The full version of this article can be found in the March 2011
edition of Maritime Risk International.
The Court of Appeal held that once the issuing bank has rejected
the documents, it must act in accordance with its chosen
option.
Earlier this year the Court of Appeal passed judgment in
Fortis Bank S.A./N.V. and Stemcor UK Limited v Indian
Overseas Bank providing a cautionary lesson to banks who
consider that they have received discrepant documents under the UCP
600.
The relationship between the parties is best illustrated by the
following diagram:
MSTC requested that IOB issue five letters of credit,
incorporating the UCP 600, in favour of Stemcor. In due course,
Fortis presented the documents under the letters of credit for
payment and IOB rejected them on the basis of discrepancies. IOB
gave notice under sub-article 16(c)(iii) of UCP 600 that it was
both returning and holding certain documents in respect of the
presentations. Where a return notice
