Would a Nominated Confirming Bank - that has not honoured a non complying presentation under a Def. Payment Credit - loose its rights of reimbursement from the issuing bank if it incurs a DPU to the benef based on its non receipt of an advice of refusal from the issuing bank within the 5-day-period allowed by the UCP.
thks
Antoine Samaha
Art 7c and Documents for approval
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RobReissner
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Art 7c and Documents for approval
Antoine,
The question is whether you can and should incur a DPU after having sent the documents for approval without having asked issuing bank's agreement to do so as yet. The Banking Commission is of the opinion that the nominated bank should do that. This view is expressed in draft opinion TA.690 which is still to be voted on in the November meeting of the Banking Commission. Sending the documents for approval means you have not acted on your nomination. In the relative query the nominated bank incured the DPU after receipt of an advice of acceptance from issuing bank. The Banking Commission opines in the draft Opinion that this DPU would fall under the protection of UCP600 Art. 12 (b). But, in the example you have given, I would not be to sure that the Banking Commission would follow the same reasoning. In my opinion you would be taking a risk there.
Regards,
Rob Reissner
The question is whether you can and should incur a DPU after having sent the documents for approval without having asked issuing bank's agreement to do so as yet. The Banking Commission is of the opinion that the nominated bank should do that. This view is expressed in draft opinion TA.690 which is still to be voted on in the November meeting of the Banking Commission. Sending the documents for approval means you have not acted on your nomination. In the relative query the nominated bank incured the DPU after receipt of an advice of acceptance from issuing bank. The Banking Commission opines in the draft Opinion that this DPU would fall under the protection of UCP600 Art. 12 (b). But, in the example you have given, I would not be to sure that the Banking Commission would follow the same reasoning. In my opinion you would be taking a risk there.
Regards,
Rob Reissner
Art 7c and Documents for approval
Antoine,
My opinion is that if a nominated bank does not incur a DPU (or depending on the availability of the credit, negotiate or accept a bill) at the time it handles documents it cannot subsequently -as nominated bank- incur a DPU (or negotiate or accept a bill as appropriate) without the subsequent agreement of the issuing bank, even if the documents are complying. Therefore, whether or not the nominated has received a notice of refusal, or even if a nominated bank has received an acknowledgement that the documents comply, from the issuing bank has no bearing on the matter.
Regards, Jeremy
[edited 10/9/2009 4:21:52 PM]
My opinion is that if a nominated bank does not incur a DPU (or depending on the availability of the credit, negotiate or accept a bill) at the time it handles documents it cannot subsequently -as nominated bank- incur a DPU (or negotiate or accept a bill as appropriate) without the subsequent agreement of the issuing bank, even if the documents are complying. Therefore, whether or not the nominated has received a notice of refusal, or even if a nominated bank has received an acknowledgement that the documents comply, from the issuing bank has no bearing on the matter.
Regards, Jeremy
[edited 10/9/2009 4:21:52 PM]
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RobReissner
- Posts: 19
- Joined: Fri Apr 05, 2019 5:25 pm
Art 7c and Documents for approval
Jeremy,
I could not agree more. Personally I have always been of the opinion that you can never execute your nomination "after the fact". Only if you have asked and received issuing bank's permission, you would be able to do so as yet. However, in the opinion I referred to, the Banking Commission appears to support nominated bank's issuance of its DPU after receipt of an advice of acceptance from issuing bank. Again, this opinion is still to pass final voting in November.
Regards,
Rob Reissner
I could not agree more. Personally I have always been of the opinion that you can never execute your nomination "after the fact". Only if you have asked and received issuing bank's permission, you would be able to do so as yet. However, in the opinion I referred to, the Banking Commission appears to support nominated bank's issuance of its DPU after receipt of an advice of acceptance from issuing bank. Again, this opinion is still to pass final voting in November.
Regards,
Rob Reissner
Art 7c and Documents for approval
Rob,
My reading of this yet-to-be approved opinion, which presumably represents the views of the small -at most- number of people involved in its drafting, is that it is assumed that the issuing bank has given its 'after the fact' authorisation. My opinion is that this needs to be expressly spelt out in the 'final' version.
Regards, Jeremy
My reading of this yet-to-be approved opinion, which presumably represents the views of the small -at most- number of people involved in its drafting, is that it is assumed that the issuing bank has given its 'after the fact' authorisation. My opinion is that this needs to be expressly spelt out in the 'final' version.
Regards, Jeremy
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RobReissner
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Art 7c and Documents for approval
Jeremy,
Just to avoid confusion, as country "India" always appears behind my name, but that is because the DC Pro licence is arranged from India. Actually I am working at a bank in the Netherlands. The national ICC Committees can present comments on the draft opinions. This week I will be involved in a discussion on the opinions and I will take the views from this discussion forum with me. Perhaps it can be taken up in the comments of the Dutch ICC Committee. Because, indeed I agree, that it would provide more clarity if it would be stated that issuing bank's advice of acceptance can be regarded as an authorisation to, as yet, act on your nomination.
