I had a Problem with the transferable, irrevocable L/C.

We are traders in HMS 1 & 2 and got transferable, irrevocable L/C from one of our coustomer.  Against which we had issued performance bond to activate the L/C.  Now at the time of transfering the L/C our bank has refused to transfer the L/C in the name of second beneficary stating that the clause 41D: in SWIFT message of L/C to Bank state "Any bank in United Arab Emirates, By negotiation" and not the name of our bank.

Our Bank requires an amendment in the L/C at this stage and want their name to be included.  Where we had fixed the schedule of shipment. 

Please advice what step should be taken and how to negotiate with our Bank  or with any other bank from UAE

First and foremost, this transferable credit is made available with ‘any bank’ in UAE by ‘negotiation’. This means that the issuing bank must indicate or expressly stated a specific nominated bank or the ‘transferring bank’ either in the country of the applicant or in the country of the first beneficiary which is authorized to transfer a transferable credit.  

However, when a transferable credit is made available with a specific named bank i.e. by payment, acceptance or deferred payment, the bank named under field 41A or D is the ‘transferring bank’ or the authorized bank to transfer a transferable credit.

In your case, I would suggest that you read through again the said LC and identify the ‘transferring bank’. If the ‘transferring bank’ is not expressly indicated in the LC, the issuing bank is the transferring bank. But before you proceed further, it is best that you get clarification or written approval from the issuing bank through the bank that advised the transferable credit to you. Without the ‘transferring bank’ you have no way to request to transfer the said transferable credit.

Quoting from [RSD]:

I had a Problem with the transferable, irrevocable L/C.

We are traders in HMS 1 & 2 and got transferable, irrevocable L/C from one of our coustomer.  Against which we had issued performance bond to activate the L/C.  Now at the time of transfering the L/C our bank has refused to transfer the L/C in the name of second beneficary stating that the clause 41D: in SWIFT message of L/C to Bank state "Any bank in United Arab Emirates, By negotiation" and not the name of our bank.

Our Bank requires an amendment in the L/C at this stage and want their name to be included.  Where we had fixed the schedule of shipment. 

Please advice what step should be taken and how to negotiate with our Bank  or with any other bank from UAE

Just a quick response to your problems.

The transfering bank has the right to refuse to transfer, or transfer only according to its own terms. Accordingly, it CAN demand that the negotiation is restricted to itself (before it transfers). 

You have to get the amendment it desires.

Reply:

Thanks a lot

Our bank has request the issuing bank through SWIFT to make the amendment  in the transferable letter of credit.  This has been accepted by the issuing bank and amendment of L/C is in progress.

Thanks again.

Quoting from [RSD]:

One more development in the given issue:

Now advising bank has asked the details of second benificiary's name, address, bank name, bank address, account number and swift code of bank from our bank i.e. benificiary Bank. 

We have given confirmation of these to our bank to provide the detail asked by issuing bank to amend the L/C.

My question is whether this is normal practise that bank is following and how much it is feasible in trading business to provide the second benificiary name, address etc to the issuing bank.

Quoting from [RSD]:

Thanks zealotwan   & Catalyst

The amendment in L/C was required by our bank (Benificiary's Bank) which was:

1) clearly sate the Benificiary's Bank name, address and Swift code in clause 41 D

Against which

Issuing bank in terms has asked to clearly state the name, address, Telephone number, Fax number, account name, account number, swift code of the bank etc of the second benificiary.

request fro above details are sent by the benificiary bank to issuing bank through swift  MT999.

Now we are awaiting for amendment in L/C by the issuing bank.

Quoting from [RSD]:I had a Problem with the transferable, irrevocable L/C.transfering the L/C our bank has refused to transfer the L/C in the name of second beneficary stating that the clause 41D: in SWIFT message of L/C to Bank state "Any bank in United Arab Emirates, By negotiation" and not the name of our bank.

      Excuse me RSD, may I joint the floor.  ?  especially to Catalyst and Zelo..                         

assuming  before  the transaction, our bank will send us a draft  l/c from issuing bak and advising us about the  contents...if we are understand and accept it, then it will be replied to the issuing    bank that it is OK,  they call it Confirmed L/C..                                       In my old days ..it been operated through Telex ....hence  SWIFT (internet)..wonder that  nowadays ..still applied the same steps "draft l/c >test OK for verify > confirmed l/c ?           It seem that ...this stage ..phase  seldom been applied...so many amendment and discrepancies may happen ?  or this is just my assumption ? In RSD case..              1. said  that  RSD's bank via Swift had propose Amendment ? suppose the applicant (buyer) who has to apply it ?                                                                                      2. My assumption is the way between Benef's & Issuing banks doing now is such a stage of test ok  or confirming the L/C .as the early statement and clearly  been stated that it is available at any bank in UEA to negotiation,  or Negotiable at any bank at UEA. so the beneficiary just go to appointed his bank and next the bank reply to applicant bank ? the second stage (after confirmed) the issuing bank will issue the l/c or d/c and  put the paying bank, negotiating bank, representing bank, advising bank etc .which including the Transferable .to 2nd party ..etc.as agreed...??   please  tell me, thanks for the response.