Presentation on theme: "Interpretation and Application of UCP 600 – Part 2"— Presentation transcript:
1 Interpretation and Application of UCP 600 – Part 2 XXV Latin American Foreign Trade Congress - CLACEGuatemalaJune 3-5, 2009Gary CollyerCollyer Consulting LLP
2 Handling of Discrepant Documents Applying UCP 600 and ISBPHandling of Discrepant Documents
3 Handling of Discrepant Documents Examination of DocumentsA nominated bank acting on its nomination, a confirming bank, if any, andthe issuing bank are required to examine the documents within a maximumof 5 banking days following the day of presentation. In the event ofdiscrepancies being observed, the applicable bank is required to provide anotice of refusal (according to UCP 600 article 16) to the presenter, no laterthan the close of that 5th banking day.The examination of the documents takes three steps:1. examination of the documents against the terms of the LC;2. examination of the documents against the applicable provisions of UCP;3. examination of the data in the documents with similar data in other stipulated documents.
4 Handling of Discrepant Documents Conforming and non-conforming documentsUCP 600 article 15 requires that when a bank determines that thedocuments represent a complying presentation that they honour or negotiateand, in the case of a confirming or nominated bank, forward the documentsto the issuing bank.When a nominated bank acting on its nomination, a confirming bank or anissuing bank have determined that the documents do not comply, they mustact according to the requirements of UCP 600 article 16.A refusal notice indicating the discrepancies that have been determined andthe status of the documents must be sent to the presenter no later than theclose of the 5th banking day following the day of presentation.
5 Handling of Discrepant Documents Standard for Examination of Documents - UCP 600 sub-article 14 (d)General principle for all documents:Data in a document, when read in context with the credit, the document itselfand international standard banking practice, need not be identical to, butmust not conflict with, data in that document, any other stipulated documentor the credit.Note:No reference to inconsistency.Data need not be identical, but must not conflict.
6 Handling of Discrepant Documents UCP 600 article 14 - Standard for Examination of DocumentsSub-article 14 (a):A nominated bank acting on its nomination, a confirming bank, if any,and the issuing bank must examine a presentation to determine, onthe basis of the documents alone, whether or not the documentsappear on their face to constitute a complying presentation..
7 Handling of Discrepant Documents UCP 600 article 14 - Standard for Examination of DocumentsSub-article 14 (b):A nominated bank acting on its nomination, a confirming bank, if any,and the issuing bank shall each have a maximum of five banking daysfollowing the day of presentation to determine if a presentation is complying.This period is not curtailed or otherwise affected by the occurrence on or afterthe date of presentation of any expiry date or last day for presentation.
8 Handling of Discrepant Documents UCP 600 article 14 - Standard for Examination of DocumentsSub-article 14 (d):Data in a document, when read in context with the credit, thedocument itself and international standard banking practice, need notbe identical to, but must not conflict with, data in that document, anyother stipulated document or the credit.
9 Handling of Discrepant Documents UCP 600 article 14 - Standard for Examination of DocumentsSub-article 14 (e):In documents other than the commercial invoice, the description of thegoods, services or performance, if stated, may be in general terms notconflicting with their description in the credit.Issue:No application or requirement for a form of “linkage” under UCP 600.
10 Handling of Discrepant Documents UCP 600 article 16 - Discrepant Documents, Waiver and NoticeIssuing bank may still approach applicant for waiver but available time reduced due to new maximum of 5 banking days;If a bank has provided a refusal according to (a) or (b) overleaf, and no instructions or waiver received they may return documents;Banks must provide a single notice of refusal;A statement of “noting discrepancies” or “observing discrepancies” is not a notice of refusal;The discrepancies must be clear and precise. For example, a discrepancy such as “invoice not as per LC” is not a valid reason for refusal unless the wrong invoice was presented for the LC in question;Refusal must state, bank is refusing, applicable discrepancies and one of the following statuses:
11 Handling of Discrepant Documents UCP 600 article 16 - Discrepant Documents, Waiver and NoticeSub-article 16 (c) (iii):a) that the bank is holding the documents pending further instructions from the presenter; orb) that the issuing bank is holding the documents …. receives a waiver …… and agrees to accept it, or receives further instructions ……… prior to agreeing to accept a waiver; orc) that the bank is returning the documents; ord) that the bank is acting in accordance with instructions previously received from the presenter.