Regards,
Rob Reissner
Just to avoid confusion, as country "India" always appears behind my name, but that is because the DC Pro licence is arranged from India. Actually I am working at a bank in the Netherlands. The national ICC Committees can present comments on the draft opinions. This week I will be involved in a discussion on the opinions and I will take the views from this discussion forum with me. Perhaps it can be taken up in the comments of the Dutch ICC Committee. Because, indeed I agree, that it would provide more clarity if it would be stated that issuing bank's advice of acceptance can be regarded as an authorisation to, as yet, act on your nomination.
Regards,
Rob Reissner
Art 7c and Documents for approval
Clarity on this point ‘one way or the other’ would be helpful.
From my experience in practice sometimes nominated prefers to wait until the documents have gone through the full cycle as in not being refused by the issuing bank before they provide financing to the beneficiary.
This is to avoid getting caught by an issuing bank refusing to honour based on a subjective discrepancy such as the ‘Date of Manufacture’ or ‘Date of Production’.
From my perspective I can not see any problem with a nominated bank acting on its nomination afterwards .i.e when they know that documents have not been refused by the issuing bank.
I do not think there is anything in the UCP rules saying this is not allowed or that this timing detracts from the issuing banks obligation to honour which is intact in any event unless they refused the documents.
Svetlana
From my experience in practice sometimes nominated prefers to wait until the documents have gone through the full cycle as in not being refused by the issuing bank before they provide financing to the beneficiary.
This is to avoid getting caught by an issuing bank refusing to honour based on a subjective discrepancy such as the ‘Date of Manufacture’ or ‘Date of Production’.
From my perspective I can not see any problem with a nominated bank acting on its nomination afterwards .i.e when they know that documents have not been refused by the issuing bank.
I do not think there is anything in the UCP rules saying this is not allowed or that this timing detracts from the issuing banks obligation to honour which is intact in any event unless they refused the documents.
Svetlana
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RobReissner
- Posts: 19
- Joined: Fri Apr 05, 2019 5:25 pm
Art 7c and Documents for approval
Svetlana,
As a final comment on this from my side, the wording of UCP600 Art. 2 on "negotiation" and Art 12 (b) makes it clear that the nominated bank takes its position before sending the documents to issuing bank by purchasing / pre-paying the draft and / or documents. Also it is understood that mere forwarding of the documents or sending them for approval does not constitute having honoured or negotiated. Therefore the view of the Banking Commission is that, in principle, nominated bank should ask the issuing bank for permission if it does not immediately act on its nomination.
Regards,
Rob Reissner
As a final comment on this from my side, the wording of UCP600 Art. 2 on "negotiation" and Art 12 (b) makes it clear that the nominated bank takes its position before sending the documents to issuing bank by purchasing / pre-paying the draft and / or documents. Also it is understood that mere forwarding of the documents or sending them for approval does not constitute having honoured or negotiated. Therefore the view of the Banking Commission is that, in principle, nominated bank should ask the issuing bank for permission if it does not immediately act on its nomination.
Regards,
Rob Reissner
Art 7c and Documents for approval
Svetlana,
Frankly I find it astonishing that there are banks that think that a nominated role can be carried out after handling documents without the subsequent authority of the issuing bank.
Surely the whole point of a nominated bank is to act as the issuing bank’s agent in the ‘settlement’ (by honour or negotiation) of a complying presentation as at the time the presentation is made and no more? Attempting to perform a nominated bank role after handling documents completely goes against this.
I also have to wonder what a bank is doing being involved in documentary credit operations if it is too frightened to honour or negotiate before it knows the issuing bank’s views regarding the compliance of documents.
Regards, Jeremy
Rob,
I will be doing similar with respect to ICC UK this Friday, i.e. putting forward my views (your earlier posting refers). However, I would not agree with ICC stating that the issuing bank's advice of acceptance can be regarded as an authorisation to, as yet, act on your nomination. On the contrary I would be vehemently opposed to this.
Regards, Jeremy
[edited 10/12/2009 3:57:11 PM]
Frankly I find it astonishing that there are banks that think that a nominated role can be carried out after handling documents without the subsequent authority of the issuing bank.
Surely the whole point of a nominated bank is to act as the issuing bank’s agent in the ‘settlement’ (by honour or negotiation) of a complying presentation as at the time the presentation is made and no more? Attempting to perform a nominated bank role after handling documents completely goes against this.
I also have to wonder what a bank is doing being involved in documentary credit operations if it is too frightened to honour or negotiate before it knows the issuing bank’s views regarding the compliance of documents.
Regards, Jeremy
Rob,
I will be doing similar with respect to ICC UK this Friday, i.e. putting forward my views (your earlier posting refers). However, I would not agree with ICC stating that the issuing bank's advice of acceptance can be regarded as an authorisation to, as yet, act on your nomination. On the contrary I would be vehemently opposed to this.
Regards, Jeremy
[edited 10/12/2009 3:57:11 PM]
Art 7c and Documents for approval
Based on discussions I was involved in this morning I think I might well be in a minority of one at the Friday meeting!
Ultimately my main concern is to have a clear and unambiguous statement of the position and not some unclear & ambiguous 'fudge'. Let's hope we get one.
Ultimately my main concern is to have a clear and unambiguous statement of the position and not some unclear & ambiguous 'fudge'. Let's hope we get one.