Name: Syed Murtuza

In Jan1999, an LC subject to UCP 500 was transferred by ABC Bank M.E Ltd. In favour of second beneficiary m/s. TradeWell and advised to them through XYZ Bank Ltd. Europe.

The L/t was available by sight payment at the counters of ABC Bank M.E Ltd.

Under additional conditions, the L/t requires that
A. Documents must be presented though XYZ Bank Ltd. Europe
B. All documents must indicate the LC no.

The payment terms under the transferred credit was as follows:
"Payment will be effected by us in accordance with your instructions only if funds are received by us from the reimbursing bank, i.e “Well known Bank Ltd”, and provided the terms and conditions of the transfer and the original credit are complied with".

In January 1999, complying documents was presented through XYZ Bank Ltd. Europe at the transferring bank counters i.e. ABC Bank M.E Ltd. and the same were forwarded to the issuing bank.

Upon scrutiny of the documents, the issuing bank raised the discrepancy stating that the LC number in the Certificate of origin was not indicated and notice of rejection of the documents was sent to ABC Bank M.E Ltd.

After 4 months from the notice of refusal, the payment was effected to ABC Bank M.E Ltd. (nominated and transferring bank), by the issuing bank and subsequently the transferring bank ABC Bank M.E Ltd, made the payment to XYZ Bank Ltd. Europe (presenting and advising bank).

In 2007, XYZ Bank Ltd. Europe had claimed the delay period interest by debiting the transferring bank a/c of (ABC Bank M.E Ltd.) held with them and sent a notice to the transferring bank (ABC Bank M.E Ltd.) that they have debited the account in respect of delay made for effecting the payment to them. They believed that it was their commitment to the second beneficiaries to effect the payment under the said L/t.

The question is whether the advising bank and presenting bank (XYZ Bank Ltd. Europe) took the right action or they have any right to claim the delay charges by debiting the ABC Bank M.E Ltd. account with them despite of the above mentioned payment terms of the transferred credit and also referring to the Article 10 of UCP 500 do they have any commitment to the 2nd beneficiaries under the a/m L/t.

I shall be pleased to hear your opinion.

Best regards

According to the various opinions of the ICC Banking Commission, missing
the LC number in the certificate of origin should not be a valid
discrepancy to warrant dishonour, if other documents also bear the same
LC number.  The document checker should find linkage in the other data
content of the certificate of origin without any problem. This is
simple common sense.

If this is not a valid discrepancy, then of course the transferring
banks, particularly the nominated bank, should have the right to claim
interest loss for the payment delay. This is again common sense,
without referring to UCP 500.

Best regards,

T. O.