09 November 2023
Is there any way to challenge the discrepancies raised by the Issuing bank, if yes, is there any procedure to be followed or one has to go to court of law to challenge the discrepancies.
15 January 2024
Yes, you can challenge discrepancies raised by the issuing bank in a Letter of Credit (LC) under the Uniform Customs and Practice for Documentary Credits (UCP 600). The UCP 600 is a set of rules established by the International Chamber of Commerce (ICC) that govern the use of letters of credit in international trade.
Here is a general procedure to follow if you want to challenge discrepancies in an LC under UCP 600:
Review the Discrepancies: Carefully review the discrepancies raised by the issuing bank. Ensure you fully understand the specific issues they have identified.
Consult the UCP 600 Rules: Refer to the UCP 600 rules to understand the standards and principles governing letters of credit. The UCP 600 outlines the roles and responsibilities of the parties involved in a letter of credit transaction.
Communicate with the Issuing Bank: Contact the issuing bank promptly to discuss the discrepancies. Seek clarification on their concerns and provide any necessary documentation or information to address the issues.
Negotiate a Resolution: Attempt to negotiate a resolution with the issuing bank. This may involve providing additional documentation, clarifications, or proposing alternative solutions that address the concerns raised.
Dispute Resolution Mechanism (Article 16 of UCP 600): If negotiations with the issuing bank are not successful, consider invoking the dispute resolution mechanism provided under Article 16 of UCP 600. This typically involves referring the dispute to arbitration, which is a common method for resolving disputes related to letters of credit.
Legal Action: If all else fails, and the dispute cannot be resolved through negotiation or arbitration, legal action may be a last resort. This would involve pursuing the matter in a court of law. Consult with legal professionals who specialize in international trade law to understand the jurisdiction and legal options available to you. It's important to note that the UCP 600 itself does not provide a specific dispute resolution process but suggests arbitration as a common method. The specific procedures for dispute resolution may be outlined in the LC or any underlying contracts.
Always consult with legal experts who are familiar with international trade law and the UCP 600 to ensure that you follow the appropriate procedures for challenging discrepancies and protecting your interests.
CAclubindia
