RETURN OF DOCUMENTS (rev)

QUESTION

Dear Mr. Old Man,

We seek your advice regarding a case involving document discrepancies.

As the issuing bank, we have received a set of documents in which all originals of the insurance certificates are not endorsed in blank as required. The applicant has informed us that the beneficiary has agreed to replace these discrepant insurance certificates and has requested that we return all originals of the insurance certificates (but not the entire document set) to the presenter.

Our questions are as follows:

1. Are we permitted to comply with the applicant’s request?
2. If so, should we return only the original insurance certificates or the entire set of documents to the presenter?

We appreciate your guidance on this matter.

Best regards,

Brandy

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ANSWER

Hi Brandy,

1. No, you cannot act on the applicant’s request. Since the applicant is not a party to the letter of credit (LC), the issuing bank is not obligated to return any or all documents to the presenter based solely on the applicant’s instructions.
2. If the documents are non-compliant and the issuing bank chooses to refuse honor, it must issue a notice of refusal to the presenter in accordance with UCP 600, sub-article 16(c)(iii). If option (d) is specified in the notice, the issuing bank may return the entire document set as received to the presenter.

However, the issuing bank may return the discrepant insurance certificates to the presenter as per the presenter’s instructions—specifically when the presenter submits new insurance certificates to replace the discrepant ones.

Kind regards,

Mr. Old Man