article 7 c vs article 8 c

asamaha · Post by **asamaha** » Thu Mar 29, 2007 1:00 am

Article 7 (c) does not cover issuing bank's undertaking vis-a-vis a designated confirming bank which reimburses a nominated bank against a complying presentation forwarded to the confirming bank in accordance with article 8 (c).

I would like to have your comments on this.

Thanks
Antoine

DanielD · Post by **DanielD** » Tue Apr 17, 2007 1:00 am

Antoine,

Having thought it over, my opinion is that the credit should be issued in such a way to allow the confirming bank to be reimbursed by the issuing bank when CB has to reimburse the nominated bank. So it would not an UCP issue.
Daniel

asamaha · Post by **asamaha** » Wed Apr 18, 2007 1:00 am

It is not a matter of reimbursement instructions. The same way art 7C covers issuing bank ‘undertaking to reimburse’ a nominated bank that has honored/negotiated and sent a complying presentation directly to the issuing bank, it should have also covered the issuing bank ‘undertaking to reimburse’ a confirming bank (when there is one different from the nominated bank) that has honored/negotiated complying documents presented to it directly by the beneficiary or thru the nominated bank.

Antoine Samaha

JudithAutié · Post by **JudithAutié** » Wed Apr 18, 2007 1:00 am

In article 8 c it says that "a confirming bank undertakes to reimburse another nominated bank that has honored or negotiated a complying presentation and forwarded the documents to the confirming bank".

I see two points in this :
first of all, it refers to "another" nominated bank, which implies that the confirming bank is the primary nominated bank.
secondly, the documents must be sent to the confirming bank, who then fulfills its role as nominated bank vis-à-vis the issuing bank.

So, in my view, the confirming bank is fully covered by the issuing bank's obligation to reimburse.

regards
Judith

asamaha · Post by **asamaha** » Wed Apr 18, 2007 1:00 am

I have seen credits which are sent thru and confirmed by one bank but are available with another, and include instructions of direct dispatch of documents to the issuer.
Yet, to benefit from the confirmation, the documents are presented to the confirmer.

regards
Antoine

AbdulkaderBazara · Post by **AbdulkaderBazara** » Thu Apr 26, 2007 1:00 am

Agree with Judith but yes I have seen credits with instructions to a bank with which the credit is available to send complying documents directly to the issuing bank and claim reimbursement from the confirming bank.

regards
Abdulkader

asamaha · Post by **asamaha** » Thu Apr 26, 2007 1:00 am

If it is so i.e. the confirming bank is the primary nominated bank, then how do you explain the use of the term 'HONOUR' under art 8(a i) instead of the term 'negotiate' to describe the CB obligation in case the credit is available by negotiation with 'another' nominated bank and that nominated bank does not negotiate.
Regards
Antoine Samaha

AbdulkaderBazara · Post by **AbdulkaderBazara** » Fri Apr 27, 2007 1:00 am

The obligation of the confirming bank {8a(i)e} here is same as that of the issuing bank (7av). It can't be beyond that. The only time the comfirming bank is obligated to negotiate is when the credit is available with confirming bank by negotiation (8aii)

regards
Abdulkader

asamaha · Post by **asamaha** » Sat Apr 28, 2007 1:00 am

Judith
I think that in this case, there is no need for the clause a-i (e) of art 8, and clause (a-ii) is to be rephrased as follows:
Quote
negotiate, without recourse, if the credit is available by negotiation with the confirming bank, or if the credit is available with another nominated bank and that nominated bank does not negotiate
Unquote
Antoine

asamaha · Post by **asamaha** » Sat Apr 28, 2007 1:00 am

Sorry, in the quoted text, please read :
' ........ or if the credit is available BY NEGOTIATION with another nominated bank and that nominated bank does not negotiate'.
Regards
Antoine