In a recent lawsuit involving a letter of credit，the beneficiary found one original page of a bill of lading missing when the issuing bank returned the related documents after refusing payment. The beneficiary sought damages，claiming errors in the disposal of documents by the issuing bank. The local intermediate and higher courts ruled against the beneficiary and ultimately the supreme court declined a request to review the case. The supreme court based its decision on the grounds that under literal reading of UCP Article 16，the issuing bank's payment obligation terminated irreversibly once it sent the refusal notice. That meant that the beneficiary's claim of damages should be settled outside the L/C. The dispute reminded me of a landmark case in the UK – Fortis Bank & Stemcor UK Ltd v. Indian Overseas Bank [2011] EWCA Civ 58. Both of the cases touch upon the complicated theme of the issuing bank's obligations in document disposal after giving a refusal notice under an L/C. However，the Fortis case adopts purposive interpretation of UCP Article 16 and seeks resolution under the L/C in the framework of the UCP. More importantly，it offers us insights on how to interpret UCP articles. Let us first quickly review the main facts of the Fortis case.

Main Facts

Indian Overseas Bank – the issuing bank – issued five L/Cs. After presentation，IOB sent a refusal notice stating RETURN on Nov.4，2008. Initially，the nominated bank – Fortis Bank – requested IOB to hold the documents and not return them.

On Jan.13，2009，Fortis Bank requested the issuing bank to endorse the bill of lading (originally made out to order of the issuing bank) and return the documents via urgent carrier. On Jan.19，Fortis Bank again requested the issuing bank to return all the documents. On Feb.9，IOB claimed it was in no position to endorse the B/L and insisted on holding the documents. On the same day，Fortis Bank warned IOB that according to UCP Art.16 (f)，its refusal to return the documents constituted a confirmation of the complying presentation. On Feb.16，the documents were returned at last without endorsement.