ICC Rules Study_ International Chamber of Commerce Opinion
This is a dispute regarding discrepancies arising from a presentation under a standby letter of credit issued in accordance with UCP 600, and the conclusion also applies to presentations under documentary letters of credit:
R821
Did the beneficiary need to present the original advice of the standby letter of credit when it made a demand; can a bank raise further discrepancies relating to a presentation at a later date?
According to UCP 600, the requirement for submitting a demand under a standby letter of credit, the beneficiary’s presentation to the notifying bank was met with discrepancies raised by the latter: Original Standby LC Not Presented (the original standby letter of credit was not submitted). In the era of standby letters of credit or letters of credit issued via SWIFT, how should we view the requirement to submit the “original letter of credit or original document”? Is this discrepancy valid?
Additionally, the inquirer raised another question: after a bank raises one discrepancy for the same presentation, can it add further discrepancies?
108
Opinion R821(TA802rev)
Is the Original Standby Letter of Credit Required When Making a Demand?
R821(TA802rev)2012~16
Question Review
QUERY
QUOTE
A standby credit was issued subject to UCP 600 and was advised to the beneficiary through an advising bank.
The beneficiary presented a demand under the credit, which arrived at the counters of the advising bank before the expiry date.
The advising bank issued a notice of refusal on the third day following presentation stating one discrepancy: “Original Standby LC Not Presented”.
There was no wording in the credit requiring presentation of the original standby LC.
A standby letter of credit issued in accordance with UCP 600 was notified to the beneficiary through an advising bank.
The beneficiary submitted a demand to the advising bank within the validity period of the standby letter of credit.
The advising bank issued a notice of refusal on the third working day after presentation, stating one discrepancy: “Original Standby LC Not Presented”.
However, there was no requirement in the terms of the standby letter of credit for the presentation of the original standby LC.
The inquirer asked the ICC:
1. Is the discrepancy stated by the advising bank correct?
2. Can the advising bank raise further discrepancies at a later date in respect of the one presentation made by the beneficiary under the credit?
1. Is the discrepancy raised by the advising bank valid?
2. For the same presentation made by the beneficiary under the standby letter of credit, can the advising bank subsequently raise additional discrepancies?
ICC Analysis
ANALYSIS
1. The wording of the credit did not require the presentation of the original credit as part of the claim. Unless the credit was issued by mail or in paper format, it is doubtful how the originality of the document could be determined. Accordingly, unless otherwise specifically required within the terms and conditions of a credit, there is no requirement for the original credit to be included in the presentation.
2. UCP 600 sub-article 16 (c) states that when a bank decides to refuse or negotiate, it must give a single notice to that effect to the presenter. UCP 600 clearly does not allow for further discrepancies to be raised that were apparent at the time of the initial presentation, as is referred to within former ICC Opinions R196, R328, R271 and TA764rev.
The terms of the letter of credit did not require the original letter of credit to be submitted as part of the claim. Unless the letter of credit was issued by mail or in paper format, it is difficult to determine the originality of the document. Therefore, if the terms of the letter of credit do not specifically require it, the presentation does not need to include the original letter of credit.
UCP 600 sub-article 16 (c) stipulates that when a bank decides to refuse payment or negotiate, it must notify the presenter in a single notice. UCP 600 clearly does not allow for additional discrepancies to be raised that should have been presented at the time of the initial presentation, as stated in previous ICC Opinions R196, R328, R271, and TA764rev.
ICC Conclusion
CONCLUSION
1. The discrepancy is not valid.
2. Additional discrepancies are not to be considered, as banks only have one opportunity to raise discrepancies for each presentation.
1. The discrepancy raised by the advising bank is invalid;
2. Additional discrepancies are not considered, as banks only have one opportunity to raise discrepancies for each presentation.
Standby Letters of Credit and Letters of Credit
This opinion clearly addresses a dispute regarding discrepancies in a presentation under a standby letter of credit, but during the analysis, the ICC often abbreviates it as a letter of credit “credit”. Logically, the term credit encompasses a broader scope, and a standby letter of credit is a type of letter of credit that can also be issued under UCP 600. The conclusions regarding discrepancies for this standby letter of credit also apply to other documentary letters of credit, meaning that under documentary letters of credit, the issuing bank (or designated bank) also has only one opportunity to raise discrepancies for each presentation.
By Mingyue | Original
# Music Time and Space
……
Fragmented Thoughts
86, 79, 58
June 14 is Trump’s 79th birthday, and he held an American-style military parade to celebrate. After watching a short video, I felt that the soldiers’ marching posture was not as good as ours during university military training, of course, they might not have taken it seriously.
Recently, a news report featured an 86-year-old head nurse still working on the front lines in a hospital, receiving numerous honors. Many people commented that the workload of nurses is not low, and they have to work night shifts. Can someone of such an age still manage it? Will they continue to hold onto their position in a public institution after retirement, receiving high salaries and benefits while pushing the dirty and hard work onto the younger generation, merely acting as a mascot? Later, this news disappeared, and the real situation remains unknown.
As I age, the most significant feeling is the issue of vision, and I have to face the world of “presbyopia”. Recently, a 58-year-old bank teller was criticized for being too slow in processing customer transactions because he had to use a magnifying glass to see the computer screen. Regarding this news, we should be more tolerant; the legal retirement age for men is 60, and since he has not reached that age, why should he suffer workplace discrimination?
We live in an era that is aging before becoming wealthy and filled with uncertainties; no one can be sure what kind of old age they will have.
Some say that ordinary Americans enjoyed decades of high welfare living after World War II, supported by American capital using dollars, the military, and U.S. debt to extract resources from around the world. Now, as American hegemony is collapsing, the good days for ordinary Americans are coming to an end. Europeans can enjoy high welfare living because Russia provides them with cheap energy, the U.S. provides them with security, and China provides them with cheap industrial goods. Yet, they often adopt a condescending attitude towards China. How can China achieve a high welfare life? It can only rely on itself!
I hope that at 58, I still have the energy and vitality to do what I love, that at 79, I can arrange a birthday party for myself (I heard that the 80th birthday should be celebrated according to the lunar calendar), and I hope to still be healthy at 86.
Summer
SUMMER
2025.6.18 Wednesday
You will find that almost all processes of becoming stronger are not nurtured but are rebuilt after being challenged and adapting. This mechanism has a name in systems science: anti-fragility.
WeChat ID: CDCS-2018
1. CDCS Exam Experience
2. Letter of Credit Practice/English
3. International Trade/Settlement Knowledge
4. Interpretation of ICC Rules
5. Mingyue’s Thoughts
