Recent Challenges to the Independence Principle in the Courts

Why Independence Matters

In recent years, the independence principle of undertakings subject to ICC practice rules, i.e. UCP600, URDG758 as well as ISP98, has faced challenges in some court decisions. Even when a beneficiary has fulfilled its contractual obligations to ship the cargo as agreed in the sale contract and presented complying documents as called for under a bank-issued independent undertaking, an issuing bank may refuse payment because the applicant is subject to sanctions before the bank honours the complying presentation.  A court may also rule in favour of a confirming bank if the applicant or issuing bank is subsequently subject to sanctions by foreign authorities.