Uncategorized WHETHER A PRESENTATION COMPLYING WITH THE ORIGINAL LC BUT NOT TO THE NOT YET ACCEPTED AMENDMENT IS DEEMED TO BE THE BENEFICIARY’S REJECTION OF THE AMENDMENT By Mr Old Man Posted on March 23, 2015 12 min read 8 0 3,961 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION FROM SHEILAR Hi Abrar and Nguyen, Hope you are well. I’ve recently read the consolidated Draft opinions April 2015, and have found TA820 drafted very ambiguously and its analysis seemed equally questionable (see the attachment please). For example, since the background information indicated that the presentation made after the amendment did not comply the the amended credit, I would boldly assume that the beneficiary had rejected the amendment by action. But the questioner asked whether the presentation which was assumed complying with the original credit “not taking into account the amendment issued” can be deemed rejection of the amendment. How do you read the wording of”not taking into account the amendment issued”? Did it refer to the presentation which complied with the original LC and disregard the amendment? Or the questioner required ICC to disregard the amendment and only consider the situation where the presentation was made after the amendment but complied with the original LC? Did you read it the way as I did? Moreover, once the amendment is deemed rejected by the beneficiary, is it right to say the amendment will cease to be available for the further presentation? Sheilar ———- COMMENT FROM NGUYEN HUU DUC Hi Sheilar, I cannot open the attached file as it is corrupted. My understanding of sub-article 10(c) as follows: (1) An amendment is deemed to be accepted or rejected where the beneficiary gives such a notification. (2) Where the beneficiary fails to give such a notification, a presentation complies with the LC and to not yet accepted amendment, the amendment is deemed to be accepted and as of that moment the LC is deemed to be amended. (3) Where the beneficiary fails to give such a notification, a presentation complies with the LC and not to not yet accepted amendment, there may occur two scenarios: (a) The amendment is deemed to be rejected if the LC does not allow partial shipments/drawings; and (b) The amendment may be deemed to be rejected for that drawing only if the LC allows partial shipments/drawings. That is to say, if further presentation complies with the LC and to not yet accepted amendment, the amendment is deemed to be accepted by the beneficiary. So, the amendment in this case is still available for further presentation if any. Kind regards, Nguyen Huu Duc ——————— COMMENT FROM SHEILAR Thank you, Nguyen. I hereby resend the opinion for your reference (please find it in the attachment.) Actually, TA820 has aroused many people’s interest. But I personally think that the answer of query no.1 seems incorrect. Do you remember R635 where the original LC is for USD100,000 and allows partial shipment, the amendment deceases the amount to USD50,000, but the beneficiary madepresentation for USD50,000 only. For this scenario, the presentation has complied with the original LC and the amendment as well, but I think that that one could not infer whether the beneficiary has accepted the amendment. It will depend on whether they would make further presentation. And the conclusion did say that the beneficiary had not accepted nor rejected the amendment. It seems that UCP 600 art.10c does not fit for all cases. As for your opinion on UCP 600 art.10c , I agree with you no. (1), and (3)a. Maybe Abrar holds a different opinion. Best Sheilar ———- COMMENT FROM ABRAR Hi Sheilar Sorry for the delay in response- I’ve only now read the query and the Opinion. I would agree with Nguyen’s assessment as below. However, I would point out the following: (1) We don’t know the contents of the amendment which had not been complied with at time of presentation and so we don’t know whether compliance under the original LC terms but not the amendment is deemed to be a rejection of the amendment. Therefore, point 1 of the conclusion may not be applicable for all scenarios (2) The determination of acceptance of rejection (if it can be determined at all) will only apply to the specific presentation. If it cannot be explicitly determined, the amendment offer remains open and can be accepted or rejected at a later date and/or by deemed action under a future presentation… Kind regards Abrar ========= FURTHER COMMENT FROM SHEILAR (23 Mar 2015) Hi Nguyen and Abrar， thank you for sharing. I agree with Abrar that in many cases it is hard to tell whether it is accepted or rejected without the beneficiary’s express notification, as they are not always in clear white or black situations. And there exists some “layoff period” in cases like R634 It is even dangerous for the issuing bank to assume that the amendment has been accepted or rejected without the beneficiary’s notification. This could be worst in cases where the issuing bank raises discrepancies based on their incorrect assumption of the beneficiary’s attitude towards amendment, while such assumption may be opposed by the beneficiary afterwards. Once it is opposed successfully, it would means the issuing bank would have to assume some operational risk in documents checking. For the sake of good order and fairness, why not to stipulate in UCP (for example in UCP700) that the beneficiary should offer their certificate of acceptance or rejection when they make presentation after amendment? I can recall some similar points in the book Commentary on UCP 600. Would you agree on this proposal? . By the way, have you got anything new on the latest DOCDEX decisions? Best regards Sheilar ————- . FURTHER COMMENT FROM ABRAR (23 Mar 2015) Hi Sheilar The difficulty with your proposition (and this issue has previously been hotly debated by ICC and the respective NCs over the years) is that the legal justification is that the amendment is to be construed as an offer from the bank. Therefore, unless and until the beneficiary agrees to accept the offer, either explicitly (by formal advice) or by implication (by performance in accordance with the LC and amendment), it remains an unaccepted offer. We can of course see straight away that there can be situations like the one you have described below under which the beneficiary’s performance does not make clear whether the amendment has been accepted or rejected and in practical terms under such a situation it seems likely that the bank would need to obtain the beneficiary’s explicit acceptance/rejection. However, it seems unlikely that the ICC are likely to deviate from this legal principle any time soon . Kind regards Abrar Ahmed Head, Trade Finance – Crown Agents Bank P/s: Sheilar and Abrar: I’m sorry for posting the Q&A without asking for your permission. .
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?