|
Somehow
this probably remains to be seen – when the UCP 600 is first tried out in
the court room. In any case I think it is fair
to say that the UCP 600 is clearer than the UCP 500 when it comes to the
responsibilities and liabilities of the involved banks.
Here are some examples:
Articles 7
and 8 regarding issuing- and confirming bank’s undertaking.
Both
articles have been redrafted in a clearer manner – so that the possible
scenarios are described. For example, the issuing bank is obligated to pay
even if a nominated bank does not negotiate (and of course documents comply).
|
Kim’s
comments: to me this is merely a matter of clarity and I guess that for
people working daily with LCs there have never been any doubt that
issuing and confirming banks were obliged to pay/accept, etc. when
credit compliant documents were presented. It may however be helpful to
newcomers and exporters that this is now absolutely clear.
|
Article 9
regarding advising of credits and amendments
Article 9b reads:
By
advising the credit or amendment, the advising bank signifies that it has
satisfied itself as to the apparent authenticity of the credit or amendment
and that the advice accurately reflects the terms and conditions of the
credit or amendment received.
|
Kim’s
comments: The word “accurately” has already been the basis for
much discussion. I do not think that this represents a real change in
the rules. I am rather sure that – even under UCP 500 – if the advising
bank makes a mistake when advising the credit or amendment (that would
e.g. not be due to errors in the transmission) – and a party for that
reason suffers a loss – then the advising bank will be liable. So again
this change is – from my perspective – mostly a matter of making it
absolutely clear that if you choose to advise a credit or amendment then
you are of course responsible for that act!
|
Article 35
regarding documents lost in transit
Article 35 reads (excerpt):
… If a
nominated bank determines that a presentation is complying and forwards the
documents to the issuing bank or confirming bank, whether or not the
nominated bank has honored or negotiated, an issuing bank or confirming bank
must honor or negotiate, or reimburse that nominated bank, even when the
documents have been lost in transit between the nominated bank and the
issuing bank or confirming bank, or between the confirming bank and the
issuing bank….
|
Kim’s
comments: This change describes when an issuing bank is liable when
documents are lost in transit. This
rule was somewhat vague in UCP 500
– but has been described a number of times in ICC Opinions. E.g. TA.388
(May 2000):
On the
basis that the letter of credit stipulated a nominated bank to negotiate
(and that bank duly acted) or that the credit was freely negotiable, a
negotiating bank would be entitled to receive payment from the issuing
bank. A
negotiating bank is protected by the content of Article 16 in the event
that documents are lost in transit.
This is,
in other words, more a matter of placing this principle in the rules in
a clear way – and not really a change in liability of the involved
banks. |
The removal
of the words "on its face" [‘except in one place’]
In the
latest issue of DCInsight (Vol. 12 No.4 October - December 2006) Peter Holst
says that:
“The
removal of the words "on its face" indicates to BIMCO that banks must
perform a more thorough examination of the documents than has previously
been the case.”
|
Kim’s
comments: So in any case BIMCO expects more “responsibility” from the
banks. I think however that this is far from the truth.
I do not
think that basic approach to examining the documents has been changed
– and if it has it actually gives room for more “flexibility”. Take for
instance UCP 600 sub-article 14(d):
Data in a
document, when read in context with the credit, the document itself and
international standard banking practice, need not be identical to, but
must not conflict with, data in that document, any other stipulated
document or the credit.
To me
the “need not be identical” is a clear message: Mirror image is
not the standard to be used.
In the
context of the BIMCO message it is also relevant to focus on UCP 600
article 34: “Disclaimer on Effectiveness of Documents”. So it may
well be that a bank may choose to “go behind” e.g. a B/L to check
whether or not it seems fraudulent – but this
is surely not a responsibility dictated by the rules. |
So my conclusion is that
the responsibility and liability of the involved banks are now much more
transparent – but I doubt that there are any real changes, but as mentioned:
it remains to be seen how courts will interpret this. This is not something
that we await eagerly!
|
