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UCP 600: Confirming Banks And Nominated Banks.

Article Excerpt
Fortis Bank S.A./N.V. and Stemcor UK Limited v Indian Overseas Bank1 is one of the first cases to consider the language of the current edition of the Uniform Customs and Practice for Documentary Credits2 ("UCP 600") relating to the right of reimbursement owed by an Issuing Bank to a Nominated Bank or Confirming Bank in respect of a negotiated or honoured credit.

UCP 600 is the latest set of contractual rules published by the International Chamber of Commerce which, although without the force of law, parties may agree to incorporate into a credit (at which point the rules will become contractually binding upon them).

This case provides comfort to Confirming Banks and Nominated Banks in respect of their right to reimbursement from the Issuing Bank.

Facts MSTC Limited, the Applicant, requested the issue of certain letters of credit ("L/Cs") by Indian Overseas Bank ("IOB"), the Issuing Bank, in favour of Stemcor UK Limited ("Stemcor"), the Beneficiary, in connection with certain purchase contracts between Stemcor and a third party.

Each L/C was stated as being subject to UCP 600, contained a request from IOB to Fortis Bank S.A./N.V. ("Fortis") to advise each L/C to Stemcor and stated that Fortis "may add" its confirmation to that L/C and that the L/C may be "confirmed at the request and cost of [Stemcor]".

At the request of Stemcor, Fortis...

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