12 Handling of Discrepant Documents UCP 600 article 16 - Discrepant Documents, Waiver and NoticeBasic requirements for a refusal notice:MT734 – list of discrepancies and status of documents;MT799, telephone call, fax advice, advice etc – indication of refusal, list of discrepancies and status of documents;Stated discrepancies should be specific to what is actually the reason for refusal i.e., avoid language such as “invoice not as per LC”;Status of documents can be by code word in MT734 (Hold, Return, Notify, Previnst) in all other advices they must be stated in full.
13 Handling of Discrepant Documents UCP 600 article 16 - Discrepant Documents, Waiver and NoticeTypical telephone conversation (John/Bank, Mary/Beneficiary):Hello Mary, this is John from Friendly Bank did you have a good weekend?Hi John, yes thank you pretty busy with the family again.John – sorry to advise you but we have the same problems with thedocuments as we did with the last set, same discrepancies.Mary – oh not again (!) I thought we had sorted this out with the shippingdepartment. Send them to the issuing bank, same as last time and let usknow when you get the approval.John – Okay, thanks have a nice day!Where was the refusal, where was the list of the discrepancies andwhere is the indication of status? (maybe you could argue that “Okay”means we will be acting in accordance with your instructions!!)
14 Handling of Discrepant Documents Handling Discrepant Documents (beneficiary options)Options available to a beneficiary where the documents are discrepant:1. correct as far as possible;2. request the bank to contact the issuing bank to seek waiver from the applicant; or3. request the bank to forward the documents to the issuing bank for settlement despite the discrepancies that have been noted.This is probably the order in which a decision should be made ondiscrepant documents.
15 Handling of Discrepant Documents Handling Discrepant Documents (beneficiary options)An opinion to be considered at the ICC Banking Commission meeting inMarch refers to a number of LCs emanating from a particular country whichstate:“Documents must be correct on first presentation. Correction of documentsis not permitted.”“Negotiating bank must certify that documents were correct on firstpresentation.”“Provided documents on first presentation in strict conformity with the LCterms, you are authorized to reimburse yourselves with …”It must be remembered that the beneficiary or presenter has the right tocorrect any discrepancies that may have been observed. This must,however, be concluded within the last day for presentation or expiry datewhichever is the earlier.
16 Handling of Discrepant Documents Handling Discrepant Documents (issuing bank options)An issuing bank may seek waiver from the applicant for the discrepanciesthat have been determined. The issuing bank is under no obligation to acceptthe waiver of the applicant.It may be that following the sending of a notice of refusal that the bank isconvinced that the discrepancy(ies) is/are not valid and that the documentsdo, in fact, comply. In this case, the bank must take up the documentsaccording to the credit terms. If the bank is the issuing bank, they will need toinform the applicant that the discrepancy(ies) has/have been withdrawn andthat the presentation complies.
17 Handling of Discrepant Documents Handling Discrepant DocumentsSituation: Documents are presented to the nominated bank who find themto comply, they do not negotiate and forward them to the issuing bank forsettlement.Issuing bank find two discrepancies (1) packing list does not evidence thetype of packing used (as required in the LC) and (2) the invoice omits acertification required in field 47A of the LC. Issuing bank provide a validrefusal notice to the nominated bank. The nominated bank advises thebeneficiary on February 5 at 4:15pm. The credit expires on February 6 with21 calendar days occurring on February 7. Who should the beneficiarypresent replacement documents to:- issuing bank?- nominated bank? and by when?
18 Handling of Discrepant Documents Release of goods against delivery order, indemnity or bank guaranteeIt is often the case that goods arrive prior to the receipt of the documents that will allow their release from customs. In this case, the applicant will request their bank to issue a delivery order, an indemnity or bank guarantee to the airline/shipping company to release the goods despite the fact that the goods are consigned to the bank or the original bills of lading are not available.If the bank agrees to such action, they should take an instruction from their customer to effect payment of the documents, when received, despite the fact that there may be discrepancies therein. This in itself may be a risk for the bank as one of those discrepancies could be credit overdrawn by a significant sum. The bank needs to consider such requests in line with their relationship with the applicant.
19 Spurious and debatable discrepancies: Applying UCP 600 and ISBPSpurious and debatable discrepancies:- the harm that it does to the LCproduct; and- ways to create a ‘proper’ and concise LC to overcome these issues.
