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Special Conditions in Field 47A

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Fri, 08/27/2010 - 02:58
sameertf2010
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Dear Experts,

We recently recieved 2 LCs with unique conditions in Field 47A. Pls. share your expert comments

1. LC issued by a Bank in Country A and restricted for Negotiation at their Branch located in Country B (my country).The LC states that in case the Bene presents the docs directly or through some other Bank other than the nominated Bank, the docs would be treated as "Dicrepant Docs". Can the Issuing Bank raise any such Discrepacny under provision of UCP 600 and if so, under which article

2. In the second LC issued by a Bank in Asia, LC was available with any bank in my Country but Field 47A
stated that Bank A (Branch of a large US Bank in my country) contains "special instructions regarding
disposal of docs and payment unde this LC". Can you pls. share the implication of such clause in the LC
and how does this affect the Bene and Nego bank under the LC

Many thanks for your comments

‹ Approval basis CONGEN B/L ›
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Fri, 08/27/2010 - 06:11
#1
sekhartreddy
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Joined: 08/26/2010
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Special conditions field 47 a

Dear friend

The issue is to be examined in respect of two aspects

1. Issuing bank u/t : Art 7 b of UCP 600 clearly states that an issuing bank is irrevocably bound to honor as of the time it issues the credit

2. Place for presentation: art 6 d.ii of UCP 60o states '....a place of presentation other than that of an issuing bank is in addition to the place of issuing bank'

From the above provisions it is clear that bene always will have the right to present the docs to issuing bk  directly or thru any bank of his choice within the validity period of the credit and issuing bank is irrevocably bound to honor.

Hence in my opinion, the condition stated can not be accepted and bene to seek amendment immedtly

sekhar

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Thu, 09/02/2010 - 02:30
#2
sameertf2010
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Dear Abrar & PAN, what's your views?

Thanks Sekhar, We tried to request the applicant to arrange for amending/deleting the above cluases, but was informed that the LC Agreement signed by the Applicant with the Issuing Bank  clearly stated that Issuing Bank has the right to restrict the LC Availibility to its choice of Bank.

My questions are

1. Whether Applicant or Issuing Bank will have the final word for choosing the Advisng and negotiating Bank?

2. Whether applicant has the right to ask the Issuing bank to delete any clause insterted in the L/C by the issuing bank on its own, without the consent of the Applicant,

 Many thanks, Sameer

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Thu, 09/02/2010 - 08:51
#3
Abrar
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My view (2)

Not much more to add than what has already been stated, but :  

1. This is quite common, and is likely to be based on reciprocal arrangements between an issuing bank and a number of its correspondents, in directing traffic through them. The issue would not be covered under any UCP provisions, but under the indemnity/agreement between the issuing bank and the applicant 

2. This would depend on whether the clause is material to the operation of the LC, as previously agreed between the applicant and benefciary, and further communicated to the issuing bank at the the time of LC application. Whereas an applicant would specify the documents required, latest shipment date, expiry date, etc., it would  unlikely specify advising bank. method of reimbursement etc. However, if the issuing bank were to unilaterally delete any clause, previously agreed to in the LC application, it would be acting outside its authority. In any case, citing a discrepancy on the basis of a misdirection of documents would not be supported by any UCP provision.  

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Thu, 09/02/2010 - 05:35
#4
pan
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Joined: 09/13/2007
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My view

Hi Friends,

thanks for the confidence.

Documents must be checked as per l/c terms, then as per applicable rules( UCP 600) , ISBP, ICC Opinions etc.

In case 1, the clause represents a bad practice and issuing bank is responsible for it, but, IMHO, this clause must be amended or accepted and acting according to it. May be: to ask the nominated bank to express to be ready to act on its nomination, to avoid refusal on presentation, to state the terms and conditions, etc.

-I will change the wording in "documents presented dire ctly or by different bank will attract a commission of USD........."

For the 2 case, I really dont understand the clause; it means that documents must be sent to Processing Agent or ...

Let me know:

Ciao

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