scholarly journals Autonomy Principle and Fraud Exception in Documentary Letters of Credit, a Comparative Study between United States and England

2015 ◽  
Vol 15 (2) ◽  
pp. 47-68 ◽  
Author(s):  
Hamed Alavi
Keyword(s):  
International Trade ◽  
Common Law ◽  
Legal Aspects ◽  
International Operation ◽  
Legal Personality ◽  
Letter Of Credit ◽  
Law System ◽  
American Law ◽  
Standards Of Proof ◽  
Letters Of Credit

Abstract Despite the fact that Documentary Letters of Credit are involved in process of International Trade for many centuries, but their legal personality is very new and their life span is much shorter than their existence. In the middle of Eightieth Century, Lord Mansfield introduced legal aspects of LC operation for the first time to the Common Law System. Later, International Chamber of Commerce started to codified regulations regarding international operation of Documentary Letters of Credit in 1933 under the title of Uniform Customs and Practices for Documentary Letters of Credit and updated them constantly up to current date. However, many aspects of LC operation including fraud are not codified under the UCP which subjects them to national laws. Diversified nature of National Laws in different countries can be source of confusion and problem for many businessmen active in international operation of Documentary Letters of Credit. Such differences are more problematic in Common Law countries as a result of following precedent. For Example, legal aspects of International LC transactions under British Law are only based on case law, however, American Law addresses Letter of Credit Operation under Article 5 of Unified Commercial Code. Due to important role of English and American law in practice of international trade, current paper will try to compare their approach to autonomy principle of in LC operation, fraud rule as a recognized exception to it and search for answer to following questions what is definition of fraud, and what are standards of proof for fraud in LC operation, under English and American law?

Part I Legal and Practical Challenges to Traditional Trade Finance, 7 Letters of Credit and Stop Payment Orders Made in the Issuer’s Country

2021 ◽  
Author(s):  
Enonchong Nelson
Keyword(s):  
Common Law ◽  
Critical Examination ◽  
Letter Of Credit ◽  
Rome Convention ◽  
The Us ◽  
The Law ◽  
Letters Of Credit ◽  
Contractual Obligations ◽  
Rome I ◽  
Made In

This chapter offers a critical examination of the significant, but largely unexplored, question whether, and to what extent, a foreign order restraining the issuing bank from making payment under a letter of credit can afford the issuing bank a good defence to a claim in a court outside that bank’s home jurisdiction. At common law, in England as well as in other jurisdictions, such as Hong Kong, Singapore and the US, such orders have only limited effect in the forum. This chapter argues that the approach of the English courts to article 4 of the Rome Convention of 19 June 1980 on the law applicable to contractual obligations meant that such orders could defeat a claim against the issuing bank in England only in very narrow circumstances. It goes on to examine the extent to which the changes introduced in article 4 of the Rome I Regulation of 17 June 2008 on the law applicable to contractual obligations have altered the position under English law, so that stop payment orders made in the issuer’s home jurisdiction may now have a much wider reach in England. The chapter contends that notwithstanding the amendments to article 4, in the specific context of letters of credit, the approach of the English courts under the Rome I Regulation is likely to be broadly similar to that under the Rome Convention. The Rome I Regulation has not (even unintentionally) opened the door to stop payment orders made in the issuer’s home jurisdiction.

Legal aspects of fitness for work

2013 ◽  
pp. 21-41
Author(s):  
Gillian S. Howard
Keyword(s):  
Human Rights ◽  
Common Law ◽  
Legal Aspects ◽  
Employment Law ◽  
England And Wales ◽  
Law System ◽  
Lower Courts ◽  
The Common ◽  
The Uk ◽  
The Right

The English legal system is based on the common law. The common law system in England and Wales developed from the decisions of judges whose rulings over the centuries have created precedents for other courts to follow and these decisions were based on the ‘custom and practice of the Realm’. The system of binding precedent means that any decision of the Supreme Court—the new name for the former House of Lords (the highest court in the UK)—will bind all the lower courts, unless the lower courts are able to distinguish the facts of the current case and argue that the previous binding decision cannot apply, because of differences in the facts of the two cases. However, since the UK joined the European Union (EU), the decisions of the European Court of Justice (ECJ) now supersede any decisions of the domestic courts and require the English national courts to follow its decisions. (Scotland has a system based on Dutch Roman law, and some procedural differences although no fundamental differences in relation to employment law.) The Human Rights Act 1998 became law in England and Wales in 2000 (and in Scotland in 1998) in order to incorporate the provisions of the European Convention on Human Rights into UK law. The two most important Articles applicable to employment law are Article 8(1), the right to respect for privacy, family life, and correspondence, and Article 6, the right to a fair trial.

