Uniform Rules for Bank-to-Bank Reimbursements for Documentary Credits (URR 725)
In most cases under LC, reimbursement by the issuing bank is made using the service of a now as Reimbursing Bank’. And the process of making reimbursement using the service of the Reimbursing Bank is known as Bank-to-Bank Reimbursement Arrangement. It has been referred to in article 13 of UCP 600; however, the process is guided by a separate ICC set of rules titled, The Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits, (ICC publication No 725) which came into
effect from October 1, 2008 containing 17 articles. To get coverage of the rules, it must be stated on the face of reimbursement authorization issued by the Issuing Bank. As in the case of UCP 600, the URR 725 permits modification and exclusion of any provision of the rules. URR suggests two way of making reimbursement one simply by authorizing Reimbursing Bank to make reimbursement to the Claiming Bank; and two, by authorizing Reimbursing Bank to issue a reimbursement undertaking to the Nominated Bank one is revocable whereas the second one is irrevocable. Reimbursement undertaking offers greater security to reimbursement to the Nominated Bank and thus to the exporter. The rules of URR assign liabilities and responsibilities of different parties involved in the process of reimbursement.
Article 17-Interest Claims/Loss of Value