Lloyd's Maritime and Commercial Law Quarterly
STERN DOCTRINE AND COMMERCIAL COMMON SENSE IN THE LAW OF DOCUMENTARY CREDITS
Howard N. Bennett *
The foreword to the 1993 revision of the Uniform Customs and Practice for Documentary Credits (UCP 500) notes “great concern” at the “marked increase in litigation involving Documentary Credits.” The litigation shows no sign of abating. In particular, the liabilities and responsibilities of banks in the processing of documents tendered under documentary credits continue to raise difficulty and constitute the focus of two cases discussed in this article. The judgment of Mance, J., in Bayerische Vereinsbank Aktiengesellschaft v. National Bank of Pakistan1
concerns a credit subject to UCP 500. The decision of the Court of Appeal in Seaconsar Far East Ltd v. Bank Markazi Jomhouri Islami Iran2
considers a credit incorporating the 1983 revision of the UCP (UCP 400) but is equally applicable to UCP 500.
Remittal of documents and the date of presentation
UCP 500, Art. 42(a) requires all documentary credits to contain an expiry date. Where, however, the documents include a transport document, by virtue of Art. 43(a) the documents must also be tendered within a certain number of days following the date of issuance of the transport document. The relevant number of days is whatever is stated in the credit or 21 if the credit is silent. The documents must be presented no later than the earlier of whichever of the two dates (the expiry date and the Art. 43(a) date) arrives first.3 It may transpire, however, that the last such date for presentation falls on a day when the bank is not open. In such a case, provided that the bank is not prevented from opening by reason of force majeure as defined in Art. 17, Art. 44(a) provides for an automatic extension of the period for presentation until the first following day on which the bank is open. Where the beneficiary takes advantage of the Art. 44(a) extension, the UCP imposes a formality on the bank to which the documents are presented. Article 44(c) provides as follows:
The bank to which presentation is made on such first following business day must provide a statement that the documents were presented within the time limits extended in accordance with sub- Article 44(a) of the Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No. 500.
* Senior Lecturer in Law, University of Nottingham.
3. For the beneficiary to be entitled to consideration of the documents, presentation must occur before close of business on that date since, by virtue of Art. 45, “banks are under no obligation to accept presentation of documents outside their business hours”. A bank is at liberty to accept documents between the close of business and midnight on that date but has no obligation to do so.
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