A letter of credit is built on a simple promise: the bank pays on a complying demand, and the underlying quarrel stays out of it. This month tests that promise from several directions, from a UK sanctions ruling to the Strait of Hormuz disruption, to a New Jersey bank that couldn't say what its own LCs were for.
This month also brings updated 1Q26 issuance data, fresh Job Board listings, and two new DCW profiles worth your time.
When a complying demand lands under a standby, but paying it might breach sanctions, which way does the bank jump? David Williams reads the UK Supreme Court's Celestial Aviation judgment and finds it gives banks firmer ground on two questions that have long kept trade finance lawyers up at night: when sanctions actually block payment, and whether a bank that holds back in good faith is protected if it gets sued. The ruling draws the net wide, but it leaves a safety valve worth knowing before the next demand arrives.
Zahoor Dattu traces how disruption in the Strait of Hormuz radiates out from stranded tankers to stressed letters of credit. Applicants lean on banks to find discrepancies, corporates reach for injunctions on force majeure grounds, and banks pull back on amendments and pre-acceptance discounting just as exporters need liquidity most. The piece argues that geopolitical risk has become a core banking risk and explains what that shift means for anyone relying on the autonomy of an LC.
Should the ISBP look beyond its traditional boundaries? While the guidance has long focused strictly on document examination, Meynell points out that today's digital documents are structured inside systems long before banks ever see them. He argues that to stay relevant, the ISBP must evolve from a static reference point into a living framework—one that acknowledges this broader digital context and bridges the gap between how documents are prepared and how they are reviewed.
A recent academic study of 135,000 Vietnamese trading firms puts hard numbers to industry intuition. The data show that LCs cluster heavily around established mid-tier importers. Meanwhile, smaller firms often want them but can't qualify, and foreign-owned firms bypass them entirely through intra-group financing. It puts numbers to what practitioners already sense: LCs live right in the middle of the global risk spectrum, not at its extremes.
DCW’s latest quarterly dataset covers LC issuance across the top 600 U.S. banks, with updated functionality that makes it easier to sort, search, and compare institutions. The release provides a detailed view of standby and commercial LC activity.
At heart a franchise dispute rather than an LC case, this New Jersey ruling is worth noting for the structure lurking in the background. Four letters of credit totaling more than USD 2.5 million would honor a draw only if the applicant first funded the issuing bank's indemnity, a condition that quietly destroys the independence and certainty an LC is supposed to provide. The flaw was driven home in a civil deposition, where the issuing bank, Soleil Chartered Bank, had its managing director concede he could not say what value the instruments actually offered the beneficiary.
Free Webinar
June 23: 4pm Singapore time
Join ADB and members of the DCW Editorial Advisory Board to learn how the Middle East crisis is impacting trade finance in Developing Asia. Experts from top institutions will tackle everything from delivery delays and force majeure to marine insurance and future normalization.
We've heard from many of you expressing interest in the new DCW Job Board. We've added more positions, and are receiving several inquiries daily. We'll keep you posted as new roles are listed, but for now feel free to browse the 28 live listings across different locations.
We feature DCW Editorial Advisory Board member Xiang Gao, Professor of Law at China University of Political Science & Law, who drafted China's first LC rules and wrote the world's first monograph on LC fraud, reflecting on a career spent building the legal machinery behind China's trade finance practice.
We also speak with Iqbal Karmally, former Head of Trade Finance at Sharjah Islamic Bank, who shares why he sees document examination as an analytical discipline rather than a clerical one, and why he believes the move from paper to digital makes that mindset matter more, not less.
What holds steady through unsteady times is a community that reads the fine print so the rest of the market doesn't have to. Thanks, as ever, for being a part of it.
Paid members have full access to expert case summaries, practical eBooks, editorial analysis, and CPD credit.
Chris Sandler is the COO of the Institute of International Banking Law & Practice, the organization which produces DCW. Reach Chris at sandler@iiblp.org
