Article 7 and 8 of UCP 600

[SIRAJ UD-DAULAH]

Dear,

Article 7 expressly enunciates that if a nominated bank disregards a complying presentation then the issuing bank is irrevocably bound to honor and it is also true for the confirming bank as well as per article 8.But how and under which clause confirming bank is ensured about its reimbursement from the issuing bank?

siraj

[abrar]

A confirming bank (if authorised by the issuing bank) is de facto, also a nominated bank, so therefore, is afforded protection under provisions if Art. 7. The fact that a confirming bank is a nominated bank is further reinforced under Art. 8, which refers to "another" nominated bank, which by implication would suggest that a confirming bank is a nominated bank.

[amrlkady]

Dear Siraj,
I will answer your question directly 'how and under which clause confirming bank is ensured about its reimbursement from the issuing bank?'
The confirming bank is ensured 100% if it has reimbursing bank irrevocable undertaking to honor.
This is assured by making the L/C subject to UCPURR latest version, as I refer to URR 725.
Knowing that getting said undertaking is another cost burden.
Hope to learn more from other contributions.

Amr

[cristiand969]

Dear Siraj,
I will answer your question directly 'how and under which clause confirming bank is ensured about its reimbursement from the issuing bank?'
The confirming bank is ensured 100% if it has reimbursing bank irrevocable undertaking to honor.
This is assured by making the L/C subject to UCPURR latest version, as I refer to URR 725.
Knowing that getting said undertaking is another cost burden.
Hope to learn more from other contributions.

Amr

It should be noted that making L/C subject to UCPURR Latest version it doesn't mean the negotiating bank will automatically have a reimbursement undertaking from a third bank (reimbursing bank). Under UCPURR the issuing bank must at minimum authorize a reimbursing bank to honour any claim from a negotiating bank (Reimbursement Authorization) .
“Reimbursement undertaking” means a separate irrevocable undertaking of the reimbursing bank, issued upon the authorization or request of the issuing bank, to the claiming bank named in the reimbursement authorization, to honour that bank’s reimbursement claim, provided the terms and conditions of the reimbursement undertaking have been complied with.
Therefore it is for the confort of the confirming bank to have in addition a reimbursement undertaking from reimbursing bank but issuing bank is not obliged when making credit subject to UCPURR to request issuance of such a reimbursement undertaking.