EARLY PRESENTATION

QUESTION

Dear Anh Đức,

Nhờ Anh có ý kiếm dùm em trường hợp sau. LC quy định như sau:

'Documents muts be presented AFTER 21 days from shipment date. '

Shipment date: 01JUN2012
Docs presented : 10JUN2012
Docs received at Issuing Bank : 15JUN2012

=> Discrepancy: Docs presented prior to the period stipulated in LC.

Theo điều kiện LC, chứng từ phải xuất trình sau ngày 21JUN mới xem là hợp lệ. Trường hợp này Nego Bank xuất trình sớm 11 ngày.

Vậy applicant có thể từ chối thanh toán thanh toán không hay là họ bắt buộc phải thanh toán nhưng ngày thanh toán kéo dài thêm 11 ngày cụ thể như sau:
Ngày IB nhận chừng từ : 15JUN2012
Ngày phải thanh toán là : 15JUN + 5 banking days + 11 ngày (Do Nego bk xuất trình sớm).
(Trong trường hợp này, NegoBk không có điện xác nhận họ xuất trình lại chứng từ vào ngày 22JUN2012)

Anh Đức xem và trả lời dùm em.

Tks Anh Đức nhiều…

Phương Trang
————————————–

ANSWER

Hi,

Trường hợp của bạn được hiểu là chứng từ xuất trình sớm hơn thời gian quy định, do vậy, NHPH có thể từ chối chứng từ trên cơ sở bất hợp lệ đã nêu. Tuy nhiên, nếu ngân hàng xuất trình xuất trình lại chứng từ trong thời hạn hiệu lực LC (trường hợp trước đó chứng từ bị gửi trả lại ngân hàng chiết khấu/người thụ hưởng ) hoặc chỉ thị NHPH (trường hợp NHPH giữ chứng từ chờ sự định đoạt của ngân hàng xuất trình) cho đến 21 ngày sau ngày theo quy định của LC và thực hiện trả tiền thì NHPH vẫn phải có nghĩa vụ phải trả tiền như trong trường hợp chứng từ được xuất trình đúng quy định.

Lưu ý rằng nếu NHPH có ý định chấp nhận chứng từ nhưng sẽ thanh toán sau ít nhất 21 ngày kể từ ngày giao hàng, cách an toàn nhất NHPH vẫn phải từ chối theo Điều 16 (c) UCP 600. Nếu không, NHPH mất quyền từ chối chứng từ và phải thanh toán chậm nhất 5 ngày ngân hàng làm việc kể từ ngày nhận được chứng từ.

Về tình huống của bạn, Mr. Old Man cũng đã từng trả lời một câu hỏi tương tự trên DC-Pro Discussion Forum cùng với các chuyên gia khác (xem Attachment 1); Ý kiến ICC R585 (xem Attachment 2) không R585 liên quan đến tình huống chiết khấu sớm hơn thời gian LC quy định, nhưng cũng có thể áp dụng đối với tình huống của bạn.

Best regards,

Mr. Old Man
—————–
Attachment 1: Discussion in DCPro

QUERY FROM THI THUY MYT (VIETNAM)

There is one set of docs which was presented to our bank early than L/C required (L/C required docs must be presented not early than 10 days after B/L date. However, docs presented with 05 days after B/L date). We advised discrepancy as early presentation. After 10 days from B/L, negotiating bank sent msg to state that the a/m docs presented as L/C required at this time and request us effect payment. Pls let me know their opinion is wrong or right? thanks so much

COMMENT FROM N.H.DUC (VIETNAM)

If the negotiating bank’s correction message is sent to the issuing bank within the period for presentation, i.e., not earlier than 10 days after bill of lading date and prior to the expiry date for presentation, the discrepancy of early presentation is regarded as corrected complying with the credit requirement and the issuing bank must honour.

COMMENT FROM THI THUY MYT (VIETNAM)

Pls let me know which foundation you think so. In my opinion, early presentation is an action happened and it can't comply at the future time.

COMMENT FROM N.H.DUC (VIETNAM)

My comment was based on the common sense approach and my years of practical experience with L/Cs. Hoping more comments from other experts would help clarify the point.

Best regards,
N.H.Duc

COMMENT FROM GLENN RANSIER (UNITED STATES)
The beneficiary owns the documents until they are honoured or negotiated (without recourse). They have the right to cure any defect in which they are able. If they can cure a discrepancy within the time mandates stated in the LC then the documents must be considered as complying. The ICC has always supported the beneficiary's rights to cure discrepancies.

COMMENT FROM THI THUY MYT (VIETNAM)

If set of docs is not considered as early presentation from new date in the future. Have we maximum of five banking days following the that date of presentation to determine if a presentation is complying? Tks

COMMENT FROM N.H.DUC (VIETNAM)

Hi,

Though UCP 600 allows each bank (nominated bank, issuing bank and confirming bank, if any) to have a maximum of five banking days following the day of presentation to determine if a presentation is complying, a fair bank should not make full use of such a period to delay the payment once the compliance is determined earlier, especially when L/C is payable at sight.

Best regards,
N.H.Duc

COMMENT FROM GLENN RANSIER (UNITED STATES)

If the documents are determined disrepant, the bank is expected to notify the presenter when that determination is made (see UCP 16 a.). In the case of "early presentation", the expectation is that a bank would refuse to honour/negotiate and contact the presenter notifying them of the refusal. Using Article 16 c. you could either:
1. agree to hold the documents on their behalf until the presentation is no longer early, or
2. return the documents unpaid. Generally, UCP intends for banks to make the compliance determination within a "maximum" of 6 days (5 days plus day of receipt) and act promptly when the determination is made.

