Home Mr Old Man LC STATES TRANSSHIPMENT ALLOWED WHEREAS INSURANCE POLICY SHOWS TRANSSHIPMENT NOT ALLOWED

LC STATES TRANSSHIPMENT ALLOWED WHEREAS INSURANCE POLICY SHOWS TRANSSHIPMENT NOT ALLOWED

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QUESTION

+ LC states: Transshipments allowed

+ Insurance policy presented indicates: Transshipment not allowed

The issuing refused the documents citing the discrepancy “Insurance policy indicates “transshipment not allowed”, which conflicts with LC”.

The presenting bank rejected the discrepancy arguing: “The LC allows transshipment; however, the shipper uses direct service from Cai Mep Port, Vietnam, to Busan, South Korea, without transshipment. Therefore, the insurance does not need to cover transshipment risk. Furthermore, your insurance policy does not require any special conditions for transshipment. As a result, the discrepancy should be considered to be invalid”.

Is the issuing bank or the presenting bank correct in this situation?

Attached: Copy of BL for your reference

Thank you so much.

Best regards,

Ngoc Thuy

—–

ANSWER

Hi,

It appears that it is a discrepancy under sub-article 14(d). However, in this specific situation the issuing bank should not have cited that discrepancy as the bill of lading did not show transshipment.

By the way, I referred this case to my friends, international experts and their opinions are that the discrepancy is not valid.

Best regards,

Mr. Old Man

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