Article 13 – Foreign Laws and Usages
Clause: “The issuing bank shall be bound by and liable to indemnify the reimbursing bank against all obligations and responsibilities imposed by foreign laws and usages.”
Explanation: Article 13 of URR 725 emphasizes the responsibility of the issuing bank to indemnify the reimbursing bank against any obligations or liabilities that arise due to the application of foreign laws and customs. This means that when a transaction involves multiple countries, the laws and practices of those countries may differ. The issuing bank must ensure that the reimbursing bank is not unfairly burdened by these foreign regulations. The issuing bank is therefore responsible for covering any costs or legal obligations that may arise from these foreign laws.
Example: Suppose an issuing bank in India requests a reimbursing bank in France to handle the reimbursement under a letter of credit. If the French bank incurs any additional obligations due to specific French banking regulations that are not present in Indian law, the Indian issuing bank must compensate the French bank for any losses or obligations. For instance, if the French law imposes a tax on the reimbursement transaction, the Indian issuing bank must indemnify the French bank for this tax.
Article 14 – Disclaimer on the Transmission of Messages
Clause: “A reimbursing bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages, delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, reimbursement authorization or reimbursement claim, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in the credit, reimbursement authorization or reimbursement claim. A reimbursing bank assumes no liability or responsibility for errors in translation or interpretation of technical terms.”
Explanation: Article 14 of URR 725 provides a disclaimer for the reimbursing bank concerning the transmission of messages and documents. The reimbursing bank is not liable for delays, loss, damage, or errors that occur during the transmission of these communications, provided the bank follows the instructions laid out in the credit or reimbursement authorization. Furthermore, if the bank chooses the method of transmission in the absence of specific instructions, it still holds no liability for any issues arising from that choice. The bank is also not responsible for any errors in translating or interpreting technical terms.
Example: Imagine a reimbursing bank in Germany is transmitting documents related to a letter of credit to a beneficiary in Japan. If the documents are delayed, lost, or damaged in transit, or if there is a translation error in a technical term, the reimbursing bank is not responsible for the consequences, provided they followed the instructions given by the issuing bank. For example, if a key technical term is misinterpreted during translation from English to Japanese, leading to confusion, the reimbursing bank is not liable for any resulting issues, as per Article 14.