Only two queries have been received for discussion at the next ICC Banking Commission meeting in Tbilisi, Georgia, in October 2018.
It was stated that the initiator had been experiencing a recent trend in which a number of presentations under documentary credits had been refused for the following (or similar) reasons:
‘NOTE THE DOCUMENTS HAVE BEEN REJECTED AND RETURNED TO YOU BY COURIER BECAUSE OF LOCAL AND INTERNATIONAL LAWS AND REGULATIONS AND INTERNAL POLICY FOR AML/CTF AND FOREIGN SANCTIONS IN ACCORDANCE WITH OUR L/C TERMS.'
This was in relation to credits that had included the following ‘sanctions' clause':
‘OUR BANK PROCESS TRANSACTIONS IN ACCORDANCE WITH LOCAL AND
INTERNATIONAL LAWS AND REGULATIONS, AND RESERVE THE RIGHT TO COMPLY WITH FOREIGN SANCTIONS AS WELL. CONSEQUENTLY DOCUMENTS ISSUED BY OR SHOWING ANY INVOLVEMENT OF PARTIES SANCTIONED BY ANY COMPETENT AUTHORITY OR CONTAINED ANY INFORMATION THEREON MIGHT NOT BE PROCESSED BY OUR BANK AT OUR SOLE DISCRETION AND WITHOUT ANY LIABILITY ON OUR PART.'
Further investigation subsequently clarified that the refusals related to internal policy and risk concerns, rather than regulatory reasons. It was questioned as to whether a bank, having issued an irrevocable credit, is permitted under UCP 600 to refuse a presentation based on internal policies and/or concerns over the applicant.
A bill of lading presented under a documentary credit stated: "Inland haulage charges from Mundra seaport to ICD Moradabad are to buyer's account. Empty container to return to ICD TKD on consignee's risk & account."
Initially, the letter of credit contained the following condition?"Documents of the following nature are not acceptable:?...?G. Bearing any reference by stamp or otherwise to cost additional to freight charges...".
This condition G, was subsequently deleted in an amendment.
Upon receipt of the documents, the issuing bank refused them for the following reason: ‘Bill of lading states that empty containers to return to ICD TKD on consignees risk and account whereas LC states no such condition.'
It has been questioned as to whether or not this was a valid discrepancy.
We will provide an update on the response to both of these queries after the Tbilisi meeting.