Home Mr Old Man Articles DOES PRESENTING BANK HAVE THE RIGHTS TO CLAIM FROM ISSUING BANK?

DOES PRESENTING BANK HAVE THE RIGHTS TO CLAIM FROM ISSUING BANK?

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(Quoted from DCPro Discussion Forum 27 – 30 June, 2016)

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QUESTION

Hi

Beneficiary presented docs to us despite LC is restricted to another bank. We, acting as a presenting bank, sent the docs to issuing bank which was considered as clean and received the acceptance advice from issuing bank.

Can we understand that this acceptance advice override the restriction terms of original LC like amendments and bind issuing bank themselves to pay at maturity to the presenting bank ?

Obtaining issuing bank’s A/A, does the presenting bank have the rights to claim from the issuing bank if default may be happened ?

Regards,
Atsuko (Japan)

——–

ANSWER

Hi,

According to sub-article 6 (a), the presenter (i.e., the beneficiary or the presenting bank making presentation on behalf of the beneficiary) may present the documents directly to the issuing bank bypassing the nominated bank.

The issuing bank which accepted the documents and advised the same to the presenting bank must pay at maturity in accordance with the presenting bank’s instructions.

As the presenting bank makes presentation on behalf of the beneficiary, it is entitled to claim from the issuing bank on behalf of the beneficiary in case the issuing bank fails to pay at maturity.

Kind regards,

N.H. Duc

 

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2 Comments

  1. indah

    August 19, 2016 at 10:52 pm

    Dear Mr Old Man,

    We received mt710 from local bank with 52A: Issuing bank is non bank, 60days after shipment date, availibility: any bank by negotiation.

    After sent docs to issuer,
    We received advice of refusal from issuer LC (non bank) by mt999. After that, We received advice of acceptance from issuer by mt999 stating “we will settle the payment on maturity date and subjet to further authentication”.

    After maturity date, the issuer doesn’t make the payment. Then, they sent msg stating that they didn’t send authenticated acceptance therefore they return docs and close file.

    Questions:
    1. Can the issuer return docs and doesn’t pay the bills because they didn’t send authenticated acceptance ?
    2. Is it true that mt999 doesn’t have No value and the contain on mt999 do not bind the issuer to pay at maturity date ?
    3. Can the issuer send advice of acceptance by adding certain conditions which didn’t state in LC ?

    Thank you.

    Thank you.

    Reply

    • mroldman

      August 22, 2016 at 9:46 am

      It is true that MT999 is unauthenticated message which has no value. I wonder why the non-bank issuer has confirmed its acceptance of payment and now refuses to pay. Notwithstanding that it is a non-authenticated message but it represents the issuer’s payment undertaking in writing. I believe the court could be on the side of the beneficiary if the case is brought to court.

      Reply

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