WHETHER THE TRANSFERRING BANK CAN REFUSE THE DISCREPANT DOCUMENTS PRESENTED BY THE SECOND BENEFICIARY

QUESTION

Dear Mr. Old Man,

Em hiện đang là sinh viên và em có một số thắc mắc về L/C chuyển nhượng, mặc dù đã tìm hiểu nhiều nguồn tài liệu nhưng vẫn không tìm thấy câu trả lời thích đáng. Em có biết qua Blog Mr. Old Man và thấy được thầy có rất nhiều câu trả lời hay, mong thầy có thể giúp em vấn đề này ạ.

“Một L/C cho phép chuyển nhượng (transferable L/C) trị giá 500,000 USD được phát hành bởi ngân hàng A cho doanh nghiệp X. Doanh nghiệp X đã chuyển nhượng LC này cho doanh nghiệp Y bằng điện MT720 thông qua ngân hàng B (ngân hàng được chỉ định là ngân hàng chuyển nhượng trong LC gốc) với giá trị 450,000 USD. Doanh nghiệp Y xuất trình bộ chứng từ cho ngân hàng B. Nhưng sau khi kiểm tra, ngân hàng B cho rằng việc xuất trình này không tuân thủ các điều khoản và điều kiện của L/C và thông báo cho doanh nghiệp X. Tuy nhiên, ngân hàng B cũng thông báo cho doanh nghiệp X rằng theo UCP 600 họ không có quyền từ chối thanh toán theo tín dụng, ngay cả khi bộ chứng từ không phù hợp và chỉ có ngân hàng phát hành mới có quyền đó.”

Hỏi: Câu hỏi đặt ra là theo bạn hành động của ngân hàng B có đúng hay không? Nếu đúng (sai) thì tại sao? Hãy đưa ra lý do và các điều khoản UCP có liên quan trong tình huống này”

Em cám ơn và xin lỗi đã làm phiền thầy.

Chúc thầy thật nhiều sức khỏe và luôn thành công trong cuộc sống.

Trân trọng,

DDQ

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ANSWER

Hi,

Liên quan đến tình huống của bạn, Mr. Old Man trả lời như sau:

UCP 600 Điều 38 không quy định về việc Ngân hàng Chuyển nhượng có quyền từ chối chứng từ bất hợp lệ hay không và từ chối trong trường hợp nào. Tuy nhiên, theo Mr. Old Man,  Ngân hàng Chuyển nhượng có thể từ chối chứng từ (bất hợp lệ) được xuất trình bởi người thụ hưởng thứ hai trong các trường hợp sau:

a/ MT 720 quy định chứng từ xuất trình thanh toán tại Ngân hàng Chuyển nhượng và Ngân hàng chuyển nhượng đồng ý hành động theo sự chỉ định, tức là chấp nhận thanh toán hoặc chiết khấu chứng từ phù hợp.

b/ Ngân hàng Chuyển nhượng đã xác nhận LC

Trương hợp Ngân hàng Chuyển nhượng không xác nhận LC và chỉ đồng ý thay đổi chứng từ (hóa đơn và hối phiếu) của người thụ hưởng thứ nhất và chuyển tiếp chứng từ đến Ngân hàng Phát hành, Ngân hàng Chuyển nhượng thường nêu rõ nội dung này trong thông báo LC chuyển nhượng (MT 720).

Cũng lưu ý thêm rằng trừ phi Ngân hàng Chuyển nhượng xác nhận LC, trong hầu hết các trường hợp Ngân hàng Chuyển nhượng thường đưa vào MT 720 điều khoản sau:

“Ngân hàng Chuyển nhượng sẽ thanh toán cho người thụ hưởng thứ hai chi khi nhận được tiền thanh toán từ Ngân hàng Phát hành”.

Bạn đọc đọc kỹ lại Điều 38 UCP 600 nhé!

Best regards,

Mr. Old Man

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P/s: Tham khảo thêm một vài tình huống tương tự Mr. Old Man đã trả lời nhiều năm trước:

March 6, 2010

TRANSFERRING BANK S LIABILITY UNDER TRANSFERRED LC

QUERY

Hi Mr. Old man,

Could you give me a word of advice in this case? Details as follows:

A transferable L/C is issued by bank A in favor of Ben 1 and Ben 1 transfer this LC to Ben 2 by MT720 through bank B (the bank is nominated as transfering bank in original LC).

Ben 2 presents docs to bank B. – After checking docs, bank B determines that presentation does not comply with the terms and conditions of LC and advises Ben 1. However, bank B also notifies to Ben 1 that acc to UCP 600 they are not entitled to refuse payment under the credit, even if the docs does not conform to the credit, only the issuing bank has that right.

So, the questions is Whether action of bank B is correct or not ??? Would you do the needful to give me some advice as soon as possible?

Thank you so much

Best regards,

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MR. OLD MAN’S COMMENT

Hi,

Thanks for asking Mr. Old Man.

You may agree with me that unless the transferring bank is a confirming bank, the transferring bank would normally incorporate the following reimbursement clause in the transferred LC:

“The transferring bank will pay to the second beneficiary only when funds are received from the issuing bank”

It is understood from the above reimbursement clause that whether or not the documents presented by the second beneficiary are complying, the transferring bank is not obligated to pay unless it has received the funds from the issuing bank.

In view of the above reimbursement clause, I think it is not necessary for the transferring bank to give a notice of refusal (of payment) to the second beneficiary when the documents presented to its counter are discrepant. However, if the transferring bank receives the notice of refusal from the issuing bank, I think it should notify the first beneficiary as well as the second beneficiary of the same.

UCP 600 Article 38 (i) states that if the invoices presented by the first beneficiary create discrepancies that did not exist in the presentation made by the second beneficiary and the first beneficiary fails to correct them on first demand, the transferring bank has the right to present the documents as received from the second beneficiary to the issuing bank, without further responsibility to the first beneficiary.

