Letter of Credit Forum

Hi Shareef

You had given instructions to the confirming bank to forward documents on approval to the issuing bank in case of discrepancies but it is not clear whether you provided the bank with authority to dispense with the requirement for the bank to issue its refusal notice as per sub-article 16 c ii. My view therefore is that unless you allowed the bank to dispense with the requirement, the confirming bank was obliged to advise you:

1. That it was refusing to honour/negotiate ( sub-article 16 c i)

2. The discrepancies noted ( sub-article 16 c ii) 

3. That the bank had forwarded documents on approval to the issuing bank in accordance with your instructions (sub-article 16 c iii d))

It looks as if the confirming bank has only complied with point 3 above but not 1 and 2. Therefore, my view is that the confirming bank is precluded from asserting that the presentation is not compliant (sub-article 16 f) and should honour/negotiate. This should be your first port of call.

Presuming that the confirming bank forwarded documents on aproval and under protection of UCP600 and not URC522, secondary recourse can also be sought from the issuing bank, because it also appears that the issuing bank failed in its obligations to revert within 5 days of its receipt of the documents and issue a refusal notice in accordance with Article 16. 

Actually, a discrepancy stated as "stale documents" is not validly made and I suggest that the discrepancy should have been stated as "late presentation". 

In any case, it appears that unless the Libyan issuing bank had provided a timely notice of refusal it would also be precluded. If this is the case, I suggest that you instruct Deutsche to instruct the Italian bank to enforce payment. I assume that the confirming bank issued its notice of refusal in time?