In documentary credits, the bank must verify the conformity of the documents stipulated in the documentary credit contract to the instructions of the person ordering the opening of the credit, and the bank is not asked if the documents presented appear to be in conformity with the instructions received from the orderer.
The bank’s responsibility for the documents stipulated in the contract for opening a documentary credit in the Kuwaiti Commercial Law
The explanatory memorandum of the Kuwaiti Commercial Law clarified that the documents required in the contract for opening a documentary credit are of paramount importance, as the implementation of the bank’s obligation, whether to fulfill, accept or discount commercial papers, depends on the conformity of these documents with the data and conditions stated in the contract.
The bank must verify the conformity of the documents to the instructions of the person ordering the opening of the credit, which is a conformity that should be complete and literal so that the bank does not have the slightest authority in regard to it in assessment or interpretation. The normal, which is consistent with the nature of banking work, and therefore the legislator exempted him from responsibility when the documents submitted were apparently in conformity with the instructions of the order because the examination of things that go beyond the appearance of things takes a long time, and the bank bears a heavy burden that does not comply with the speed of completion and decision-making required by the banking work.
The bank’s responsibility for the documents stipulated in the documentary credit contract in the rulings of the Kuwaiti Court of Cassation
The Kuwaiti Court of Cassation, in its ruling No. 159 of 1990 dated February 16, 1992, indicated to the Commercial Department how important it is for the bank to perform its duty towards examining the documents stipulated in the documentary credit contract with reasonable care that is consistent with the nature of the banking business, as well as for the bank to conform the documents on their face to the instructions of the order.
Grounds of the judgement
What was evident from the records of the initial ruling supporting its reasons in the contested ruling was that he established his judiciary by denying the responsibility of the second challenged bank and rejecting the subsidiary lawsuit filed by the appellant based on his consistent statement in the lawsuit, the expert’s report and the business records that the plaintiff (the appellant) chose the supplier……. Who requested to open the credit in his name on the People’s Bank of Cyprus, so the Kuwait Finance House opened the documentary credit as the plaintiff’s request in favor of an institution, ……. in Cyprus in the amount of 531,000 US dollars and then offered ……. The correspondent bank, which is the People’s Bank of Cyprus, with documents that apparently conform to the conditions for opening the credit, so the said bank paid the value of the credit to it on 10/8/1985 and deducted this value from the Kuwait Finance House account with……. In New York, and then based on the foregoing, the aforementioned bank does not ask or demand a deeper investigation into the authenticity of these documents, as the plaintiff claims, and what the ruling stated does not support its judgment.
Wording of the court judgement
This is because it is established from the papers that the documents submitted by the supplier to the correspondent bank and according to which the value of the credit was disbursed were not submitted to the lawsuit papers, and therefore the committee of experts who was appointed in the lawsuit, as well as the court did not look to verify the extent to which the bank performed its duty towards examining these documents with reasonable care that is consistent with the nature of banking work to make sure From its apparent conformity with the terms of the credit opening contract.
Despite what the appellant raised about her during the case, that the supplier’s disbursement of the value of the credit from the correspondent bank was without careful examination of these documents and without verifying the availability of the conditions agreed upon in the contract of opening the credit, which is an essential defense. If the court were to investigate it and the appellant’s claim was found to be true, it would change the face of the opinion in the subsidiary case, a matter with which the contested judgment would have violated the appellant’s right to defence, which would have to be partially distinguished in this part of his judiciary.
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