The right process for this Case of Confirmed LC

[WARLORD77]

Hello everyone,

I have a nice Export LC case which I would like to share with you.

This LC issued in country S by Bank A and advised it to Bank B in country Y via swift.
Bank B advised the LC to us in country Y(we are advise through bank) in hard copy even though we have RMA (this is not the case).
LC available with Bank B and Drawee Bank Field shows the wording as 'confirming Bank'.

Confirmation instruction ' Confirm'

Our client was trying to get confirmation through bank B, but they have declined, until this moment the total advised amendments are 2 amendments(LC+2 amendments).

Now our client found a bank which will add confirmation to the LC, Its bank C, my client said to me that this bank will confirm the LC.

Now until this moment, the client has the Original LC and 2 amendments in his possession because we are as advise through bank and our job to advise anything to them.

Last sunday we received amendment number 3 through bank B as usual, the amendment states that the LC is now to be available with bank C, this amendment is still under our custody, and i will give it to the customer next Monday, this amendment will remove Bank B from the story of the LC, which means any future amendments will be transmitted to us (the advise through Bank)through bank C(the new advising Bank/Receiver of MT700).

That day, I have called Bank C regarding the amendment number 3 and that it contains their name as available with Bank, they said yes coz we as Bank C will add confirmation as per the client request , but they(Bank C) ordered me to send all the originals to them (Hard copy of LC and amendments), this process means I have to collect the whole LC set from the beneficiary (original LC+2 amendments) and amendment number 3 in our custody in which all to be sent to Bank C under our Bank covering letter, is this correct ? Or do they need the originals because they will add confirmation.

What is the meaning of this, we are advise through Bank, why we send to them the whole set, I said to myself maybe they want to collect it from us and then send us again all incorporated in one LC through MT710, I don’t know what is the correct procedure, please tell me what is the correct process here.

[shahriar]

technically i haven't found any information that the issuing bank is changing the advising bank. as per UCP, bank B will remain as the advising bank and any amendment is suppose to be route through them. is there any express declaration that bank C will be the advising bank?

[WARLORD77]

Dear Shahriar,

The issuing Bank only information is the amendment No.3 which stated that ' the available with Bank is now BankC instead of Bank B', will this change the route?

For your information, Bank C has RMA with Bank A.

[shahriar]

is that all the amendment says? i expected something more. this certainly does not change the advising bank. im infact confused over another thing. assuming that the MT 700 field 49, that was sent to bank B, say may add or confirm, only bank B has the authority to confirm the credit in the present state.

[S.Khalili]

Since issuing bank has changed the confirming bank and that amendment has been advised by the previous confirming bank, ther is no harm in accepting this change. The new confirming bank wants original LC and all amendment as it wants to add it's confirmation, which is a normal course.

Does UCP prohibits change of confirming bank? Comments will be appreciated

There is perhaps ambiguity in LC regarding payment of confirmation charges.


Disclaimer:
The above represents my personal view. The reply given is not to be construed as being other than solely for the benefit of guidance and there should be no legal imputation associated with the reply offered.

[shahriar]

dear khalili,

appreciate your view. but i agree with me

the available with Bank is now Bank C instead of Bank B',

if this is the only amendment, how could we infer that C is authorized to confirm. if the LC is not available with B anymore that does not necessarily mean that B can not confirm the credit.

as per SWIFT law, i found that only bank B is authorized to confirm the LC.

there is no prohibition in changing the confirming bank. if issuing bank, beneficiary and confirming bank agrees, this is possible. need to remember that in our case bank B is not the confirming bank; its merely authorized to do so.

other comment appreciated

[WARLORD77]

Thanks to all of you,

I understand now how to route under this case.

regards

[iLC]

notwithstanding the above discussion, i would request you all to consider UCP 600 article 10.

A confirming bank may, however, choose to advise an amendment without extending its confirmation and, if so, it must inform the issuing bank without delay and inform the beneficiary in its advice.

doesnt this clause implies that confirming bank is always an advising bank or at least 2nd advising bank?