Quoting from [Catalyst]:
The final version of UCP 600 was approved by the ICC in Paris on 25 October 2006, and been available since December 2006. Programmes are being held around the globe to understand the articles of the new document and what they mean to the trade and industry. Preparations are on in full swing to be ready for 1 July 2007, the day UCP 500 is scheduled to make way for UCP 600.
This small posting is to seek clarification with regard to Article 14.b of the new UCP 600. The sub-article states:
“A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of five banking days following the day of presentation to determine if a presentation is complying. This period is not curtailed or otherwise affected by the occurrence on or after the date of presentation of any expiry date or last day for presentation.”
Let us assume that we have an LC with an expiry date of 24th July. Document presented for negotiation on 22nd July. My questions are:
(1) Under article 14.b of UCP 600, can the negotiating bank take up to 27th July to decide whether to take up the documents or not?
(2) If yes, what should be the last date for negotiation? Please support with relevant article of UCP 600.
(3) What happens to the expiry date stated in the original LC which occurs on 24th may – the intervening period between the date of presentation and the 5-day period? Should it change in consequence? Give reasons for your reply.
(4) If not, given the clear stipulation in the last sentence of the article quoted above, why not?
(5) Since the bank does not have the 5 days given to it as per the above article, can it refuse to accept the documents from the presenter?
(6) If not, why not?
(7) If yes, on what grounds? Please quote relevant article of UCP 600 in support.
(8) Finally, does this sub-article have any bearing on the expiry date stated in the original LC as one of its terms and conditions?
Frankly speaking, I have a huge problem with the second sentence of the sub-article quoted above, and its implications on documentary credit operations. Will appreciate a full and reasoned response to each of the above questions.
IM not going to take this point by point but I did attend one of the cl for UCP600 as it pertains to the changes.
14.b simply says that as long as the douments are presented by the expiry date, each bank has up to 5 days to examine the documents for compliance. So therefore if you present to the nominating bank the documents needed to fulfill the the L/C on the 22nd of July that it could take until August 6th for the documents to be approved by the issuing bank. However even though it could take this long, the L/C remains payable and irrevocable. This extension allows all parties involved a period of time to work out any noted discrepancies.
To answer question 5. As long as the documents are presented befor the expiry date their will be no adverse effect on the enforcability of the L/C.
You may have a problem with the second part but I believe the reason it was changed and for the best results of all concerned is that there is no rush by any bank to examine the documents.