NOTING AND PROTESTING

QUESTION

How are you doing?

I currently face with an issue that I honestly need to seek for your assist in clarification.

We are a collecting bank of documentary collection against acceptance. On maturity date of the DA, the drawee is unable to pay the bill due to bankruptcy. Meanwhile, we have received message from remitting bank requested to protest. Quoted their message “please arrange to return the drafts marking the same ‘protested’” unquoted.

We need you helped to clarify our matter below.

1. What are the protest and its process?
2. The presenting bank message quoted “please arrange to return the drafts marking the same ‘protested’” unquoted, what does remitting bank want us to do? Is this related to note or not?
3. The drawee’s company was closed due to bankruptcy, what should we do with remitting bank request?

We appreciate your opinion on our queries and look forward to hearing from you.

Kindest regards

R
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ANSWER

Dear R.,

Re: Noting and protesting

Noting under UK Bill Of Exchange Act 1882 is the the procedure whereby a public notary presents BoE to the drawee on the same day it was refused or on the next business day. If the drawee refuses to honour the BoE, the public notary will “note” on the BoE the amount of his charges, the date and his initial. The BoE may be noted on the day of dishonour and must be noted not later than the next succeeding business day. The reason for refusal will be shown on a note attached to the BoE. The BoE can be then “protested”

Protesting is the procedure following the noting of the BoE and requires the public notary to issue a formal certificate certifying that the BoE has been dishonoured.

Please note that the legal procedures for noting and protesting a dishonoured BoE may not be the same in different countries. It depends on the local law. So, please refer to your legal consultant.

Regarding protest, please also refer to URC 522 Article 24, which says:

“The collection instruction should give specific instructions regarding protest (or other legal process in lieu thereof), in the event of non- payment or non-acceptance.
In the absence of such specific instructions, the banks concerned with the collection have no obligation to have the document(s) protested (or subjected to other legal process in lieu thereof) for non-payment or non-acceptance.

Any charges and/or expenses incurred by banks in connection with such protest, or other legal process, will be for the account of the party from whom the collection instruction was received”.

So, please check the covering schedule to be sure if the remitting bank gives any specific instructions regarding protest. If not, you have no obligation to have the documents protested for non-payment but just return the BoE accepted by the drawee to the remitting bank/principal.

Last but not least, under documentary collections you sometimes find the remitting bank’s colletion instructions “Protest for non-payment”. If you are unable or unwilling to comply with the instruction, i.e., undertaking the services of noting and protesting, please advise the remitting bank of the same.

Hope it is helpful.

Best regards,

Mr. Old Man