WHEN DOCUMENTS ARE PRESENTED DIRECTLY TO THE ISSUING BANK BYPASSING THE CONFIRMING BANK

QUESTION

Dear Sir

I hope this email finds you well. I follow all of your vlog related to trade finance. For those people who are willing to learn about letter of credit your vlog acts as bible. I really admire your effort sir. We are really indebted to you for your effort in sharing your experience with us

Sir today I come across an issue which need your attention and expert opinion.

We issued an LC in favor of a beneficiary in China with the following details:

Field 41a: Available with BANCA UBAE SPA (Confirming Bank)

Field 49: Confirm

Field 57a: Advise though SCB Xiamen Branch, China

BANCA UBAE SPA added its confirmation to the LC and advised the same to the beneficiary through SCB Xiamen Branch.

Today we have received the documents from SCB Xiamen Branch.

QUESTIONS:

1/ Can SCB Xiamen Branch make the presentation, on behalf of the beneficiary, directly to us bypassing BANCA UBAE SPA notwithstanding that the LC was restrictedly available with BANCA UBAE SPA?  Is sub-article 6 (a) applicable in this case?

2/ Can we give a notice of refusal to SCB Xiamen Branch?

3/ Must we advise BANCA UBAE SPA of this issue?

Sir, I would highly appreciate if you take a little precious time out of your life and answer me these questions

Thanks & Regards,

Juwel

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ANSWER

Hi,

Thank you for your high appreciation of my blog.

1/ Sub-article 6 (a) is still applicable in this case regardless of whether or not the LC is restrictedly available with the confirming bank or a named nominated bank. So, SBC Xiamen Branch, acting as the presenter, can present the documents directly to your bank for payment, deferred payment or acceptance as the case may be.

2/ If the presented documents contain discrepancies, your bank can give a notice of refusal to the presenter. i.e., SBC Xiamen Branch.

3/ You are not obliged to inform the confirming bank of the issue. However, you can do that as a matter of courtesy as well as to help avoid double presentation of documents (if any).

Of course, you as the issuing bank must be liable for confirmation fee in case the confirming bank cannot collect from the beneficiary.

Kind regards,

Nguyen Huu Duc