Last paragraph of Article 7 C of UCP 600 says - An issuing bank's undertaking to reimburse a nominated bank is independent of the issuing bank's undertaking to the beneficiary.
Any idea what does it means.
Shahed
Article 7C
Article 7C
It means that a nominated bank claiming reimbursement stands in its own shoes under 7c and not in the shoes of the beneficiary. This is important for purposes of protecting a nominated bank that has honoured or negotiated a complying presentation made to it and then forwarded the documents to the issuer.
Among other things, it means that a fraud defense that might be available against the beneficiary is not automatically available against a nominated bank asserting a right that UCP600 says is "independent".
Just as there are exceptions to the independence of a beneficiary's rights to honour based on fraud, there are exceptions to the independence of a nominated bank's 7c rights of reimbursement. (The independence of a nominated bank's rights as well as the exceptions are codified under US law, but in most countries they are not, which makes 7c particularly useful when an innocent nominated bank's reimbursement is threatened.)
Among other things, it means that a fraud defense that might be available against the beneficiary is not automatically available against a nominated bank asserting a right that UCP600 says is "independent".
Just as there are exceptions to the independence of a beneficiary's rights to honour based on fraud, there are exceptions to the independence of a nominated bank's 7c rights of reimbursement. (The independence of a nominated bank's rights as well as the exceptions are codified under US law, but in most countries they are not, which makes 7c particularly useful when an innocent nominated bank's reimbursement is threatened.)