Replying to [Catalyst]:


 My banking lawyer friend has no clear way to resolve this accept if the L/C was confirmed then it would seem the confirming bank is left holding the bag and is obligated to make the payoff pursuaint to the terms of the L/C and is also held to this under UCP.  He however did not name a specific place to quote Under UCP rules.

Best regards,

Ranger

Replying to [Catalyst]:
Quite risky position basically countries not under icc ucp 500. Issuing bank had to comply their country law. U had to proof in the court that products meet specification as contracted.

Probably preshipment inspection documents may assist you,

Replying to [Ranger]:

As a confirming bank (IF the LC was confirmed) it would any way be left holding the baby, till the court gave its final judgement. Even if theLC was not confirmed, the situation would not change much, would it? The law of the land supersedes the UCP provisions, I believe. Whether the judgement was based on a mistaken premise or not, only the court can decide.

Replying to [Xris]:

I repeat the points that I am trying to make here:

(1) The national law prevails over the UCP provisions.
(2) Courts usually (repeat, usually) do not stand in the way of the UCP process, unless there is a clear case of fraud.

Do note that, as far as the LC is concerned, documents were complying and were approved as such by the banks concerned.

Dispute regarding quality or specifications (as in this case) is NOT fraud. However, since the court HAS given a judgment/order, is there any way out other than going back to the court?

Quoting from [Catalyst]:


Assume that the transaction is under an acceptance credit. Documents are submitted by beneficiary in compliance with LC terms. The applicant takes delivery. He refuses to pay on due date, but goes to court, takes out an injunction or a 'stop payment' order from the court against the issuing bank - because he claims the goods to be apparently not per specifications.


What is the remedy for the beneficiary?


I am not sure I know the solution to this one. Inviting Ranger to jump in.

R.N.  In the last few days I've read 20 cases from 6 countries where the buyer got an injunction.  Only one was upheld.   So I guess I can only say that by reading these cases the seller would have to challenge the injunction in the beneficiarys country.  But I can say at the outset of overturning the injunction that the benificairy was also awarded interest court costs and intereset on the withheld payment.  Also in 5 cases a mere petition to overturn the injunction resulted in the court rescinding the order of injunction and two were released by the court to ICC arbitration.   If this is to be the future then maybe suppliers are going to have to require performance bonds to opened by the buyers as well.

Ranger

Replying to [Catalyst]:
First an LC, and then again for a performance bond to defend the LC....plus costs for both....

Ouch...!.....

What is the world comin' to....?

Replying to [Catalyst]:

The bank is NOT obliged to pay if the LC was unconfirmed!