UCP 600 Article 16: the refusal notice
One notice, not a conversation
Article 16 is the refusal rule. When an issuing bank, a confirming bank, or a nominated bank acting on its nomination decides that a presentation does not comply, it must give a single notice. The notice goes by telecommunication. If telecommunication is not possible, it goes by another expeditious means. A telephone call that is not confirmed in that notice is not the notice. A chain of emails that slowly adds points is not a single notice either.
Every discrepancy in that one message
The notice must state each discrepancy. A desk that writes “documents discrepant, details to follow” has not complied. The applicant’s waiver, if the bank chooses to seek one, is not a substitute for the notice to the presenter. The notice must also state what the bank is doing with the documents. Holding them at the presenter’s disposal, returning them, or holding them pending a waiver are different statements. The bank should use the statement that matches what it is actually doing.
The clock is Article 14
The notice must be given no later than the close of the fifth banking day following the day of presentation. Article 14(b) is that period. Article 16 does not create a second, longer period. If the credit expires on the day after presentation, the bank still has the examination days. It does not gain a reason to refuse in silence until the applicant visits the branch. Missing the notice has a hard consequence: the bank is precluded from claiming that the documents do not constitute a complying presentation.
Waiver is not a second examination
The article allows the issuing bank to approach the applicant for a waiver, but the approach does not extend the notice deadline. If a waiver comes in time and the bank accepts it, the refusal is not given. If the waiver does not come, or the bank will not rely on it, the notice still has to leave inside the examination period. Nominated banks that have not undertaken to honour or negotiate are in a different position under Article 12. This page is about the bank that is refusing a presentation it was obliged to examine.
Bangladesh practice point
Many files mix the refusal with an IMP update, a margin call, or a request for a revised invoice from the supplier. Those are bank-customer steps. They are not the Article 16 notice. The presenter, usually through the negotiating or remitting bank, is the party that must receive the single notice. Keep the SWIFT or the authenticated message as the record, and do not treat an internal credit memo as notice to the presenter.
Source
ICC, UCP 600, Article 16. Operational summary only. Read the publication at iccwbo.org. Open the cited source.
Frequently asked questions
Can the bank send a second list of discrepancies later?
No. Article 16 requires a single notice. A later message that adds discrepancies does not repair a notice that was incomplete or late.
What must the notice say about the documents?
It must state each discrepancy and say what the bank is doing with the documents, such as holding them pending instructions or returning them.
What happens if the notice is late?
A bank that does not give the notice by the close of the Article 14 examination period is precluded from claiming that the documents do not comply.