DOCUMENTS LOST IN TRANSIT (2)

QUERY FROM JIM

Hi!

UCP600 says

Article 35

Disclaimer on Transmission and Translation

A bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or documents, when such messages, letters or documents when such messages, letter or documents are transmitted or sent according to the requirements stated in the credit, or when the bank may have taken the initiative in the choice of the delivery place in the absence of such instruction in the credit.

If nominated bank determines that a presentation in complying and forward 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.

A bank assumes no liability or responsibility for error in translation or interpretation of technical terms and may transmit credit terms without translating them.

now lets say that the documents were destroyed for any reason when it was in the possession of the nominated bank but was already determined as a complying presentation, can the nominated bank claim under that letter of credit?

jim

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COMMENT FROM MR. OLD MAN

Dear Jim,

Under UCP 600 Article 35, the nominated bank is entitled to the issuing bank’s reimbursement even when the documents have been lost in transit between the nominated bank and the issuing bank.

Yet, I think the nominated bank, if required, must provide the issuing bank with proofs evidencing that the documents lost in transit are complying and that the nominated bank has forwarded the complying documents to the issuing bank. In this case, the issuing bank may require the nominated bank to provide it with a set of photocopied documents lost in transit and its courier receipt.

In my opinion if the documents, whether complying, were destroyed due to the nominated bank’s negligent fault and/or not forwarded to the issuing bank, the nominated bank is not entitled to any reimbursement from the issuing bank.

The phrase "destroyed in transit" is not covered in UCP 600 Article 35. Yet, I think, similar to the case where the documents have been lost in transit, the issuing bank must honour or reimburse the nominated bank even when the documents have been destroyed in transit. Of course, the issuing bank has the right to request the nominated bank to give proofs to evidence that the original documents destroyed in transit are complying by asking for a set of photocopied documents (and its courier receipt if necessary).

Best regards,
Nguyen Huu Duc …