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SINGLE NOTICE OF REFUSAL

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Trở về từ Cửa Khẻm

QUESTION

Dear Mr. Old Man,

I have a case that needs your comment.

The issuing bank examined the documents received from the presenter and decided to refuse. However, its notice of refusal was rejected by the presenter based on the reason that the discrepancy stated in the notice was invalid.

The issuing bank sent another notice of refusal citing a new discrepancy immediately not later than the close of the fifth banking day following the day of receipt of the documents.

Can the presenter reject the second notice of refusal if the new discrepancy is correct? If yes, what is the basis for the presenter’s rejection?

Thank you.

TD

———–

ANSWER

Hi,

My short answer is YES.

The presenter can reject the notice of refusal based on the first paragraph of sub-article 16 (c), which says “When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a SINGLE NOTICE [emphasis added] to that effect to the presenter”. The notice must incorporate ALL discrepancies.

The second notice of refusal is not valid even when the new discrepancy is correct.

ICC has given several opinions on the subject.

Kind regards,

Mr. Old Man

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9 Comments

  1. Garima Tamrakar

    March 27, 2016 at 6:38 pm

    Hi Mr Old Man,
    I have a query regarding article 16(c)(iii).(a)
    ‘We are holding documents at your risk and disposal’ does this cause discrepancy?
    In other words,Do following two statements carry same meaning or wording is required to be same as 16(c)(iii).(a):
    1. We are holding documents at your risk and disposal.
    2. We are holding documents pending further instructions from you.

    Second question: ‘we refuse to pay’ is enough or ‘we refuse to honour/ negotiate’ is necessary?

    Regards,
    Garry

    Reply

    • mroldman

      March 27, 2016 at 7:06 pm

      I’m on business. Will answer when back home.

      Reply

    • mroldman

      March 29, 2016 at 3:03 pm

      Hi,

      1. The statement “We are holding documents at your risk and disposal” is not covered in UCP 600. You can state “We are holding documents pending your further instructions” or use the code /HOLD/.

      2. If MT 734 is used, there’s no need to state “We refuse to honour or negotiate” as MT 734 is labled itself as an advice of refusal already. In case a free format swift message, e.g. MT 799, is used, it depends on the role of the bank and the type of availability that the notice must state “We refuse to honour” or “ We refuse to negotiate”. It’s ok if the issuing bank states “We refuse to pay”.

      Kind regards,
      Mr. Old Man

      Reply

  2. Garima Tamrakar

    March 27, 2016 at 7:36 pm

    No problem

    Reply

  3. Garima Tamrakar

    March 30, 2016 at 12:02 am

    Dear Mr. Old Man
    Thanx for your reply.
    So from what I gather, in below mentioned question notice is incomplete because of 16(c)(iii) not getting fulfilled??

    Ques:Is this refusal notice acceptable for a DC subject to UCP 600?

    “We refuse to pay you due to the following three discrepancies:
    The commercial invoice does not meet the terms and conditions of the DC.
    Third party B/L presented.
    Unclean B/L presented.
    Meanwhile we are holding the documents at your disposal and risk.”

    Reply

    • mroldman

      March 30, 2016 at 8:06 am

      As said, a complete document disposal statement would be “holding documents pending your further instructions or simply /HOLD/. However, I still think the notice is still valid for refusal (if the discrepancies are valid) notwithstanding that the notice of refusal is not complete as per sub-article 16 (c).

      Reply

  4. An

    May 17, 2016 at 6:25 pm

    Dear, Mr Old Man, in case the docs returned by issuing bank due to discrepancies. Can we re-present the docs again?

    Reply

  5. An

    May 17, 2016 at 6:27 pm

    Dear Mr Old Man, in case the docs returned by the issuing bank. Can we re-present with complied docs?

    Reply

    • mroldman

      May 18, 2016 at 9:36 am

      Hi,

      You can re-present the documents provided that the presentation is made before or on the last day for presentation and within the L/C validity.

      Kind regards,
      Mr. Old Man

      Reply

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