Advanced L/C Case Studies

(T. O. International Trade Seminar)

Introduction

International traders nowadays possess better knowledge on the L/C operations. As a result, parties play more tricks on L/C and disputes increase at an alarming rate. Bankers have to face rapid changes in maritime and multimodal transport, insurance, trade law, and other sophisticated technologies. The UCP 500 cannot resolve all these changes. It also brings new problems due to certain articles carrying grey areas and often misinterpreted by parties. This workshop compiles important legal cases on UCP 500 in U.K. and the Americas, answers to queries from National Committees provided by ICC Group of Experts, and private consultancy cases of Mr. T. O. Lee as case studies for group discussion and analysis, with names of the parties protected. Participants can grasp the right interpretation of these grey areas on the UCP 500 and at the same time can learn from the real life cases to improve their L/C problems solving and disputes prevention skills.

Workshop Outline

  1. Analysis of Some Special Terms in L/C
    • to ensure that the beneficiary will provide notice of acceptance or rejection of amendments.
    • payment subject to certificate issued by authorities in importer's country.
    • payment subject to a future event not controllable by the beneficiary.
    • baby L/C payment subject to master L/C payment.
    • asking for data to appear in the wrong document.
    • certificate of compliance to the reimbursing bank.
  2. Procedural Malpractice of the Issuing Bank
    • Incorrect interpretation of "on its face" in determination of discrepancies.
    • approaching the applicant incorrectly, putting the bank in an awkward situation.
    • losing negotiating bank's power of recourse for unconfirmed L/C.
    • passing documents to the applicant for examination.
    • sending notice of dishonour incorrectly in terms of contents, timing, and means.
    • returning documents without preliminary notice of intent.
  3. Not Understanding A Bank's Own Role in L/C
    • ICC's official interpretation of the meaning of a nominated bank.
    • confirming bank's obligations in L/C after amendments.
    • applicant bank v. applicant
    • negotiating bank's right of recourse as holder of drafts under the Basic Law
    • a bank's power to transfer a L/C.
  4. Nature of Letter of Credit
    • Difference between Commercial L/C and Standby L/C.
    • Why the L/C is not a contract?
    • Why the L/C is not an absolute payment undertaking?
    • Can L/C payment be subject to foreign exchange control?
    • Qualification of non documentary conditions - an expert's view.
  5. Injunctions and Sanctions
    • When should a court of law issue an interim injunction to stop L/C payment?
    • The fraud rules as related to L/C payment obligation.
    • Impact of U.S. government sanctions to payment under L/C.
    • Other dirty tricks banks in certain countries play to avoid payment under L/C.

The Speaker

Mr. T. O. Lee, FAE, MCIArb, MITD

Duration

One-day workshop

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