Serving notice under art 16(c)(iii) of UCP 600: A rejection or preclusion?

Ozdel, Melis (2010) Serving notice under art 16(c)(iii) of UCP 600: A rejection or preclusion? Shipping & Trade Law, 10 (3).

Abstract

Having found discrepancies in the documents presented, an issuing bank could take the view that merely serving a notice is sufficient for rejection, since art 16(c)(iii) of UCP 600 does not call for any further actions to be taken. However, in Fortis Bank SA/NV v Indian Overseas Bank [2010] EWHC 84 (Comm) the English court chose to imply a term requiring the banks to act in accordance with their documentary disposal statements, failing which they will be precluded from relying on the discrepancies. In so doing, the courts have made the draconian remedy of preclusion available in order to urge the banks to comply with ‘the best practice and reasonable expectations of experienced market practitioners’.

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