ICC Digital Library Forum

I understand that a nominated/non confirming bank that informs the beneficiary of its acceptance to act on its nomination, has the same right of reimbursement of an authorized confirming bank. If so, banks will not need to provide a silent confirmation anymore.
Your comments pls.
Regards
Antoine Samaha

It's not the right to reimbursement that is the determining feature of confirmation, but rather the additional irrevocable undertaking of the confirming bank towards the beneficiary to honor or negotiate.

regards
Judith

pls review 600's art.8,2 and 12.
you'll find the answer reading them together.
bogdan

Antoine,

Under both UCP500 & UCP600 a non-confirming nominated bank that -in UCP600 language- honours or negotiates a presentation has exactly the same reimbursement rights vis-a-vis an issuing bank as does a confirming bank.

The 'last part' of UCP600 12(a) ('except ... beneficiary') merely carries forward the 'first part' of the second sentence of UCP500 12(c) ('Except ... Beneficiary').

Regards, Jeremy


[edited 8/10/2007 10:38:44 AM]

What do you do if you receive a message from the issuing bank notifying you of possible beneficiary fraud and revoking or at least warning you not to act on your nomination? If you nonetheless act, your reimbursement rights as written in the UCP may be unaffected, but you may be vulnerable to a fraud defense recognized under applicable law.

Under US law (UCC 5-109) a bank nominated to confirm has stronger defenses against a fraud claim than a nominated negotiating bank. Non-US law may draw a similar distinction between the rights of authorized and non-authorized "confirmers" seeking reimbursement after paying against fraudulent documents.

Regards, Jim Barnes

Jim, my earlier posting was simply about the express terms of the UCP -which have not materially changed from 500 to 600 in this regard- and not intended to suggest that there are not additional factors that need to be considered when giving a 'silent confirmation'.

I quite agree that under the applicable law a non-confirming nominated bank's UCP reimbursement rights might be overridden in the circumstances you describe if it then acts on its nomination. Having said that, the apparent mandate given by UCP500 & 600 to give a 'silent confirmation' would seem to be a strong argument for the silently confirming bank's reimbursement rights not being prejudiced in the circumstances you describe.

Regards, Jeremy


[edited 8/11/2007 10:40:20 AM]

What is the difference in responsibilities and rights between a nominated bank that has added its silent confirming and a nominated bank that has agreed to its nomination and so communicated to the beneficiary?

Best Regards

Abdulkader,

This aspect of sub-Art. 12(a) concerns a (non-confirming) nominated bank undertaking an ‘OBLIGATION’ to honour or negotiate, not simply agreeing to its nomination and communicating this to the beneficiary. (What the legal consequences of this latter action would be I do not know, but -whatever- it is not covered by sub- Art. 12(a).) Thus this aspect of sub-Art. 12(a) does only concern what most bankers call a ‘silent confirmation’ and nothing new. Therefore, to put it bluntly, Antoine’s question is based on a false premise.

Regards, Jeremy

Jeremy,

Special thanks for taking the time in responding on your weekend.

Best
Abdulkader