Article 38k and Force Majeure in UCP600

[CDCS2009]

Hello!!

as per article 38k of UCP600, a second beneficiary must present the document to the transferring bank. if the transferring bank is closed on a regular business day due to a force majure, what is the remedy available to the second beneficiary. can it present the document directly to the issuing bank?

[picant]

Hi Pal,

in UCP 600 Commentary is written ref art 36:
The second paragraph relates to the effect on a presenter when credit expires during the interruption of an issuing or nominated bank's business due to force majeure event.
Such banks will not honour or negotiate upon resumption of their business, under a documentary credit that expired during the period of interruption.
If the documentary credit is restricted to a specific nominated bank, the beneficiary could present directly to the issuing bank if time permits prior to the expiry date or last day for presentation.
---
So, IMHO, if it is possible I will present documents directly to issuing bank, stating that "Action due to Force Majeure" or the like.

Other comments appreciated

Ciao

[cristiand969]

Hi Pal,

in UCP 600 Commentary is written ref art 36:
The second paragraph relates to the effect on a presenter when credit expires during the interruption of an issuing or nominated bank's business due to force majeure event.
Such banks will not honour or negotiate upon resumption of their business, under a documentary credit that expired during the period of interruption.
If the documentary credit is restricted to a specific nominated bank, the beneficiary could present directly to the issuing bank if time permits prior to the expiry date or last day for presentation.
---
So, IMHO, if it is possible I will present documents directly to issuing bank, stating that "Action due to Force Majeure" or the like.

Other comments appreciated

Ciao

From the practical perspective more and more tranferring banks (not confirming the credit) state under payment instructions that they will pay after receipt of funds from issuing bank. It follows therefore that transferring bank neither undertake to honor nor to negotiate . In this case I would not consider that art. 36 is applicable for the transferring bank and docs can be sent to issuing bank directly with the mention picant has stated
regards

[CDCS2009]

thank you for your kind asnwers. i have an additional question, a academic one. suppose there a force majeure condition with the transferring bank and document is presented direcly to the issuing bank. what should be the action of the issuing bank? one thing is that it will inquire with the transferring bank. but will there be a option for the first beneficiary to substitute the document at the counter of the issuing bank?