scholarly journals THE TWO IMPORTANT DOCTRINES UNDERLYING DOCUMENTARY LETTERS OF CREDIT AND THE FRAUD EXCEPTION

2008 ◽  
Author(s):  
Tenielle Appanna
Keyword(s):  
International Trade ◽  
Letter Of Credit ◽  
Fraud Exception ◽  
Letters Of Credit

Documentary letters of credit are important tools in relation to international trade. The parties who make use of these instruments usually come from different countries and usually have different views on trade and customs. The parties generally do not know each other personally and have opposite interests in relation to the contract of sale. There is a sense of distrust towards each other, as both parties have serious concerns as to the other’s performance in terms of the contract. While the purchaser has a fear of receiving goods of an incorrect quantity or quality, or not receiving goods at all, the seller fears non-payment, or that the buyer refuses to accept the goods on a mere technicality. Coupled with the abovementioned is the fact that legal recourse will be expensive and may be complex taking jurisdiction into consideration. A documentary letter of credit eases some of these fears due to the unique doctrines which form the foundation of this instrument, and these will be discussed at length. The most frequently encountered exception to documentary letters of credit not being fulfilled is that of fraud, which will also be discussed at length.

scholarly journals Precedent as a Core Component of Anglo-American Law and Its Penetration into the Legal System of Ukraine

2020 ◽  
pp. 119-127
Author(s):  
Nepyivoda Vasyl ◽  
Nepyivoda Ivanna
Keyword(s):  
Legal System ◽  
Common Law ◽  
Civil Law ◽  
Legal Tradition ◽  
Stare Decisis ◽  
Law System ◽  
American Law ◽  
Judicial Lawmaking ◽  
The Common ◽  
Anglo American

The Anglo-American law have a considerable amount of accomplishments, which have become a worldwide asset. In terms of globalization and interaction, to use these achievements would be beneficial for further development of Ukrainian legal system. However, the very philosophy and reasoning behind the precedent-based common law is different from that in the civil law tradition of which the Ukrainian law is a part. This paper is intended to contribute to the examination how the mechanism of Anglo-American law operates in view of the expediency to introduce some of its elements into the Ukrainian jurisdiction. The initial part devoted to the emergence of, and formation of, the common law. It is noted that in the case of common law the influence of Roman law should not be denied. Relying mostly on praetorium ius experience, it has manifested itself in other directions and forms compare to civil law system. Therefore, the both, common law and civil law, despite their differences have been formed on the common ground – the Roman legal tradition. Taking into consideration that throughout their history they exchanged fruitful ideas, there is no irreconcilable, "genetic" incompatibility between them. Thus, it would allow to successfully implant certain common law elements, first of all precedent as a source of law, in the body of Ukrainian law, a part of civil law system. The paper notes that issues of common law mechanism have never been a priority for scholarly research in Ukraine as in a country of civil law tradition. The inertial influence of the Soviet law has also contributed to this situation. According to the communist ideology and the positivist visions on which the Soviet law was based, the precedent has not been considered as an acceptable legal instrument. In order to clarify how the mechanism works, the paper provides an overview of precedent and stare decisis doctrine as key components of common law. While a principle of stare decisis binding courts to follow legal precedents in cases with similar circumstances is in the core of Anglo-American law, in civil law systems precedent is not considered as binding. This discussion is followed by an analysis of judicial lawmaking. The paper specifies that in the common law systems, courts are not absolutely bound by precedents. In terms of radical changes in political, social or legal areas, they are entitled to re-examine and apply the law differently without legislative intervention, to adapt it to new circumstances. Thus, the Anglo-American legal tradition provides much broader scope for judicial lawmaking than Romano-German law. However, there is no consensus on the range to which it should be extended and to which extent it should rely on precedent. Within the framework of this controversial issue judicial activism and judicial restraint, two opposite philosophies of making a ruling in common law, are addressed. In order to examine the multifaceted nature of correlation between stare decisis principle and judicial lawmaking, the latest experience of the Supreme Court of the United States' on overruling precedents is considered. The paper summarizes that, most likely, mixed legal system associated with Nordic countries should be set as the reference point for the movement of Ukraine in this area. Such approach would provide rather broad scope for the operation of the common law elements, while safeguarding its omissions such as unjustified judicial activism.