20 Current experiences with the handling of LCs Applying UCP 600 and ISBPCurrent experiences with the handlingof LCs
21 Applying UCP 600 and ISBPExamples of reported spurious and doubtful discrepancies:Grade of steel mentioned in Mills Test Certificate is not as per clause No. 4 of field 46A of the L/C. Field 46A of the LC stated “Mills Test Certificate”. (USD8.8m)Short quantity supplied in the size 2.00x1230mm which is less than 10 percent which is not as per clause 45A of the LC terms. Field 45A gave a quantity of goods (5 different sizes) all subject to 10% +/-. Quantity of size shown was less than -10% but LC allowed partial shipments. (USD6.4m)
22 Applying UCP 600 and ISBPExamples of reported spurious and doubtful discrepancies:Certificate of Origin does not show name of the consignee. The condition in the LC was “Certificate of Origin” and there was no requirement for the consignee to be shown. (USD3.6m)B/L shows goods shipped on deck. BL was a charter party BL which had pre-printed text “(of which ……….. on deck at shipper’s risk, carrier not responsible ….)”. The gap was not completed with any quantity. (USD1.7m)
23 Applying UCP 600 and ISBPExamples of reported spurious and doubtful discrepancies:Clean on board date not indicated on BL, wrong beneficiary address on documents and documents not presented by express mail. Standby LC required presentation of draft, copy invoice, copy clean on board BL and various certificates. Documents to be sent by express mail and beneficiary address in SBLC was stated to be “Zu, Switzerland”.The copy BL showed an on board date and no notations or clauses regarding the goods or their packaging. The documents were sent by courier service. The beneficiary address was Zug (in Switzerland). (USD6.7m)
24 Applying UCP 600 and ISBPExamples of reported spurious and doubtful discrepancies:Non-negotiable copies of BL not signed. These are not signed and LC did not request their presentation! (USD2.5m)Certificate of Origin shows as consignee a party other than the beneficiary. LC was silent as regards content of Certificate of Origin. (USD3.4m)Mills Test Certificate is issued by a party other than the beneficiary. LC did not indicate the issuer. (USD3.4m)
25 Applying UCP 600 and ISBPExamples of reported spurious and doubtful discrepancies:Commercial Invoice and Packing List show name of the buyer as “viz. ABC Co Ltd” whereas buyers name is ABC Co Ltd. LC stated documents in the name of buyer “viz. ABC Co Ltd”. (USD380k)Beneficiary declaration as per clause 5 of the LC is not presented. Beneficiary presented the required document under the title “Beneficiary Certificate”. (USD8.7m)
26 Applying UCP 600 and ISBPExamples of reported spurious and doubtful discrepancies –latest occurrence:LC provides a goods description (field 45A) that includes “partial shipment to be allowed” and “goods will be carried under deck”.Commercial Invoice presented showing the goods description as per field 45A but without the two statements in quotation marks as above. Issuing bank refuses for absence of data. (USD5.1m)
27 Applying the UCP 600 on a day-to- day basis to establish best practice Applying UCP 600 and ISBPApplying the UCP 600 on a day-to-day basis to establish best practicewith regard to issuance, advising,confirmation, amendments andsettlement under documentary credits
28 Establishing Best Practices Issuance:Clear and precise terms and conditionsTerms and conditions that match the form of shipmentDocumentary requirements that outline the issuer (if required) and the data content for each document (do not rely on the effect of sub-article 14 (f))Advising:Are you willing to accept your nomination?Do you examine the credit for workability?
29 Establishing Best Practices Confirmation:Do you understand what you are confirming?What is the wording of your confirmation and what does it mean?Do beneficiaries understand the effect of confirmation?Amendments:Does the amendment cater for all the terms and conditions of the LC?What effect does the amendment have on the remaining terms and conditions?
30 Establishing Best Practices Example of an amendment not catering for all the terms and conditions of the LC and leaving an element of ambiguity.LC requires shipment from Singapore to Rotterdam and requires presentation of bills of lading. Incoterm CFR.Beneficiary and applicant determine that bills of lading are the wrong form of document and agree on a forwarders certificate of receipt. An amendment is issued stating delete bills of lading and insert freight forwarders certificate of receipt issued by Acme Forwarding Company Ltd. Incoterm is unchanged.Is the FCR to indicate shipment from/to or just delivery at Singapore? What about the other BL conditions – consignee, notify party and freight paid or payable?
