Because standbys and demand guarantees often contain automatic extension clauses, ICC Opinion TA954 offers important lessons for practice and the need for sound drafting of such clauses.
As the year draws to a close, this month’s DCW focuses on the issues likely to carry into 2026. Drafting discipline, honor risk, and the continued influence of courts and regulators on LC practice are all in focus.
We begin with a response to last month’s article on ICC Opinion TA954, challenging its characterization as merely educational and unpacking the real exposure created by poorly drafted evergreen clauses. From there, an executive summary of the IIBLP New York Standby & Guarantee Forum explores authentication, electronic records, syndicated SBLCs, and recent global case law. This month's lineup also features 3Q25 U.S. LC issuance data, a Supreme People’s Court decision in Luoyang Aviation v. Korea Kookmin Bank, and focused ICC updates as practitioners take stock before year-end.
This article responds directly to commentary published in DCW last month on ICC Opinion TA954, expanding the discussion around evergreen standby clauses and their drafting implications. It examines how notice of non-extension should be interpreted in practice and why imprecise wording can unintentionally extend exposure or alter drawing rights. The analysis reinforces the importance of careful drafting under UCP600 and ISP98, particularly where timing and method of notice determine when and how a standby may be drawn.
Luoyang Aviation Construction Co. v. Korea Kookmin Bank [2025] China’s Supreme People’s Court has dismissed an issuing bank’s retrial application in a high-value transferable LC dispute, leaving intact rulings that required the bank to honor a second beneficiary’s complying presentation. The decision addresses alleged fraud, late-raised discrepancies, and the operation of UCP600 Article 38, offering important guidance on the rights of second beneficiaries, the limits of refusal notices, and the autonomy of letters of credit in complex multi-bank transactions.
The latest LC issuance data for the top 600 U.S. banks as of 3Q25, detailing net amounts outstanding across standby, financial, performance, and commercial LCs to capture quarterly trends and institutional activity.
This conference report captures wide-ranging discussions on how standby and guarantee practice is evolving across documentation, litigation, and technology. Panels examined authentication responsibility, auto-extension risk, cancellation controls, and the treatment of electronic records, alongside lessons drawn from recent SBLC and guarantee cases across multiple jurisdictions. The report also explores syndicated SBLC structures, capital relief and participation mechanics, and practical drafting tests designed to prevent open-ended exposure, offering practitioners a forward-looking view of risk management challenges and emerging best practices.
Scam Survey
UK Company behind Advance Fee Scam Shut Down: A London High Court has ordered the winding-up of a company that took substantial upfront fees to arrange a large financial guarantee but failed to deliver any services. The case underscores persistent risks around firms marketing SBLCs and bank guarantees, and the importance of due diligence when engaging non-bank financial intermediaries.
Indian Officials Pursue Large-Scale Loan Fraud Case: India’s Enforcement Directorate has filed a PMLA prosecution complaint alleging large-scale misuse of letters of credit and export packing credit facilities to obtain INR 110 crore in bank financing. Investigators claim the transactions were circular, unsupported by real exports, and designed to launder funds—raising renewed compliance concerns around trade finance controls and documentation scrutiny.
As always, thank you for reading. From the whole team at DCW, we wish you a happy holiday season and a prosperous 2026.
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Chris Sandler is the COO of the Institute of International Banking Law & Practice, the organization which produces DCW. Reach Chris at sandler@iiblp.org
