Article 16F
Article 16F
Article 16 sub articles frequently mention a nominated bank actiong on its nomination, a confirming bank and the issuing bank. Any reason behind why preclusion in 16f not apply to nominated bank, acting on its nomination ?
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Article 16F
Under UCP 600 who are obligated to honour or negotiate compliant presentation? All of us know the answer, the issuing bank (honours) and the confirming bank (honours or negotiates). Therefore, those that would be for sure precluded from not honouring or negotiating would be these two banks.
In accordance with article 12(a), UCP 600 does not impose any obligation on a nominated bank that has not confirmed the LC to honour or negotiate. Since it is not obligated, such nominated bank may not be compelled to honour or negotiate. Now in accordance with the same article, a nominated bank that has not confirmed the credit may provide its own undertaking to honour or negotiate. The merits of this irrevocable undertaking, however, in my opinion, depend on its terms.
Having said that, it does not mean, in my opinion, that a nominated bank, that has not confirmed nor provided its undertaking to honour or negotiate, acting on its nomination, is authorized to perform in any different manner. Article 16(c) use the expression MUST on how, when deciding to refuse the presentation, the issuing, confirming or such nominated bank may act. Nevertheless, the consequence, as far as a nominated bank that has not confirmed the credit, as a result of not acting in the prescribed method is not explicitly covered. Maybe it is left for the applicable law. Hope the commentary covers this.
Regards
Abdulkader
[edited 7/8/2007 10:39:19 PM]
In accordance with article 12(a), UCP 600 does not impose any obligation on a nominated bank that has not confirmed the LC to honour or negotiate. Since it is not obligated, such nominated bank may not be compelled to honour or negotiate. Now in accordance with the same article, a nominated bank that has not confirmed the credit may provide its own undertaking to honour or negotiate. The merits of this irrevocable undertaking, however, in my opinion, depend on its terms.
Having said that, it does not mean, in my opinion, that a nominated bank, that has not confirmed nor provided its undertaking to honour or negotiate, acting on its nomination, is authorized to perform in any different manner. Article 16(c) use the expression MUST on how, when deciding to refuse the presentation, the issuing, confirming or such nominated bank may act. Nevertheless, the consequence, as far as a nominated bank that has not confirmed the credit, as a result of not acting in the prescribed method is not explicitly covered. Maybe it is left for the applicable law. Hope the commentary covers this.
Regards
Abdulkader
[edited 7/8/2007 10:39:19 PM]
Article 16F
Historically, UCP preclusion has only applied to issuing and confirming banks. In practice, non-obligated nominated banks don't charge enough for UCP to provide that they assume issuer credit and country and "integrity" risks. Also, the phrase "acting on its nomination" is new, and its scope is unclear. If preclusion were to be imposed by UCP, then it should be imposed on a clearer act, e.g., on payment before forwarding the documents. As it stands, the UCP still leaves to local law (or agreement) whether a negotiating bank negotiates with or without recourse. Regards, Jim Barnes