right under local law

[nura]

experts,

the export documents are usually negotiated without recourse basis. if there is a fraud from any part, dont the banks have any recourse under the local law?

[ajoy]

I will tell you what I think anyway...


There is always some kind of recourse in the case of a fraud - recourse to/through law is a right which goes beyond everything else I think....

Let us wait for an expert opinion now...

Cheers

Ajoy

[nesarul]

not an expert but.
Fraud is the very hard word to define. and it is not always that you can get the injunction from the court. here i want to put some of the reference:

first of all, IN Hyosung America, Inc Vs. Sumagh Textile Co., Ltd. The new York Court held that:
The essential elements of a common Law fraud claim include:
1) A material false representation by the person who perpetrated the fraud
2) An intention to defraud
3) Responsible reliance by the applicant on the representation: and
4)Damages caused to the applicant.

Moreover the plaintiff must have to prove before court with strong cogent that fraud has actually taken place in order to get the injunction:

UniCredito Italiano S.P.A Vs. Alam Chung Wah Tang : Hong Court Revealed that:
“It is clear that fraud must only be alleged when there is sufficient evidence and then must be alleged specially with full particulars…….”

.
So Mere allegation of fraud will not be accepted by the court, so the applicant must produce cogent evidence to support its charge. Mere allegation of fraud will not be accepted by the court, so the applicant must produce cogent evidence to support its charge.

In addition to that :
The court will consider the position of the applicant and the beneficiary as well as the position of the Bank, since an injunction restraining L/C payment can undermine the reputation and integrity of a bank."
.

Let us wait for an expert opinion now...

Regards
Nesar

[ajoy]

You are right proving a fraud in court is another thing altogether.

Moreover, you not only have to prove taht a fraud was committed but alos must prove that the bene perpetuated the fraud or helped a third party commit the fraud or was aware of the fraud or that the docs were fraudulent at the time of submission. (Sometimes the fraudulent docs may be submitted by a middleman the bene has engaged for arranging the shipment for example.)

Even when you can prove the fraud as above the bene and /or the money maynot be traceable any more.

Still all said and done you always have legal recourse in case of fraud.

Whether you can exercise that recourse to recover your lossess is altogether another issue.

(Same applies to so called constructive control over the goods concept..)

The best way is to make sure you do the due deligence on the bene in the begining itself and continue to monitor the account vigilantly.

Cheers

[nesarul]

Dear ajoy,

Still all said and done you always have legal recourse in case of fraud.

If the word "YOU' as denoted or refer to Issuing bank, then there are some issue where fraud might not always refrain IB to reimburse: such as : where fraud has been conducted by the third party without knowledge of the beneficiary........

United City Merchants (Investment] Ltd. Vs. Royal Bank of Canada:
[[Lloyd’s Law Report ,1979(2) page 498]

In the above case the bill of lading has been antedated without knowledge of the beneficiary. so beneficiary was innocent and thereby
IB had to reimburse them.
.
Regards
Nesar

[ajoy]

You are right proving a fraud in court is another thing altogether.

Moreover, you not only have to prove taht a fraud was committed but alos must prove that the bene perpetuated the fraud or helped a third party commit the fraud or was aware of the fraud or that the docs were fraudulent at the time of submission. (Sometimes the fraudulent docs may be submitted by a middleman the bene has engaged for arranging the shipment for example.)

This is the same as you are saying...The only differnce is I did not cite the court case and you did.

I think we are interpreting the original question differently and also I was a bit lazy in my use of words.

I interpreted it as below:

Even if you have negotiated 'without recourse' you will still have legal recourse in case of fraud.

(Of course , you will need to be able to prove fraud in court, to prove bene committed the fraud/ or was culpable etc.....)

'Having recourse ' is NOT the same thing as being able to actually enforce recourse and get your money back.

( In practice even where we have negotiated 'with recourse' to bene we might not be able to actally enforce the recourse and recover our money. In this case the fact that we could not enforce the recourse des not mean that there is no recourse )

Your interpretation is different and therefore your stand looks a little different but is perfectly correct as far as I think. I think your stand was so much clearer and with nice examples. So I agree with whta you are saying absolutely.

Cheers


Cheers