Case on Insurance Dox
LC called for insurance documents in 1 original and 1 copy.
Bene beneficiary has presented 1 original and 1 copy to confirming bank,
Confirming bank checks the dox and found it comply and debited issuing bank a/c and credit beneficiary a/c.
But insurance policy shows Number of original issued 2.
Later issuing bank checks the documents and found a discrepancy insurance cert preseneted in 1 original where as 2 original issued, and issuing bank has rejected the dox.
But confirming bank argued that beneficiary has complied with the terms and conditions of the credit.
But issuing bank argued 2 original has to be submitted. (refererring UCP article 28(b).
Is Issuing bank correct in his decision ?????
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It has its effect definitely. A lot of it may be some advantages.____________________captive insurance managers
Issuing Bank is right. All originals must be submitted.
Imran Umer
IamImranUmer@gmail.com
I believe ImranUmer is right, since Article 28 b. UCP 600 provides: "b. When the insurance document indicates that it has been issued in more than one original, all originals must be presented."
This requirement is identical to Article 34 b UCP 500, and is also reflected in Article 23 a (iv) UCP 500 for bills of ladings (now Article 20 a iv UCP 600).
The rule under the UCP seems to be that the full set of originals needs to be presented to give the applicant full control over the goods. The only exception to this requirement is that copies of bills of lading that are labeled "non-negotiable" may remain in the freight forwarder's/shipper's possession to allow the proper processing of the shipment.
Hence, I believe that the LC requirements as you presented them above, were not intended to modify Article 28 b UCP 600, but inaccurately required only "one" original when the proper reading should have been "full set of originals" plus one copy.
Of course particular factual circumstances might exist that the applicant actually only wanted one original insurance certificate. However, this scenario is unlikely and banks are dealing in documents and should not concern themselves with the underlying transaction.
Good answer admin.
I wanted to add the following comment.
If the letter of credit required one set of original documents to be sent outside of the banking channels (i.e. direct to the applicant) then the letter of credit requirement would supercede article 28b, and only 1 of the 2 originals should be presented under the letter of credit.
Best regards,
LC Sam
Hello dear,
I am completely agree with all of you !!!!!!
But, here in this case bene and confirming bank is complied with the terms and conditions of the LC.
Watever LC asked has to be complied by the bene.... Sometimes you need to supercede UCP.
Still I could say 2 originals should be presented by bene, but confirming bank and bene is complied with terms and conditions of the credit.
Cheers!!!
LC Specialist
Dear LC Specialist
the credit never ruled out an existing art. of the UCP 600 nor did it explicitly form a modification. Usually insurance policies are issued in just one original.
It might have been cleverer to ask for a "full set of original insurance policy" but in many cases this leads to requests for amendments as "this document is only issued in one original and not in sets".
That's why art. 28 b is there!
In this case two originals were to be presented - and I would have also added a further copy.
-Each long journey starts with a small step-
Best regards
Frammi
I have faced the same problem. Beneficiary worked as we instructed presenting 1 original as required in credit. However our back-office found that discrepent since insurance was issued in 2 originals.
Do you think it is normal when bank says 1 original of insurance to be presented and when received that one say "oh no, where the second one, it was issued in 2 originals". Beneficiary has nothing to do with UCP, he just should comply with credit terms.
What is the right solution in this case?
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