scholarly journals Risk Analysis in Documentary Letter of Credit Operation

2017 ◽  
Vol 0 (0) ◽  
Author(s):  
Hamed Alavi
Keyword(s):  
Risk Management ◽  
International Trade ◽  
Risk Analysis ◽  
Current Paper ◽  
Management Theory ◽  
Letter Of Credit ◽  
Legal Principles ◽  
Strict Compliance ◽  
Letters Of Credit

Abstract Documentary Letters of Credit are among most popular methods of payment used in international trade. They function as an irrevocable promise of issuing a bank to pay instead of an applicant buyer to a beneficiary seller under the condition that the beneficiary presents complying documents with terms and conditions of the credit to the bank. One of the reasons for the popularity of the LCs in international trade is shifting the payment risk from an individual buyer to a bank with a much stronger financial standing. However, LC operation in international trade is not free of risk. Despite the fact that two main principles of the Documentary Letter of Credit’s Operation (Principle of independence and principle of strict compliance) facilitate the process of international trade significantly, but still all parties involved in LC operation are supposed to be cautious about the existing risks relevant to their role in LC operation. Current paper tries to use legal principles of documentary credits and risk management theory in order to define existing risks to each party (beneficiary, applicant and bank) in international LC transaction and find an answer to the question of what are exposing risks for involved parties? For this purpose, the paper starts with an explanation of the two main principles of LC operation and moves forward with using the risk management theory to explain existing risks for each party in detail.

scholarly journals Documentary Letter of Credit: A Pivotal Case for the Inefficiency of the Law of Contract

2014 ◽  
Vol 35 (4) ◽  
pp. 487-532
Author(s):  
Malgorzata Karolina Chmielewska
Keyword(s):  
International Trade ◽  
Comparative Analysis ◽  
Guinea Pig ◽  
Common Law ◽  
Civil Law ◽  
Contract Law ◽  
Letter Of Credit ◽  
Distinct Mechanism ◽  
The Law ◽  
Commercial Device

This study compares the methods used both in common law and civil law jurisdictions to deal with the basic problems relating to the documentary letter of credit. A unique commercial device was thus developed in international trade as a means of ensuring safe and swift payment for goods. Even though this distinct mechanism works efficiently in practice, the numerous attempts made to classify it legally have been unsuccessful. A comparative analysis of the legal conceptualizations traditionally used to explain the nature of credit reveals apparent shortcomings in contractual theories. Because the basis of the documentary credit appears to be an abstract promise to pay, this phenomenon seems to break through the conceptual framework of traditional contract law theory. This is due to the fact that the process of forming the credit does not fit into the ordinary offer-acceptance formula. Yet, the easiest solution—the credit as a "mercantile specialty" or a "sui generis contract"—avoids facing the true challenge of our era, which is re-thinking the concept of "contracts" under modern laws. Legal debates should be directed in a more functional direction in order to provide satisfactory theoretical grounds for providing solutions to obvious, but still unanswered questions such as why people ought to keep their promises and why only some of those promises are likely to be legally enforced. It seems that, in this regard, documentary credit would be a convenient "guinea pig" for most contemporary concepts relating to the law of contracts.

scholarly journals The Link Between Incoterms 2000 and Letter of Credit Documentation Requirement and Payment Risk

2006 ◽  
Vol 1 (4) ◽  
Author(s):  
Roberto Bergami
Keyword(s):  
International Trade ◽  
Preliminary Data ◽  
Letter Of Credit ◽  
Preliminary Results ◽  
Data Content ◽  
Industry Survey ◽  
Letters Of Credit

Letters of credit are an important finance instrument for international trade. These instruments are particularly useful in trade where the transactional values and trading risks are high. Essentially the letter of credit is a substitute for a buyer’s risk with that of his bank, as it underwrites the transaction. Exporters experience difficulties in achieving documentary compliance to the bank’s satisfaction and therefore run the risk of not being paid. Compliance is based on the accuracy and form of data content on documents required by the letter of credit. The more voluminous and complex the documentary requirements, the higher the non-compliance risk. This paper explores the link between international delivery terms and documentary requirements of the letter of credit. Preliminary data from an industry survey suggests that exporters are contracting on international delivery terms that may leave them unnecessarily exposed to non-payment risks. Although further investigation is required to determine whether alternate delivery terms would diminish the exporter’s risk, preliminary results indicate that it is possible to reduce payment risk by the strategic use of international delivery terms.

