• Journal of Arbitration Studies
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• v.16 no.3
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• pp.161-189
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• 2006

This paper is aiming at analyzing case law of India in relation with reasonable time to make decision whether to accept or to refuse the documents received from the presenter in credit transactions. As specified in UCP, the failure to refuse to accept the documents within a reasonable time precludes the Issuing Bank, Confirming Bank (if any) and Nominated Bank from asserting that they are discrepant. Compliance of the stipulated documents on their face with the terms and conditions of the credit shall be determined by international standard banking practice as reflected in this Articles of UCP 500. The Issuing bank is only to be held responsible for honoring the documents presented by beneficiary through the nominated banks if they are strictly in compliance with terms and conditions of the Credit. As any well experienced banker knows, however, a word-by-word, letter-by-letter correspondence between the documents and the credit terms means a practical impossibility. Thus the notion of reasonable care in conjunction with the doctrine of strict compliance mixed with International Standard Banking Practices has not played a right functional standard for checking the documents as stipulated in the credit and UCP 500. And so the rejection rate is highly estimated at approximately 50% in EU and 40 to 70% according to their geographical locations in the USA. As a result, it can possibly be inferred from this fact that the credit industry would be facing the functional failure as the international trade credit facility, if not supported with motive power as a relevant scheme in UCP 500. It is quite important to note that UCP 500 Article 13(b) which specify the time limit for the banks to notify the presenter their decision not to accept the documents within a reasonable time not to exceed seven banking days following the day of receipt of documents would be the motive engine to improve the negotiability of documents in international trade financial facility.

• Korea Trade Review
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• v.46 no.5
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• pp.173-194
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• 2021

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.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.13
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• pp.495-513
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• 2000

In this paper, I examined the terms of letter of credit and standard for examination of documents. In connection with the test of standard, I reviewed the bank's reasonable care, inconsistence and linkage between documents, non-documentary conditions and the treatment of discrepant documents. Traditionally credit law is founded on two principles such as the standards of strict of compliance and substantial compliance, but these standards are not consistency. Moreover although the Uniform Customs and Practice for Documentary Credits(UCP) introduces a new standard for examination of documents by incorporating international banking practice, the standards for documentary compliance have created ambiguity. Accordingly, I suggest that the standard requires strict compliance between party concerned in letter of credit transactions but only requires international standard banking practice in customer relationship. Therefore the standard and the specific guideline should be prescribed in the next version of the UCP.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.61
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• pp.191-211
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• 2014

This paper intends to study some problems in the application of UCP 600 in the international trade transactions with China. Generally speaking, China complies with UCP 600 well. Nevertheless, there are some problems in the application of UCP 600 in China owing to the difference in law and practices. There are some problems in the application of UCP 600 in China owing to the difference of practices under Bills of Exchange Act and The Provisions of the Supreme People's Court on Some Issues Concerning the Trial of Cases of Disputes over Letter of Credit. The Act insists on the formal requirements, the consistency between a letter amount and a figure amount, the unconditional payment character of bills of exchange. The Provisions include the recognition of revocable credits, the difference of standard in examining documents, the difference in the treatment of issuing banks in relation to discrepant documents. These aforesaid matters of the Act and the Provisions are inconsistent with the practices under the UCP 600. There are two main problems in the operation of letters of credit in China. One is the lack of concerned parties' practice knowledge in relation to letters of credit in China. The other is the inactive stance of nominated banks in China. There are two main problems in relation to judiciary institutions in China. First, judges in China tend to abuse the injunctions owing to the lack of understanding in relation to letters of credit. Secondly, there are inconsistency in the court ruling in China.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.13
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• pp.515-536
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• 2000

This study analyzes the U.S. case law which challenges the legal conclusions of the district court with respect to the applicability, and effect, of the doctrine of waiver and estoppel in addition to the doctrine of documentary cure. The impliations are as follows. First, the documentary cure requirement can not be interpreted to mean early enough to allow the beneficiary to cure and represent the documents before the presentment deadline or expiry date of letter of credit. The mere fact that the presentment period expired before the completion of bank's review and notification process does not compel any conclusion about whether the examiner spent a reasonable amount of time examining the documents. Indeed, the reasonable time requirement does not imply that banks examine a presentation out of order or hurry a decision based upon particular needs or desires of a beneficiary. Secondly, even if the doctrine of waiver can apply to letter of credit governed by the strict compliance standard, a one-time acceptance of discrepant documents by a bank does not waive the bank's right to insist upon conforming documents in all subsequent letter of credit transactions between the bank and beneficiary. Revised UCC Article 5 is highly persuasive on this point: waiver of discrepancies by issuer or an applicant in one or more presentation does not waive similar discrepancies in a future presentation. Neither the issuer nor the beneficiary can reasonably rely upon honor over past waivers as a basis for concluding that a future defective presentation will justify honor.

• International Commerce and Information Review
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• v.14 no.4
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• pp.433-456
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• 2012

The confirming bank undertakes to make payment to the beneficiary, provided that a complying presentation is made and complies with its confirmation. In case L/C fraud is evident, though, the confirming bank as well as the issuing bank does not have the obligation to make payment. That is, the confirming bank does not take the risks involving documentary fraud. The confirming bank cannot exercise the right to recourse toward the beneficiary or the nominated bank when the issuing bank finds the discrepancies which the confirming bank has not noticed. This is because under UCP600, the issuing bank or the confirming bank cannot refuse to make payment with the cause of documentary discrepancy after 5 banking days following the presentation of documents. Even if the issuing bank accepts the discrepant documents following the confirming bank's request to do so, the confirming bank does not have the responsibility for the confirmation. When under Usance Negotiation Credit, the confirming bank acts as the nominated bank, the confirming bank should make payment in no time if the beneficiary presents complying documents. Therefore, unless the confirming bank intends to make immediate payment, they should consider using Deferred Payment or Acceptance L/C in Usance Credit. It is also safer for the beneficiary to have the reimbursing bank's undertaking to the reimbursement than just have confirmation of the credit because in the latter case they may not have full payment due to disputes regarding discrepancies of the documents even if they have confirmation of the credit.