31 Establishing Best Practices Beneficiary considerations:Do you examine the LC, when received, for errors?Do you consult the nominated bank / advising bank for their views?Do you examine amendments when received for errors?Do you have a policy with regard to the routing or centralization of LCs with one bank?Do you have any policy with regard to requests for confirmation of LCs?Are you guilty of adding too much data to documents?Do you have an internal procedure that monitors the level of refusals?Do you know the level of refusals for your company?Have you calculated the additional cost that is involved when you have discrepant documents?
32 Applying ISBP Publication 681 Article 2 of UCP 600 provides a definition of Complying Presentation as “a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules [UCP 600] and international standard banking practice”.Reference to “international standard banking practice” is not confined to the content of the ICC publication 681. International standard banking practice also includes the opinions and DOCDEX decisions that are not in the publication plus other functions and acts performed by banks on a daily basis.
33 Applying ISBP Publication 681 Application and Issuance of the CreditParagraph 2The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. Unless expressly stated otherwise, a request to issue or amend a credit authorizes an issuing bank to supplement or develop the terms in a manner necessary or desirable to permit the use of the credit.Paragraph 5Many of the problems that arise at the examination stage could be avoided or resolved by careful attention to detail in the underlying transaction, the credit application, and issuance of the credit as discussed.
34 Applying ISBP Publication 681 Corrections and AlterationsParagraph 11The use of multiple type styles or font sizes or handwriting in the same document does not, by itself, signify a correction or alteration.An example of the application of this rule is in ICC Opinion TA.657 where thedate of issuance and receipt of goods shown on a CMR were completed bypen where the document was completed except for the date which wasshown as “__ ”. The completion of the date, in pen, was acceptableunder this practice.
35 Applying ISBP Publication 681 Documents for which the UCP 600 transport articles do not applyParagraph 19Some documents commonly used in relation to the transportation of goods, e.g., Delivery Order, Forwarder’s Certificate of Receipt, Forwarder’s Certificate of Shipment, Forwarder’s Certificate of Transport, Forwarder’s Cargo Receipt and Mate’s Receipt do not reflect a contract of carriage and are not transport documents as defined in UCP 600 articles As such, UCP 600 sub-article 14(c) would not apply to these documents. Therefore, these documents will be examined in the same manner as other documents for which there are no specific provisions in UCP 600, i.e., under sub-article 14(f). In any event, documents must be presented not later than the expiry date for presentation as stated in the credit.
36 Applying ISBP Publication 681 Documents for which the UCP 600 transport articles do not applyParagraph 20Copies of transport documents are not transport documents for the purpose of UCP 600 articles and sub-article 14(c). The UCP 600 transport articles apply where there are original transport documents presented. Where a credit allows for the presentation of a copy transport document rather than an original, the credit must explicitly state the details to be shown. Where copies (non-negotiable) are presented, they need not evidence signature, dates, etc.
37 Applying ISBP Publication 681 Issuer of documents and signaturesParagraphs 22, 37 and 40If a credit indicates that a document is to be issued by a named person or entity, this condition is satisfied if the document appears to be issued by the named person or entity. It may appear to be issued by a named person or entity by use of its letterhead, or, if there is no letterhead, the document appears to have been completed or signed by, or on behalf of, the named person or entity.Even if not stated in the credit, drafts, certificates and declarations by their nature require a signature. Transport documents and insurance documents must be signed in accordance with the provisions of UCP 600.A signature on a company letterhead paper will be taken to be the signature of that company, unless otherwise stated. The company name need not be repeated next to the signature.
38 Applying ISBP Publication 681 Title of Documents and Combined DocumentsParagraph 41Documents may be titled as called for in the credit, bear a similar title, or be untitled. For example, a credit requirement for a “Packing List” may also be satisfied by a document containing packing details whether titled “Packing Note”, “Packing and Weight List”, etc., or an untitled document. The content of a document must appear to fulfil the function of the required document.Paragraph 42Documents listed in a credit should be presented as separate documents. If a credit requires a packing list and a weight list, such requirement will be satisfied by presentation of two separate documents, or by presentation of two original copies of a combined packing and weight list, provided such document states both packing and weight details.
39 Establishing Best Practices Settlement:ExaminationDo beneficiaries assist the examination process? What can the banks do to help beneficiaries and reduce discrepancy rates?A banks responsibility when examining documents.SettlementIf documents comply when do you honour or negotiate? For example, you finish the examination on Monday afternoon. When would you expect to honour or negotiate?