24. Documentary payments

2019 ◽  
pp. 645-690
Author(s):  
Eric Baskind ◽  
Greg Osborne ◽  
Lee Roach
Keyword(s):  
International Trade ◽  
Legal Issues ◽  
Letter Of Credit ◽  
Payment Mechanism ◽  
Letters Of Credit ◽  
Bill Of Exchange ◽  
International Sales

This chapter is divided into two main parts. First, it aims to provide an introduction to the concept of an important piece of property called an instrument, principally by focusing on one specific example: the bill of exchange. Second, the chapter considers a bank payment mechanism called the letter of credit, especially in conjunction with bills of exchange. Bills of exchange, of which cheques are a particular type, although declining in importance in domestic sales, remain important in international sales. While bills of exchange are not the only instruments, and letters of credit are not the only mechanism supporting the financing of international trade, focusing on these two important commercial documents makes it possible to obtain a good understanding of the types of legal issues involved in documentary payments.

scholarly journals RISKS AND REMEDY IN ISLAMIC AND CONVENTIONAL LETTER OF CREDIT: JORDANIAN PRACTICES

2020 ◽  
Vol 2 (01) ◽  
pp. 54
Author(s):  
Emad Mohammad Al amaren ◽  
Mohd Zakhiri bin Md. Nor ◽  
Che Thalbi Bt Md. Ismail
Keyword(s):  
International Trade ◽  
Foreign Trade ◽  
Letter Of Credit ◽  
Letters Of Credit ◽  
Conventional Banks

International trade and the movement of goods between parties living in different countries have spread in the last century and have become one of the fundamental features of the current trade. This proliferation of international contracts, of course, has its own problems. The problems of external Islamic or conventional letters of credit affect export, since letters of credit are considered a valuable tool used in financing foreign trade operations. Therefore, the problems faced by exporters in letter of credit reflect on and impact trade in general. Thus, the fewer the credit problems are, the more active foreign trade especially export will be. But if problems are relatively large, exports will contract. This study attempts to identify the problems of external and internal letters of credit facing the Jordanian traders and Jordanian Islamic and conventional banks, and to analyze them in an organized scientific manner, then proposing the appropriate recommendations to address these problems.

scholarly journals Comparative Study of Issuing Bank’s Obligations towards Beneficiary of the Letter of Credit under UCP and English Law

2016 ◽  
Vol 2 (3) ◽  
pp. 289
Author(s):  
Hamed Alavi
Keyword(s):  
International Business ◽  
Common Law ◽  
Legal Person ◽  
Letter Of Credit ◽  
Business Partners ◽  
Strict Compliance ◽  
Letters Of Credit ◽  
Credit Law ◽  
Shed Light

Process of international trade is complicated and risky. Risks will be more considerable when times come to deal with receiving/sending payments from/to unknown business partners in remote geographic areas. Employing documentary letters of credit (LC) is one of the ways to reduce payment risk in international business especially when partner’s financial standing is unknown to each other. By using the LC as method of payment, parties will shift payment obligation from buyer as a natural person to the guarantee of bank as a legal person. The process of using LC is complicated and involves different players and relations between them. Amongst all relations in process of LC transaction, relation between issuing bank and beneficiary is the most complicated and least clear from legal stand point. This article tries to shed light on vague aspects of relations between issuing bank and beneficiary by studying obligations of the issuing bank towards beneficiary under the law of documentary letters of credit while comparing provisions of UCP with English Common Law on subject matter. Main objective of paper is providing answer to the question of what is the role of issuing bank in the process of LC transaction and which liabilities does it have towards beneficiary? Article consists of five main parts. Part one will provide an introduction to function and relation among different parties in process of an international LC transaction. Further, it endeavours to tap on principle of autonomy and strict compliance as governing principles of documentary letters of credit. Part two and three will take a comprehensive look at legal basis of relations between issuing bank and beneficiary, as well as bank’s obligations under documentary credit law. Part four will discuss liabilities of issuing banks towards beneficiary and finally part five will touch upon situation in which bank will right to recourse against beneficiary.

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