The above provision does not clearly state whether the transferring bank is obligated to notify the first beneficiary of the discrepancies in the documents presented by the second beneficiary. However, at least the provision makes us think that the transferring bank should do so.

Best regards,

Mr. Old Man (Nguyen Huu Duc) …

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February 1, 2018

TRANSFERRING BANK’S LIABILTY UNDER TRANSFERRED LC

QUESTION

Dear Mr. Old Man

We are the 2^nd beneficiary in LC and the actual suppliers/shippers of the cargo.

1. Our bank is based in Malaysia.
2. Transferable LC was opened from a Chinese Bank by Applicant based in China
3. First beneficiary’s address in LC is of Hongkong as 1^stbeneficiary is based in Hong Kong.
4. Applicant bank is in China (Wuhan Branch)
5. 1^stbeneficiary bank is also in China (Qingdao Branch – same bank as of applicant but different branches in different cities)
6. Clause 40B of LC says: “IRREVOCABLE (WITHOUT OUR CONFIRMATION)”
7. Clause 49 of LC says: “Confirmation Instructions: Without”
8. LC says all docs to be forwarded to 1^stBeneficiary’s bank branch in Qingdao.
9. We sent the documents to our bank in Malaysia and they sent all the documents to 1^stbeneficiary bank in China (Qingdao branch). So far 8 banking days passed and we have not news from 1^st beneficiary’s bank. There is no rejection or any refusal. So since 5 banking days passed so we assume it was a complying presentation otherwise they would have raised a discrepancy?

The Problem: Global prices of the cargo has dropped and have an impression from first beneficiary that they have made an alliance with the applicant not to honor this shipment and somehow escape or reject or refuse the documents and that is why so far the 1^st beneficiary or his bank has not yet sent the substituted documents to applicant’s bank.

Now being shippers of the cargo, we have following concerns/questions:

1. What is the liability of the 1^stbeneficiary bank? Since our presentation was complying and they did not raise any objection and if on the pressure or mal-intention of the 1^st beneficiary they do not present the substituted documents to applicant bank or 1^stbeneficiary intentionally makes discrepant substituted documents so that applicant bank refuse it so what should be our position in this situation? What is legal liability of the 1^st beneficiary’s bank under UCP 600 and International Chamber of Commerce rules? Can we force 1^st beneficiary bank or Applicant bank to pay us?
2. What if 1^stbeneficiary doesn’t present docs to his bank (transferring bank) at all or if presents then presents discrepant docs? What should be role of the transferring bank? Can we challenge transferring bank failure to act as per UCP article 38(i)?
3. Incase 1^stbeneficiary doesn’t present docs at all or transferring bank forwards our docs to applicant bank as they last choice? Would they be deemed acceptable and complying since there would be unit price and amount difference and our invoice is issued in the name of 1^st beneficiary? What is the legal liability in this case for applicant’s bank?
4. To cut the long story short, now at this stage, can our payment or documents be rejected as per UCP or any other reason?
5. Can we go to court and sue both banks if our payment is not realized?

Thanks a zillion for your kind help and advice.

Regards

Asim

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ANSWER

Dear Asim,

1) It is normal that the transferring bank would undertake to pay the 2^nd beneficiary upon receipt of the proceeds from the issuing bank. Therefore, in most cases the transferring bank would not reject the documents but forward them to the issuing bank for payment. Of course, before forwarding the documents to the issuing bank, the transferring bank requests the 1^st beneficiary to present its own invoice and draft, if any, to substitute those of the 2^nd beneficiary. If the 1^st beneficiary fails to present on first demand or if the invoice presented by the 1^st beneficiary create discrepancies that did not exist in the presentation made by the 2^nd beneficiary, the transferring bank would present the documents as received from the 2^nd beneficiary to the issuing bank without further responsibility to the 1^st beneficiary.

The 2^nd beneficiary cannot force the transferring bank to pay so long as it has not yet received the proceeds/payment from the issuing bank.

2) As said, if the 1^st beneficiary fails to present its invoice on first demand or if the invoice presented by the 1^st beneficiary create discrepancies that did not exist in the presentation made by the 2^nd beneficiary and the 1^st beneficiary fails to correct on first demand, the transferring bank would present the documents as received from the 2^nd beneficiary to the issuing bank without further responsibility to the 1^st beneficiary.

3) If the transferring bank forwards the complying documents as received from the 2^nd beneficiary, the issuing bank must honour irrespective of unit price and invoice amount being different from those in the L/C.

Here is ICC’s reasoning:

“When an issuing bank agrees to issue a transferable credit it must appreciate that some of the information appearing on certain documents may not agree with that shown on the invoices, due to the substitution of the second beneficiary’s invoices. For instance, the invoice number of the first beneficiary may be different from an invoice number (that of the second beneficiary) which may appear on say, a certificate of origin. If amounts are shown on documents other than the invoice (and draft(s) if any) and these differ from that on the substituted invoice, the issuing bank will still be bound to effect settlement if the documents are otherwise in conformity with the credit terms and conditions. The issue of amounts being shown on documents other than the invoice, is more for the first beneficiary who may not wish the original purchase price to be made known to the applicant. There would be no discrepancy for the reasons outlined above. The negotiating bank would not be required to produce any proof of values that may have appeared in the second beneficiary(ies) invoice(s). (Opinion R.489)

4) and 5) Your bank may send a message to the transferring bank enquiring the status of the documents. You can take legal action against the transferring bank if it did not act in accordance with UCP 600, i.e., not forwarding the documents to the issuing bank within a reasonable time or has received the proceeds from the issuing bank but do not pay you.

Kind regards,

Mr. Old Man