An LC's independence from the underlying transaction it supports is one of the core tenets that distinguishes this instrument type from other promises. When disputes arise, courts at times have given uneven treatment to independent undertakings with regard to the independence principle.
In the past, the answer would be no. Chang-Soon Thomas Song, Attorney at KEB Hana Bank, explains what changed and one case where a remitter was able to recover from the beneficiary’s bank.
Part 2 of a series on the trade finance skills cliff, applying ethics and moral philosophy to trade finance for something hopefully amusing and genuinely informative.
Although automatic extension is not addressed in the URDG758 rules, the ISDGP articulated in 2021 contains provisions to help interpret such terms if included in a demand guarantee.
Recent ICC guidance addresses practical trade finance issues arising from the Middle East conflict. Having a nimble strategic approach for coping with operational risk is paramount for banks.
With regard to how fraud may disturb a bank's obligation to honour under an independent undertaking, courts have used various qualifiers to describe the level necessary. In his expansive article, Dr. Alan Davidson explores the concept of "Letter of Credit Fraud" under law and in the courts.
Surrendered bills of lading are not addressed in UCP or ISBP, so ICC was approached to opine on the topic. Kim Sindberg details the initial ask and the guidance ultimately given.
Over-insurance is not cause for concern under the UCP 600 practice rules, but it may raise unsettling questions that need addressed from a risk perspective.
With the immediate future of the existing ISBP now settled, the question turns to whether the industry should consider extending its role in a careful, deliberate way to reflect the realities of modern documentary credit practice.
A study of 135,000 Vietnamese trading firms reveals some interesting data regarding what it takes to access trade finance products from banks. Hint: start-ups do not get access.
