Disputes over letters of credit take on added complexity where several parties are involved and each is situated in a different jurisdiction with no choice of law specified. This work examines the criteria applied to resolve such a situation.
Letters of credit usually involve at least four parties: (1) the buyer applicant, (2) the bank issuing the letters of credit, (3) the seller beneficiary, and (4) the corresponding bank confirming and advising or negotiating the letter of credit. It is not uncommon that these parties will be located in different jurisdictions with different substantive and procedural laws.
Another twist: the Uniform Customs and Practice for documentary credits (UCP) governs the letters of credit when incorporated. While the UCP is a set of rules and practices on the use of letters of credit, this particular codification does not offer solutions to the conflict of laws problem in disputes over the use of letters of credit in the absence of an applicable choice of law provision.
International Letters of Credit: Resolving Conflict of Law Disputes contains a particularly useful documents section which includes the UCC Rules and samples of letters of credit. Legal practitioners involved in financial and banking law or the settlement of disputes, financial institutions, and those in import and export will find this a useful resource on a complex but not uncommon issue.
- Relationships and Connecting Factors Related to a Letter of Credit Transaction
1.1. Operation of the Letter of Credit
1.2. Relationships Developed in a Letter of Credit Transaction
1.3. Connecting Factors Relevant to Letter of Credit Transactions
- Conflict of Law Rules
2.1. General Rules of Conflict of Laws in Contracts
2.2. Conflict of Law Rules in Matters of Letters of Credit
- Specific Criteria as a Solution to Conflicts of Laws in Matters of Letters of Credit
3.1. Application of the Law of the Site of Issue
3.2. Application of the Law of the Site of Performance of Payment
3.3. General Comments on Case Study: Applying the Law of the Site of Issue and the Site of Payment
3.4. Proposed Method to Evaluate Specific Criteria