Is Confirming Bank of a Letter of Credit Protected Under UCP 600?

Article 7(c) of UCP 600 states: "An issuing bank undertakes to reimburse a nominated bank that has honoured or negotiated a complying presentation and forwarded the documents to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank's undertaking to reimburse a nominated bank is independent of the issuing bank's undertaking to the beneficiary."

Nowhere does UCP 600 say that the issuing bank must reimburse the confirming bank (see UCP 600 sub-article 7(c)).

Is the above statement true?

In my reading of UCP 600, I see that the rules both imply and necessitate the interpretation that a confirming bank is a nominated bank. The reasons are set forth below:

• UCP 600 sub-article 8(a) requires the confirming bank to honour or negotiate a complying presentation if the stipulated documents are presented to the confirming bank or to any other nominated bank.
• Sub-article 8(a)(i) makes clear that the confirming bank must honour if the credit is available with another nominated bank and that nominated bank does not honour or negotiate a complying presentation made to it.
• That the confirming bank is (in sub-article 8(b)) “irrevocably bound to honour or negotiate as of the time it adds its confirmation to the credit” means that the credit is available with the confirming bank. Nominated bank means the bank with which the credit is available (article 2).
• In sub-article 8(c), a confirming bank undertakes to reimburse another nominated bank that has honoured or negotiated a complying presentation.
• The aforementioned use of the adjectives other and another to refer to a nominated bank apart from the confirming bank can only mean that the confirming bank is also a nominated bank.

(my emphasis added in italics)

Hence, a confirming bank may rely on all the protections accorded a nominated bank in UCP 600. The undertaking of an issuing bank to reimburse a nominated bank (sub-article 7(c)) applies to any confirming bank.

This is a partial and modified extract of my comments appearing in the Nov/Dec 2020 issue of Documentary Credit World under "Readers Speak: ICC Was Right To Issue Interpretation of UCP 600 Article 35", pp. 13-14.