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The unprecedented situation resulting from the volcanic eruption has led to delays in the presentation of documents by beneficiaries and banks to nominated banks, issuing banks, guarantors and instructing parties, due to the inability of courier companies to deliver packages in accordance with their published schedules.

Officers of the ICC Banking Commission said the transportation problems are having an impact on transactions subject to the Uniform Customs and Practice for Documentary Credits (UCP 600), the Uniform Rules for Demand Guarantees (URDG 458), and the Uniform Rules for Collections (URC 522).

“It must be noted that this is not an event that is covered by the force majeure rules of UCP 600 (article 36), URDG 458 (article 13) and URC 522 (article 15),” the statement said. “The concerned banks, guarantors and instructing parties are still open for business; it is the documents that are being delayed in transit to them.”

The main courier companies advise that packages are still being collected from their clients, but delivery times are being extended due to the need to utilize road and rail networks to reach an airport from which the packages may be flown to their destination. Delays in the delivery of packages are stated to be in the range of up to five to seven days. The articles that are applicable in this situation are:

UCP 600 article 35 – “A bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in the credit.”

URDG 458 article 12 – “Guarantors and Instructing Parties assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any messages, letters, demands or documents, or for delay, mutilation or other errors arising in the transmission of any telecommunication. Guarantors and Instructing Parties assume no liability for errors in translation or interpretation of technical terms and reserve the right to transmit Guarantee texts or any part thereof without translating them.”

URC 522 sub-article 14 (a) – “Banks assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any message(s), letter(s) or document(s), or for delay, mutilation or other error(s) arising in transmission of any telecommunication or for error(s) in translation and/or interpretation of technical terms.”

Presentation – Beneficiary/Presenter to a Nominated Bank, Issuing Bank, Guarantor or Instructing Party

It is the responsibility of the beneficiary, or other presenter acting on their behalf, to ensure that the document(s) is/are presented to the nominated bank, issuing bank, guarantor or instructing party, at the place specified in the documentary credit, standby credit or guarantee, within the expiry date and the applicable presentation period. Where documentary credits, standby credits or guarantees require that presentation be made to a specific bank, guarantor or instructing party that is in an inaccessible location, beneficiaries should consider the appropriateness of seeking an amendment that will allow presentation to be made to another bank, guarantor or instructing party that is more accessible to them.

Beneficiaries should ensure that the expiry place of their documentary credit, standby credit or guarantee is that of their location, so as to facilitate presentation within the expiry date and the applicable presentation period. Alternatively, additional time must be factored into the process to allow for the document(s) to reach the nominated bank, guarantor or instructed party.

Presentation –Nominated Bank to Issuing Bank or Guarantor

At this juncture, presentation has successfully been made to the nominated bank, by the beneficiary. Provided such presentation has been made in accordance with the terms and conditions of the credit, the issuing bank or guarantor is bound to honour when they receive the documents. The nominated bank will dispose of the documents according to the requirements stated in the credit.

Return of discrepant documents to a Nominated Bank, Instructing Party, Beneficiary or other Presenter under a documentary credit or guarantee

When it is decided to refuse and return documents or, where the beneficiary or other presenter requests the return of some or all of the documents, the rule contained in UCP 600 article 35 or URDG article 12 (both as quoted above) will apply to the return of those documents, to the extent that the issuing bank, nominated bank, guarantor or instructing party has complied with those instructions.

Documentary Collections

Collecting and presenting banks are only in a position to act from the time whence they receive the collection instruction from the remitting bank. Collecting and presenting banks in Europe should be chosen on the basis of their proximity to the importer so as to facilitate the obtaining of a payment or acceptance instruction.