The need for speed: Court of Appeal interprets UCP 600

Under art 16(c) of UCP 600, issuing or confirming banks must serve notice in case of non-compliance between the documents tendered by the seller and the letter of credit. The notice needs to specify any discrepancies and the documents should be returned to the seller, although art 16 is silent in relation to timing. Confirming the first instance judgment, the Court of Appeal in Fortis Bank SA/NV v Indian Overseas Bank [2011] EWCA Civ 58 re-emphasised the importance of a prompt return of documents to sender.

Facts

The issuing bank Indian Overseas Bank (‘IOB’), the defendant in the proceedings, opened five letters of credit in respect of five contracts of sale concluded between seller Stemcor and buyer SESA International for the trade of containerised scrap. Three of the five letters of credit were confirmed by the appellant, Fortis Bank London, whilst for the remaining two, Fortis Bank acted as an advising bank.