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We received documents against our L/C in collection from the Foreign Bank. Apparently the documents were in order. The Foreign Bank also send a SWIFT message that the documents are in order and demanded its payment. The applicant was initially reluctant to make the payment for the documents due to its stance that the beneficiary has not sent a set of non negotiable documents to it which was agreed between them.
later the applicant sent its acceptance in writing requesting us to release the payment to beneficiary and received the original documents from us. When it went to receive the goods from port it was found that the Bill of lading was forged / fabricated. Which was also confirmed by the shipping line later that the original Bill of Lading was meant for another shipment.

Now the payment is released to beneficiary whose bank has refused to refund the payment, what is the position of our bank. Do we have any protection under UCP 600 as the applicant is demanding refund of its amount that we have given him forged documents. Can someone guide.

Hi Pal,

a part that you need advice from a lawyer.
However art 34 of UCP 600 may be applied in this case.
I dare say that you have to contact the presenting bank about the relationship with the l/c beneficiary.
In case of no answer, if it possible write to the regulatory bank in that Country.
A part UCP 600, banks have to follow other guidelines, AML, KYC etc.
Nowadays, thanks to Internet it is possible to check the details of bill of ladings, containers etc.
Your principal, the applicant, could check details directly or via its forwarder. We do not live on the Moon.
Other comments appreciated
Ciao

Thanks ciao,

Jaswal,

yes. we have protection under UCP600. The banks deal with documents and not with the goods. As ciao, rightly pointed out we need to step into the court to look for solution before that we need to check the below points

1. The country of law apply (Incase of dispute). This should have been mentioned in the contract between the beneficiary & the applicant.
2. Have we done the due diligence properly(BL screening, container verification) this could be the one of the question from court that handling the case.
3. If the payment has not been effected to the beneficiary then kindly request the presenting bank to hold the payment mentioning our court order NO.......(if the case has been filed) or should request the presenting bank to get the payment from the beneficiary(considering our releasing with them)..

Presenting should help us as the should have done the BL screening, container verification) from their end also...

Regards
Dinesh