Negotiation By Non-Nominated Bank!!

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Joined: Thu Feb 23, 2017 11:26 pm
First Name: S. M. Shafiqur
Last Name: Rahman, CDCS
Organization: Southeast Bank Ltd.
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Negotiation By Non-Nominated Bank!!

Postby shafi865 » Fri Mar 31, 2017 11:22 am

Dear All,
Please help me for finding the answer of the following question

Bank I issued a credit available with Bank N by negotiation. Bank I receives documents from Bank B stating that documents were compliant and that they have negotiated documents. Which of the following statements BEST describe the option available to Bank I?
A. Examine documents. If they are compliant, Pay bank B.
B. Examine documents. If they are compliant, Pay bank N.
C. Return documents to bank B as bank B is not authorized to negotiate.
D. Send documents to bank N for negotiation

Thanks in advance.


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Joined: Tue Jul 11, 2017 8:38 am
First Name: Fajar
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Negotiation by Non-Nominated Bank

Postby Fajar » Thu Jul 13, 2017 11:01 am

Im recently experienced this case

UCP 600 does not give clear guidance regarding this matter, it only mentioned

Article 6
a. A credit must state the bank with which it is available or whether it is available with any bank. A credit available with a nominated bank is also available with the issuing bank.

In my interpretation, issuing bank cannot negotiate the document, it can only honour the document means payment made by issuing bank cannot be taken back to issuing bank.

Based on this interpretation, if the document was presented by non-nominated bank, it is discrepant and You should notice BANK I as per UCP 600 Article 16c.

This is debatable though, In my office, I even debate with my workmate about this matter, my workmate said that, "availability" is non documentary clause, so if the document comply with LC terms, issuing bank must pay to the presenting bank eventhough the presenting bank is not the nominated bank. However, both of us agree in case the document is lost in transit, presenting bank does not have the right to claim payment from issuing bank.

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