Don’t Walk Away: A Tried and Tested Alternative to “Pay and Walk”?

The “pay and walk” clause, a curious, rarely-sighted provision in documentary instruments, can evoke raised eyebrows and much head-scratching when encountered outside its original birthplace in the Australian finance market. Pay and walk provisions have increasingly surfaced in Asia-Pacific, the United States and the Middle East, but they have generally not been subject to significant public discourse in the trade finance space,[[1]] and remain somewhat mystifying and controversial. The prevailing view is that pay and walk clauses are, at best, unhelpful in international documentary credit practice. As will be explored below, pay and walk can arguably be rendered unnecessary by instead using long-established cash collateral arrangements.