WHICH PARTY WILL PAY CONFIRMATION FEES?

QUESTION

Dear Old Man,

Please guide:

Scenario:

– LC issued MT-700 by MCBLMUMUXXX MAURITIUS

– LC received and transmitted by BOMLAEADFTC UAE to BAFL-India MT-710

– LC requested and confirmed by BOMLAEADFTC UAE

– All charges outside (ALL LOCAL AND FOREIGN WHETHER WITHIN OR OUTSIDE IS ACCOUNT OF APPLICANT)

– Available by BOMLAEADFTC UAE Payment

– 1st confirming bank BOMLAEADFTC UAE

– 2nd confirmation by BAFL-India on request of beneficiary.

Remittance cover was made and sent to BOMLAEADFTC UAE claiming bill amount + confirmation charges. However, payment received from BOMLAEADFTC UAE only bill amount.

My question in this scenario who will pay 2nd confirmation charges applicant or beneficiary?

Warm regards,

Faisal Zaheer

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ANSWER

Hi,

What I understand from your description is that BAFL India added its confirmation to the LC (which had been confirmed by BOMLAEADFTC UAE) at the request of the beneficiary, and not at the request of the issuing bank.

The confirmation added by BAFL India is treated as a silent confirmation. Therefore, the beneficiary will pay confirmation fee to BAFL India whereas the applicant will pay all other charges including the confirmation fee payable to the 1st confirming bank – BOMLAEADFTC UAE.

Best regards,

Mr. Old Man