Article e8: Notice of Refusal
“If a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank, provides a notice of refusal of a presentation which includes electronic records and does not receive instructions from the party to which notice of refusal is given for the disposition of the electronic records within 30 calendar days from the date the notice of refusal is given, the bank shall return any paper documents not previously returned to that party, but may dispose of the electronic records in any manner deemed appropriate without any responsibility.”
Explanation and Example
Clause: “If a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank, provides a notice of refusal of a presentation which includes electronic records”
Explanation: This clause refers to a situation where a bank involved in the letter of credit process (either a nominated bank, a confirming bank, or the issuing bank) issues a notice of refusal. This refusal pertains to a presentation made under the letter of credit that includes electronic records.
Example: Imagine a scenario where a nominated bank receives a presentation from the beneficiary, which includes both electronic records and paper documents. If the bank finds issues with the presentation and decides to refuse it, it must notify the beneficiary of this refusal.
Clause: “and does not receive instructions from the party to which notice of refusal is given for the disposition of the electronic records within 30 calendar days from the date the notice of refusal is given”
Explanation: Once the bank has issued the notice of refusal, it waits for instructions from the party (usually the beneficiary or the presenting party) on how to handle the electronic records. If no instructions are provided within 30 calendar days from the date of the notice, the bank will proceed according to the article’s provisions.
Example: The nominated bank sends a notice of refusal to the beneficiary on January 1st. If the beneficiary does not respond with instructions on how to handle the electronic records by January 31st, the bank will take action as described in the next part of the article.
Clause: “the bank shall return any paper documents not previously returned to that party”
Explanation: The bank is required to return any physical paper documents that were part of the presentation and have not yet been returned to the presenting party. This ensures that the presenting party receives all physical documents related to the refused presentation.
Example: If the presentation included a shipment invoice and a bill of lading, and these paper documents were not yet returned to the beneficiary after the refusal, the bank must send them back once the 30-day period has elapsed.
Clause: “but may dispose of the electronic records in any manner deemed appropriate without any responsibility”
Explanation: For the electronic records, if the presenting party does not provide instructions within the 30-day period, the bank is free to handle the electronic records as it sees fit. The bank does not bear any responsibility for how these records are disposed of.
Example: Suppose the bank receives no instructions from the beneficiary on what to do with the electronic records after 30 days. The bank might choose to delete or archive these records according to its policies. The bank is not held liable for any consequences arising from its disposal of the electronic records.