WHEN DOCUMENTS ARE PRESENTED AFTER THE LC EXPIRY DATE

QUESTION

Dear Mr. Old Man,

I have a question as follows:

Is there any ICC opinion on the situation where the issuing bank can return the documents on the grounds that the documents are presented after the LC expiry date?

If the Applicant has received the goods, is the issuing bank obliged to pay the documents?

Is there a case where the applicant has received the goods but the issuing bank refuses to pay and returns the documents on the grounds that the documents are presented after the LC expiry date?

In case of a lawsuit, who should the beneficiary sue, the issuing bank or the Applicant?

Is there an ICC Opinion on this issue?

Thank you so much.

Best regards

Obidur

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ANSWER

Hi,

When the LC has expired, the payment liability of the issuing bank under the LC ceases and it may refuse and return the documents to the presenting bank as per UCP 600 sub-article 16 (c)(iii)(c).

However, if it has issued a shipping guarantee to enable the applicant to take delivery of the goods, it must pay regardless of whether the presented documents are presented after the LC expiry date or contain discrepancies.

If the applicant has taken delivery of the goods although the bank has not delivered the documents or issued a shipping guarantee, the issuing bank is not obliged to pay. If this is the case, the beneficiary should first sue the shipping line for delivering the goods to the applicant without requiring the presentation of the bill of lading or sue the applicant for receiving the goods without paying, not sue the issuing bank.

Litigation is a matter of local law, not covered by the UCP.

Best regards,

Mr. Old Man