to sent a message to nominated bank for refusal of docs, just applied applicant for acceptance.
Today nominated bank sent us a message claiming l/c amount to be paid since we did not act as per uCP600 article 16.
In my opinion, since lc expired, relevant UCP articles connot be applicable. There is no lc available.
Am I right.
(by the way applicant is planning to deduct a penalty fee due to late shipment and for that reason they have not accepted docs yet)
Issuing Bank Failed To Send Refusal To Nominated Bank
-
Navi
- Posts: 362
- Joined: Mon Jun 23, 2008 4:17 pm
- First Name: Olcay
- Last Name: Özcan
- Organization: Bank
- Filter: Two Plus Two =: 4
- Location: Turkey
-
iLC
- Posts: 504
- Joined: Thu Jun 26, 2008 10:33 pm
Re: Failing to act as per UCP600 16,
dear Navi,
its always wise to send a refusal advise even if the documentary credit is expired. its a safeguard.
in this case, you are fully in line with the UCP. what generally happen that the nominated bank received the LC late and send the document to the issuing bank without saying that they have received it lately or "all terms and condition complied"
then the duty of the issuing bank is to ask the nominated bank whether it was received within the expiry or not. if yes, ok, good. if no, then its a discrepancy. or more precisely, "no discrepancy"; the letter of credit is simply expired!!
now in your case, there is no need to ask the nominated bank since they have already said it was presented after the expiry of the LC.
now there are two related ICC opinion here
one says, for an expired LC, there is no need send an refusal advice
another says, "Although the confirming bank may have indicated a discrepancy(ies) in its covering schedule, it is still the responsibility of the issuing bank to determine the status of the documents - whether they conform or not. The issuing bank is still bound to send refusal advice"
expired LC is such a case that the issuing bank has nothing to confirm further. its the nominated bank who will find it out.
so the logical conclusion is there is no need to send a refusal advice in your case.
Cheers!!
iLC
its always wise to send a refusal advise even if the documentary credit is expired. its a safeguard.
in this case, you are fully in line with the UCP. what generally happen that the nominated bank received the LC late and send the document to the issuing bank without saying that they have received it lately or "all terms and condition complied"
then the duty of the issuing bank is to ask the nominated bank whether it was received within the expiry or not. if yes, ok, good. if no, then its a discrepancy. or more precisely, "no discrepancy"; the letter of credit is simply expired!!
now in your case, there is no need to ask the nominated bank since they have already said it was presented after the expiry of the LC.
now there are two related ICC opinion here
one says, for an expired LC, there is no need send an refusal advice
another says, "Although the confirming bank may have indicated a discrepancy(ies) in its covering schedule, it is still the responsibility of the issuing bank to determine the status of the documents - whether they conform or not. The issuing bank is still bound to send refusal advice"
expired LC is such a case that the issuing bank has nothing to confirm further. its the nominated bank who will find it out.
so the logical conclusion is there is no need to send a refusal advice in your case.
Cheers!!
iLC