International Finance Law Case Study: UCP 600 and Documentary Credits

This case study examines a dispute between an issuing bank and a nominated bank concerning the validity of a documentary credit under the UCP 600. The central issue revolves around the issuing bank's contention regarding the legality of the documents presented. The case analyzes the application of UCP 600 Articles 14 and 18, which govern the examination of documents and the requirements for a commercial invoice, respectively. The analysis highlights that the issuing bank has the authority to check the validity and compliance of the documents presented, including ensuring the beneficiary's name and seal are in English. The case concludes that the issuing bank's contention is valid because the invoice did not meet the requirements of the UCP 600 and international banking regulations. The document provides a detailed legal analysis of the case, referencing relevant articles and international standards.

INTERNATIONAL
FINANCE LAW

Table of Contents
ISSUE:.............................................................................................................................................2
RULES:............................................................................................................................................2
APPLICATION AND CONCLUSION:.........................................................................................3
REFERENCES................................................................................................................................4

ISSUE:
There is discrepancy between the issuing bank of the latter of credit and the nominated bank over
the legality and validity of the documentary credit. The issuing banks have raised this question
and the nominated bank have presented argument against same. Now the issuing bank is under
the averment in context of article of UCP 600. The issues here is that weather the contention of
the issuing bank is valid and can it be upheld?
RULES:
UCP 600:
As per the provision of the UCP 600 (Uniform Customs & Practice for Documentary
Credits”) is set of rules and regulations that governs the interactional documents in case of
international trade and commerce.
Article 14 a: the standard of examination of documents:
As per the sub section of Article 14 of UCP 600, the nominated bank acts on its
nominated and the issuing bank which is the confirming bank is required to examine the
presented made it to determine that whether the documents presented to it are as per the
requisition and the facts presented on the face of the documents fulfils all the requirement of
being valid documents (Article 14, 2019). It is not the part of the issuing bank to determined and
check the validity and legality of the documents presented to it on its face.
Article 18 a: commercial invoice
This article presents the required of the invoice that is presented to the issuing bank for
checking the validity and examine the invoice under article 14 a. This article provides that
invoice must have been issued by the beneficiary only (Article 18, 2019). It must contain the
name of the applicant and must be made out in the same currency as in the letter of credit, also it
must be signed. The issuing bank have a right to check the issuance of the invoice and its validity
and truthfulness.
The international standard of the banking practice:
As per this standard the basic requirement for documentary credits includes submission
the original income of the shipment along with three copies to the issuing bank by the
beneficiary. Along with it also have an importance requirement that if nothing is stated between
the partiers for the issuance of letter of credit all the documents must be issued in the English
language. If the documents re presented in any other language it must be accompanied by the

documents in English (Antoniou, 2017). This means all the documents gives a understanding in
English language is present of all the detail in English is must for issuance of a documentary
credit.
APPLICATION AND CONCLUSION:
With application of above rules in the present case it can be stated that for an issuance
and validity of the letter of credit the power is vested solely on the issuing bank regarding
checking the validity of the all documents presented to it. This means the issuing bank in this
have a right as per the article 14 a over determining validity and relatability of the documents
(Alavi, 2019). Also, it can see the compliance on the basis of documents itself. Article 18 a
started that the invoice must be issued by the beneficiary only. The requirement of the
international standard defines that document must be in English and if anything is in another
language it must be represented in English as well. In the present case it can be seen that the
invoice did not contain any name of the beneficiary on its face and name and seal was not in
English language. Rather, it was in the Chinese. This means with the power vested to issuing
bank under article 14 of the UCP 600 it can check the validity of the documents which is not. It
can also be seen that the invoice did not contain the name of the beneficiary and it did not given
any profit in the English language that the invoice was issued by the beneficiary only and neither
it was signed. Hence, it can be concluded that as per the rules stated under article of UCP 600
and the international banking regulation the contention of the issue bank is right and the
averment made by the nominated bank can not be upheld. Moreover, it can be interpreted that the
Issuing bank has been given the full authority to check the requisition of the documentary credit
and decide the validity and legality of the documents presented to it.

REFERENCES
Books and journals
Alavi, H., 2019. WHAT IS COMPLIANT PRESENTATION UNDER THE LAW OF
DOCUMENTARY LETTERS OF CREDIT? A CRITICAL ANALYSIS OF ARTICLE 14 OF
THE UCP 600. East-West Studies, (9).
Antoniou, A. M., 2017. New rules for Letters of Credit: Time to update the UCP 600. Journal of
International Banking Law and Regulation. 32(4). pp.128-140.
Online
Article 14. 2019. [Online]. Available through :<http://www.tradefinanceguru.net/international-
rules/ucp-600/c-examination/article-14>.
Article 18 . 2019. [Online]. Available through :<http://www.tradefinanceguru.net/international-
rules/ucp-600/d-documents/article-06>.