COMMENT FROM JACK CHAN (HONG KONG)

Hi there, if I were the presenter, I would state the following instruction in my covering letter addressed to the issuing bank.
Quote
IN THE EVENT THAT THE ATTACHED DOCUMENTS ARE RECEIVED BY YOU LESS THAN 10 DAYS AFTER BL DATE, PLEASE DO NOT CONSIDER THEM AS PRESENTED UNTIL 10 DAYS AFTER THE BL DATE.
Unquote
Jack Chan, Hong Kong

COMMENT FROM GLENN RANSIER (UNITED STATES)

In response to JLee, The suggested statement may not be adequate. Some banks may decide to return the documents as they would not desire the responsibility to:
1. Take full responsibility for the care of such non presented documents (What happens if the documents are lost, destroyed, etc.); or
2. Determine if the UCP presentation/examination rules can be truly overridden based on the beneficiary's statement.
COMMENT FROM YAATULOLAIA (INDONESIA)

You as issuing Bank have to decide. As you mentioned that documents were presented earlier and you have advice discrepancy to Negotiating Bank, then you have to approach the applicant whether they accept dthis discrepancy or not and if they accept it then you may consider to pay negoatiating bank.

COMMENT FROM DANIEL (SWITZERLAND)

Could I know why documents must not be presented earlier than 10 days after B/L date?

COMMENT FROM N.H.DUC (VIETNAM)

Dear Daniel,

It may take one month or longer to ship the goods, for example, from Long Beach (USA) to Da Nang Port (Vietnam) or vice versus. Hence, if the documents are presented as usual, i.e., right after shipment date, the applicant may pay at least 10 days earlier (while the goods are still somewhere on the sea). Such a provision in L/C may help the appl
icant delay the payment for 10 days, which means that he may save some money (interest payable due to early payment). Some importers would make full use of this bad practice, especially when the shipment is of high value.

I think that is the reason why sometimes the documents are required to be presented not earlier than 10 days after B/L date.

Best regards,
N.H.Duc

COMMENT FROM DANIEL (SWITZERLAND)
Dear N.H. Duc,
I thought so but in that case, it would be easier to arrange a deferred payment
Regards
Daniel

COMMENT FROM N.H.DUC (VIETNAM)
Dear Daniel,
It’s true that arranging a deferred payment or an acceptance L/C is more convenient. I have seen U.S importers who import goods from Asian countries having their LC available at 30 or 45 days sight.
Still, it is not always easy for importers in some countries which are enforcing the policy of foreign debt restrictions to open such a type of L/C. Imports to be paid by deferred payment L/Cs are regarded as one of the forms of foreign borrowings. Therefore, importers in the said countries are not allowed to open deferred payment L/Cs or are allowed with hard-to-meet conditions or with complicated formalities.
I take my country as an example. Fifteen years ago or more my country’s government ever imposed the same policy on deferred payment L/Cs. That is to say, the importer who wanted to open deferred payment L/C had to pledge deposit of 70% of L/C amount to secure the payment right at the time applying for opening L/C. The government did not prohibit importers to open deferred payment L/Cs but it was obvious that wise importers would never open L/Cs with such a condition.
What described above perhaps is strange in your country or at least to you, isn’t it?
The case in the query may have nothing to do with the same situation as described above. The reason may lie in the selling policy of the exporter or in the fact that the exporter, for some reason, feels unsafe with deferred payment L/C. Moreover, you may agree with me that 10 days is much shorter than 30 days sight or after B/L date which is the shortest tenor normally used in deferred payment L/Cs.
Best regards,
N.H.Duc
————-

Attachment 2: R585

Where an L/C stipulated that negotiation must be effected seven days after the shipping date
Official Opinion R585 / TA515 – Unpublished Opinion 1995-2004
From UCP500 – Article 42

QUERY
In ICC Publication 596, ICC strongly discourages banks from stipulating a latest date by which documents are to be presented and negotiated. We met a similar situation recently, which may be summarized as follows:
In L/C field 47A, i.e., additional conditions, the L/C stipulated that negotiation must by effected seven days after the shipping date. In the documents presented, the B/L date showed as July 14, 2001. However, the negotiating bank negotiated and sent the documents to the issuing bank on July 16, 2001, which was only two days later than the shipping date. The issuing bank, therefore, refused to take up the documents due to the discrepancy: early negotiation.
We would be very grateful if you could advise us on the following two questions:
1. To whom does the content of field 47A apply, the beneficiary or the negotiating bank, or put into other words, who should follow the instructions stipulated in field 47A?
2. Is early negotiation a discrepancy in this case?
In our opinion, it is the responsibility of the issuing bank to make a payment under an irrevocable letter of credit provided the presented documents, on their face, comply with the terms and conditions of the credit. The conduct of the negotiating bank, whether it follows the instructions of the credit or not, should not affect the right of the beneficiary to obtain payment from the issuing bank. We would like your opinion concerning this matter.

ANALYSIS/CONCLUSION
The entire contents of a letter of credit are to be adhered to by the beneficiary AND the negotiating bank to the extent that the terms and conditions apply. A statement that negotiation is to be effected seven days after shipment, whilst not a term that would be recommended by ICC, must be adhered to. On the basis that the advising bank has forwarded the credit to the beneficiary, it must have been in agreement with that condition, and the beneficiary in effecting shipment thereunder signified its agreement to the credit terms and conditions.
As you say, the clause does not remove the obligation of the issuing bank to honour conforming documents, presented by the beneficiary, in accordance with the terms of the credit. Under this credit, the issuing bank would be obliged to honour on the seventh day after the date of shipment.