40 Applying ISBP Publication 681 Documents should be examined in accordance with international standard banking practice, as stated in the UCP 600 and as articulated in the ISBP.Any rejection of documents should state discrepancies in accordance with UCP 600 article 16.You reject documents because they are discrepant under UCP 600.There is no harm in explaining to another party which ICC Opinion, DOCDEX Decision or paragraph of the ISBP was used to understand how the practices of the UCP were applied.
41 Alternative forms of Documentary Credits Applying UCP 600 and ISBPAlternative forms of DocumentaryCredits
42 Alternative forms of Documentary Credits Advance Payment;Red / Green Clause;Revolving / Reinstatement;Instalment;Transferable;Back to Back; andAssignment of Proceeds.
43 Alternative forms of Documentary Credits Advance Payment (Red Clause)This is often referred to as a ‘red clause credit’ due to the fact that thewording regarding the advance payment was typed in red ink so as tohighlight this condition.Today, advance payments under credits are fairly rare and generally limitedto around 80% of the credit value. The advance is often paid against areceipt from the beneficiary indicating that they will ship the goods asrequired by the credit and in the event that they fail to do so will return theadvance or percentage thereof in respect of goods not shipped. Wherethere are doubts as to the beneficiary’s ability to return the funds, theapplicant may insist that the advance is made against the issuing of a bankguarantee covering the value of the advance.When the beneficiary presents their documents for the goods shipped, theinvoice will be issued for 100% of the value less the amount of the advancerelative to those goods.
44 Alternative forms of Documentary Credits Red Clause LCsWhere a bank guarantee is to be issued to cover any advance payment,consideration should be given to include wording as below (or similar):This guarantee will automatically reduce by xx% of the value of any invoicepresented under letter of credit number xxxxxxx as part of a complyingpresentation made by the beneficiary to XXX Bank [name of nominatedbank]. By the inclusion of this wording, the liability under the guarantee willreduce as shipments are made under the respective letter of credit.Issuing banks (and applicants) that allow the advance to be made againstan undertaking of the beneficiary must appreciate that the nominated bankwill have no further involvement in recovering the funds in the event offailure to ship. The ultimate risk lies with the applicant.
45 Alternative forms of Documentary Credits Green Clause LCsA letter of credit which contains a clause authorising the nominatedbank to make advances to the seller against security (such as apayment guarantee from a third party or the pre-shipment storage ofthe goods in the name of the nominated bank or the issuing bank)before shipment /presentation of documents. If the seller fails topresent the documents, the issuing bank’s or buyer’s reimbursementobligations can be recovered through enforcement of the security.
46 Alternative forms of Documentary Credits Revolving and Reinstatement LCsRevolving: A revolving credit has three features that need to beaddressed in a credit:-1. whether it is automatic or not;2. whether the revolvement amount is cumulative or non-cumulative; and3. the basis under which the revolvement will occur.Reinstatement: A reinstatement credit has three features that needto be addressed in a credit:-1. the initial amount of the credit;2. the basis under which the reinstatement will occur; and3. the maximum amount to which the reinstatement will be made.
47 Alternative forms of Documentary Credits Revolving LC basicsBeneficiaries prefer a cumulative, automatic revolving credit as theyhave a bank undertaking for the full amount of the value of theirgoods.Banks prefer a non-cumulative or cumulative, but non-automaticrevolving credit as it limits the banks exposure to the value of onerevolvement.A non-cumulative revolving credit allows the bank to reduce theirliability by any undrawn balance within any revolvement period.A cumulative automatic revolving credit could, possibly, allow theBeneficiary to draw the full value in the final segment of the credit.
