Is a Confirming Bank Always a Nominated Bank? Understanding Dual Confirmation and Place of Expiry

Whether a Confirming Bank is a Nominated Bank – and what happens when there are two confirming banks?

✅QUESTION

Dear Mr. Old Man,

You mentioned that a confirming bank is certainly a nominated bank. Could you elaborate on this—especially in relation to the credit’s place of expiry and the situation where two confirming banks are involved?

Let’s suppose a credit is issued by an Iraqi bank in Baghdad and sent to a Lebanese bank, ABC Bank in Beirut, requesting it to confirm and transmit the credit to a Thai bank, XYZ Bank in Bangkok. The credit also requests XYZ Bank to add its confirmation. The place of expiry is at XYZ Bank’s counter in Bangkok.

In this case, both ABC and XYZ are confirming banks. Which bank is the nominated bank? Can both be nominated banks even though there is only one place of expiry?

Also, suppose XYZ Bank is to seek reimbursement from ABC Bank, but ABC will only pay against complying documents. What happens if XYZ sends the documents but they never arrive at ABC? Can ABC still pay without receiving the actual presentation?

And finally, if the beneficiary presents the documents to XYZ Bank on the last day of credit validity, and those documents are then couriered to ABC Bank after expiry—how long is that delay acceptable? When do we say the documents are lost in transit?

Would appreciate your insights.

Best regards,

N.N

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ANSWER

Hi,

This is a great question, and it touches on some important interplays between confirmation, nomination, and expiry rules under UCP 600.

✅ Is a Confirming Bank Always a Nominated Bank?

Yes, in my view, a confirming bank is always a nominated bank.

Let’s refer to Article 2 of UCP 600: a nominated bank is one with which the credit is available. Now look at Article 8: it uses the terms “another nominated bank” or “other nominated bank” when referring to a confirming bank, clearly implying that a confirming bank is (also) a nominated bank.

So even if the credit is available with a third bank, once a bank adds its confirmation, it becomes a confirming bank and a nominated bank for the purposes of Article 8.

✅ What About Two Confirming Banks?

In your example, ABC Bank and XYZ Bank have both confirmed the credit. That means they’re both nominated banks:

• ABC Bank is a nominated (and confirming) bank—probably tasked with honouring or reimbursing.

• XYZ Bank is also a nominated (and confirming) bank, possibly with a negotiation role.

The key lies in the place of expiry.

Since the credit expires at XYZ Bank’s counter, the beneficiary must present the documents to XYZ. Provided the documents are complying, XYZ must negotiate without recourse and forward them to ABC for reimbursement. Once XYZ has negotiated and dispatched the documents, the expiry at its counter is satisfied. The credit “ends” at XYZ in that sense.

✅ What if Documents Are Lost in Transit?

This is where Article 35 of UCP 600 applies:

If a nominated bank determines that a presentation is complying and forwards the documents to the confirming bank or issuing bank, the confirming bank must honour or reimburse—even if the documents are lost in transit.

So if XYZ has determined that the documents are complying and has forwarded them to ABC, ABC must pay, even if the physical documents never arrive.

Of course, XYZ Bank will need to prove it forwarded complying documents—usually by providing:

• A full photocopy of the documents,

• Courier tracking/dispatch receipt,

• Proof of compliance under UCP rules.

✅ How Many Days for Document Examination?

Under Article 14(b), each bank involved has a maximum of five banking days from the date of presentation (at its counter) to examine documents.

In this case, XYZ Bank has 5 banking days to examine the documents after the beneficiary presents them. Once XYZ negotiates, ABC Bank will use its own 5 banking days upon receipt (even if after expiry), but ABC cannot reject for late presentation, since presentation occurred on time at XYZ.

✅ When Are Documents Considered Lost?

There’s no fixed rule in UCP 600 on how many days must pass before declaring documents lost in transit, but here’s a common practice:

• If no acknowledgment is received within 8–10 days after dispatch,

• The negotiating bank should contact the reimbursing or confirming bank,

• Simultaneously, the courier company should be consulted for tracking updates.

If tracking confirms non-delivery and the documents can’t be recovered, banks usually consider them lost after 10–14 days—but this depends on the case.

✅ Practical Tip

With today’s courier services (e.g., DHL, FedEx), delivery is fast and traceable. For example, from Da Nang to New York takes 3 days. So it’s very feasible to confirm loss or delay within 7–10 days.

☝️Conclusion:

• Yes, both confirming banks are nominated banks.

• The place of expiry determines where the beneficiary must present documents.

• ABC must honour if XYZ negotiates complying documents—even if the originals are lost in transit.

• Article 35 protects the beneficiary and the nominated bank in such cases, provided proof of dispatch and compliance exists.

Kind regards,

Mr. Old Man