Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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A Study on the Obligations of the Issuing Bank in Payment Refusal under UCP600

신용장 개설은행의 지급거절시 의무사항에 대한 연구

  • Sun-Hae Lee (Department of International Commerce, Daejeon University)
  • 이선혜 (대전대학교 국제통상학과)
  • Received : 2021.10.10
  • Accepted : 2021.10.28
  • Published : 2021.10.30
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Abstract

This study aims to derive precaution points for issuing banks in refusing payment under L/C through literature review and examination of court cases and official opinions of ICC Banking Commission with regard to the provisions of article 16 of UCP 600 that stipulates obligations of issuing banks in refusing payment. If the issuing bank fails to act in accordance with this article, it shall be precluded from claiming that the documents do not constitute a complying presentation. Therefore, it is crucial that issuing banks should be well informed of this article. When discrepant documents are presented, however, issuing banks seldom refuse payment because, in most cases, the applicants waive the discrepancies. For this reason, issuing banks have few chances to deal with payment refusal in practice and thus they occasionally end up failing to observe the provisions of the article. Such court cases include Kookmin Bank and Korean Exchange Bank (currently Hana Bank) that failed to indicate discrepancies in the refusal notice losing the lawsuits. It should be noted that if issuing banks disregard the provisions of article 16 of UCP 600 and thus fail to indicate discrepancies in the refusal notice, they may face fatal situations in which they must make payment against discrepant documents.

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References

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