Although the letter of credit is essentially an international instrument with an age-old pedigree, a troubling number of serious disputes still founder on national provisions with respect to the fraud rule (or fraud exception). The rule is embodied in several major international agreements, but its adjudication takes place under national statutes in which in the opinion of Judge Xiang Gao of the Supreme People's Court of the People's Republic of China (PRC) a significant degree of further refinement and harmonization is called for.
Dr. Gao finds the best provisions and practices in respect of the fraud rule in the United States, the United Kingdom, Canada, and Australia, and applies these standards to the reformulation of the fraud rule in the PRC. In the process he surveys the entire field of the fraud rule in the law of letters of credit in its substantive aspects, thus going deeper than mere banking law analyses and revealing, for the benefit of jurists everywhere, the fundamental legal issues that must underlie all sound judicial reasoning in the area. In more practical terms, this approach also allows judges to meet their essential responsibility that of giving an answer when a case is put before them with the widest and best possible degree of discernment.
Among the many factors contributing to the law and practice pertaining to letters of credit, Dr. Gao finds the following elements, among others, particularly relevant to his subject:
the ICC Rulesthe UNCITRAL Convention Article 5 of the UCCSztejn v. J. Henry Schroder Banking Corp U.S.-Iranian casesthe United City Merchants case Drawing on all of these elements as well as on the drafting process of the Supreme People's Court that led to a new fraud rule provision in 2001, Dr. Gao gives us the deepest and most wide-ranging judicial analysis of this subject available. His unique study will be of great value not only to jurists and academics, but to all lawyers concerned with the legal underpinnings of international trade.
- The Letter of Credit and its Legal Framework
The Nature of Letters of Credit
The Legal Framework of Letters of Credit
Summary
- The Fraud Rule: An Overview
Meaning and Rationale
Historical Development
The Fraud Rule in the United States
The Fraud Rule in Other Jurisdictions
The Fraud Rule in ICC Rules
The Fraud Rule under the UNCITRAL Convention
Summary
- The Standard of Fraud
The Position in the US
The Position in the UK
The Position in Canada
The Position in Australia
The Position under the UNCITRAL Convention
Summary
- The Locus of Fraud
The Controversy
Case Studies
The Solution
Commentary
- Identity of the Fraudulent Party
Statutory Provisions
Applicant Fraud
Third Party Fraud: The Case of United City Merchants
Summary
- Presenters Immune from the Fraud Rule
Preliminary Observations
Likely Presenters
Conclusion
- The Fraud Rule in the People's Republic of China
The Legal System of the PRC
The Fraud Rule in the PRC