Best Trade Solution

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.

Regards
Shafique

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.

I see this quizz very simple:
1. According to art 7 a: Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honour if the credit is available by
2.According to art 6 d ii ........... A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank
Therefore, the fact that the BanK B presented documents to issuing bank does not makes the issuing bank entitled to withdraw its undertaking which is primarly addressed to beneficiary and in subsidiary to a nominated bank .
The fact that bank B has declared it has negotiated docs (and actually had no authority to do that) , it does not change the position of issuing bank which must honour a complying presentation. The only thing you have to consider in this particular case is that the place of presentation has switched to issuing bank place according to art 6 d ii .
As such the answer A is the correct one, provided the docs arrived to issuing bank counters before expiry date.
PS . The question does not say the issuing bank negotiate, just to examine docs and pay which is correct!

Issuing bank cannot negotiate. If documents are presented to issuing bank directly, it must make payment through a nominated bank. Because there are also chances of beneficiary submitting the documents to nominated and gets nogotiated. Inorder to avoid this kind of duplications and fraud issuing bank should route payment through nominated bank if documents are submitted to issuing bank directly.