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What Is Right Of Recourse?

Posted: Sat Nov 15, 2008 12:44 pm
by mkp
Dear All

Hi
1 - What is Right of Recourse ?
2 - Is it depend on kind of payment term
( honour or negotiation ) ? what about the country's law or the bank policy ?
3 - What does UCP 600 say about Right of Recourse ? and ICC official statement ,if any ?

Thank in advance for your views.

Best Regards

Re: Right Of Recourse

Posted: Sat Nov 15, 2008 6:06 pm
by jmitra
hi,

you didnt mention right to recourse from whom by who. but from the entire question, i feel that you are talking about right to recourse of the nominated bank from the beneficiary. first thing, a issuing bank or confirming bank has no right to recourse.

anyway, in general right to recourse means right to recover a bad debt.

2 - Is it depend on kind of payment term?
so for i understand, no. you need to understand the fact that a nominated bank is not oblige to negotiate or honor. when it does so, it may do it on recourse basis or without recourse basis. thus it will depend on the nominated bank and not on the payment terms.

2. what about the country's law or the bank policy ?

about bank policy, same as said earlier. about country's law; the fact is that the right to recourse is always exercised through legal channel. so law plays an important role here.

3. UCP does not say anything about right to recourse. i think this is because, if UCP says that nominated bank will pay on recourse basis, that may hamper the right of the beneficiary to some extent while if UCP says nominated bank is to pay without basis, that will conflict with the idea of "no obligation". so its better to put the issue for nominated bank decision. the only reference in UCP about right to recourse is in article 8.

the best ICC opinion i know on this issue is
The inclusions of conditions under which a bank will offer negotiation, with or without recourse, are not for the ICC to arbitrate. Local law and relationships between advising banks and exporters will dictate those terms.
regards