Sanctions clauses that are wisely or imprudently constructed continue to be inserted into trade finance instruments and may heavily impact the legal rights and transactional obligations of involved parties.
Various articles from the June 2024 edition of DCW caught the attention of ICC Banking Commission Senior Technical Advisor Dave Meynell who offers the following comments.
In a high profile case involving standby letters of credit issued in connection with aircraft leases to Russian airlines and
-- link to Kuvera case
In Kuvera Resources Pte Ltd. v. JPMorgan Chase Bank, N.A., the Singapore Court of Appeal on 28 September 2023 reversed the trial court’s judgment granted in favour of JPMorgan. (Summary of trial decision at Nov./Dec. 2022 DCW 18). JPMorgan added its confirmations to two UCP600 letters of credit issued by Dubai-based Bank Alfalah Ltd. to support a resale of coal cargoes between an Indonesian seller and UAE buyer. Kuvera Resources was beneficiary under the credits as it had advanced funds to the Indonesian on-seller. Included in its advices and subsequent confirmations was JPMorgan’s Standard Sanctions Clause. (See boxed text).
Sanctions clauses that are wisely or imprudently constructed continue to be inserted into trade finance instruments and may heavily impact the legal rights and transactional obligations of involved parties.
Exploring the steps and considerations for banks to effectively navigate the complexities of true sale unfunded risk participation, identifying product and regulatory nuances, and understanding practical applications through use case scenarios.
Fraud prevention is a crucial pursuit, but is an interim/hybrid solution requiring a beneficiary’s bank to vouch for the beneficiary the answer? Or does it introduce added risks?
ICC TAB 9 points out that there is a risk of documents being presented to more than one bank at the same time, especially under an LC that is freely negotiable, but it stops short of making any recommendations for avoiding this risk. Here’s my suggestion.
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