48 Alternative forms of Documentary Credits Reinstatement LC basicsA reinstatement credit allows the applicant to limit the value of any oneshipment by setting the value of the credit to that level. For example, thetotal contract price is USD100,000 but the maximum that would be drawn inany one presentation is USD15,000The credit will be issued for an initial amount of USD15,000 and state thatthe amount will be reinstated after each drawing to the amount ofUSD15,000 subject to a maximum of USD100,000If the beneficiary makes an initial drawing of USD12,500 the amount willreinstate to USD15,000 but the remaining total amount reduces toUSD87,500 and so on until the full credit amount is drawn.The banks liability is for the full USD100,000
49 Alternative forms of Documentary Credits UCP 600 article 32 - Instalment Drawings or ShipmentsAn instalment credit is covered by UCP 600 article 32. Care must be takenwhen drafting an instalment credit to ensure that the right structure is used.For example, DC issued on 9 February stating:-1000 Pens to be shipped by 28 February1000 Pens to be shipped by 15 March1000 Pens to be shipped by 31 Marchis not an instalment credit unless the first shipment is not made. All thegoods could be shipped before 28 February.An instalment credit should have specific goods to be shipped within givenperiods that do not overlap. For example: 1000 Pens between 9 and 28February, 1000 Pens between 1 and 15 March, 1000 Pens between 16 and31 March.Article 32 is to be excluded under a Standby DC where instalments occur.
50 Alternative forms of Documentary Credits UCP 600 article 38 - Transferable Credits(a) states that no bank is under an obligation to transfer;(b) provides definitions ofTransferable credit means a credit that specifically states it is “transferable”. A transferable credit may be made available in whole or in part to another beneficiary (“second beneficiary”) at the request of the beneficiary (“first beneficiary”);Transferring bank means a nominated bank that transfers the credit or, in a credit available with any bank, a bank that is specifically authorized by the issuing bank to transfer and that transfers the credit. An issuing bank may be a transferring bank; andTransferred credit means a credit that has been made available by the transferring bank to a second beneficiary.
51 Alternative forms of Documentary Credits UCP 600 article 38 - Transferable Credits(e) No longer a requirement for “irrevocable” instructions regarding amendments;(f) If transferred more than once, each transferred credit stands as an individual credit;(g) No change to items that can be reduced or curtailed but if original credit is confirmed, so must the transferred credit;(i) If first beneficiary fails to substitute or fails to correct substituted documents (where the 2nd beneficiary documents complied), 2nd beneficiary documents may be utilised; and(k) documents must be routed through transferring bank.Issues:Changing additional terms and conditionsSubstituting more than the draft and/or invoice
52 Alternative forms of Documentary Credits Sub-article 38 (k) – ICC Opinion TA. 632 approved October 2007The conclusion to this opinion includes the following:“When there is a 100% transfer of the credit amount and no substitution isto occur, the necessity to present the documents of the second beneficiaryto the transferring bank is negated. This position prevails to the extent thatthe transferring bank has not added their confirmation to the transferredcredit and, thereby, necessitating that documents are presented to that bankin order for the undertaking of the confirming bank to be fulfilled.In the advice of transfer, where there is a 100% transfer, the transferringbank may make a modification of the rule to state that the documents are tobe sent direct to the issuing bank. In such circumstances, the transferringbank should inform the issuing bank of this action.”
53 Alternative forms of Documentary Credits Back-to-Back CreditsUsed where the beneficiary of a credit (middle man) cannot obtain atransferable credit or cannot arrange for their bank to issue a credit in theirown name. Beneficiary of the original credit seeks to use that credit assecurity for a bank to issue another credit in favour of the supplier of thegoods.In a back to back credit there are two separate and independent creditsissued whereas under a transferable credit the transaction happens underthe umbrella of the original credit.Most banks are willing to handle transferable credits as there is protectionunder UCP in the event of failure on the part of the 1st beneficiary. Under aback to back credit each credit is independent and failure of the 1st beneficiarymay put the bank at risk of receiving proceeds to cover their payment to thesupplier.
54 Alternative forms of Documentary Credits Back-to-Back CreditsIssues with Back-to-Back LCs:matching terms and conditions between credits;aligning the settlement under both credits;substitution by the original beneficiary and failure on their part to doso;banks that link the settlement of one LC to settlement under theother;safeguards?
55 Alternative forms of Documentary Credits UCP 600 article 39 - Assignment of Proceeds“The fact that a credit is not stated to be transferable shall not affect the rightof the beneficiary to assign any proceeds to which it may be or may becomeentitled under the credit, in accordance with the provisions of applicable law.This article relates to the assignment of proceeds and not to the assignmentof the right to perform under the credit”.Points to note:- assignment of the proceeds not the right to perform under the credit;- payment security to assignee exists only if compliant documents presented;- bank should limit their payment obligation to documents being presented at their counters;- copy of assignment notice should be sent to all parties; and- clear instructions where more than one assignee or partial shipments.
56 Thank You Applying UCP 600 and ISBP Contact : Gary Collyer, Collyer Consulting LLP