| A confirming bank failed to receive payment because a war broke out in the opening bank's region. The confirming bank request redemption for the payment to a seller since the opening bank was not making payment. However, a dispute was developed because the seller insisted that the confirming bank is also the negotiating bank and the confirming bank t the same time which do not have a right to redemption.
Case study
1. Bank responsibility for Force majeure
A credit becomes null if the credit validity expires due to Force majeure, strike and job suspension and the opening bank bears no responsibility. (The Article 17 of U.C.P. 500)
Even when a opening bank resume the business, the bank has no responsibility with payment - take over - differed payment - NEGO for the credit that was expired with validity period. The rule applies the same to the opening bank about a strike and business discontinuance.
2. Business discontinuance of a opening bank and the responsibility of a confirming bank
Even if a opening bank's business is interrupted due to Force majeure , if there is a confirming bank to present documents, the payment should be made as long as the documents are consistent to the documents terms since the confirming bank confirmed separate independent undertaking of payment. The confirming banks are also included in the Article 17 of U.C.P. Therefore, a confirming bank is exempt from responsibility if the business is interrupted due to Force majeure , but if there is a opening bank, the opening bank should be responsible.
Conclusion
The opening bank has no responsibility to make payment because the business was discontinued due to the war. Even if the war is over and the bank resume the business, the bank is no longer responsible to make payment for the expired credit. But the validity of the credit's expiration period is still not over even after the war is over, the bank has the responsibility for the payment.
|