• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.37
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• pp.107-130
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• 2008

The purpose of this study is to provide the guideline for the loss of documents relating to the delivery of documents under Letter of Credits transactions. If the documents are lost while in transit from the nominated bank to the issuing bank neither the nominated bank nor the issuing bank is liable as Article. 35 of the UCP600. Normally such matters are settled amicably between banks and problems are only likely to give rise to litigation where this cannot be done and the applicants does not want the goods or take delivery or sell them on because of the loss of documents. UCP 2007 Revision stated that a presentation is complying and forwards the documents to the issuing bank, whether or not the nominated bank has honoured or negotiated, an issuing bank must honour or negotiate, or reimburse that nominated bank. Accordingly, the applicant liable to the issuing bank for any damage sustained as a result of the loss of document. In such circumstance it might be possible to obtain a second(duplicate) set of documents that were sufficient to satisfy the applicant that the document were compliant and enable the applicant to obtain deliver of documents or comply with the terms of a sub-sale. If the applicant does not want the documents presented, no the less, the bank might find it difficult to prove that complaint documents had been presented and, subject to the terms of arrangement with the buyer, could be liable for damage sustained by the applicant as a result the loss of the documents.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.22
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• pp.71-106
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• 2004

Todays, L/C transactions in international trade are governed by UCP 500 and eUCP. But UCP 500 and eUCP do not cover all legal problem of L/C transactions. Therefore choice of laws in international L/C transactions are occurred. U.S.A. has an enacted law (UCC ${\S}5-Letter$ of Credit) to govern L/C transaction. But other countries has no special enacted law to govern L/C transaction. The reason is that there are difference between legal attitude of U.S.A. and other countries. American law considers L/C as a special device made by merchants. Therefore U.S.A. applies UCC ${\S}5-Letter$ of Credit instead of general contract law. UCC ${\S}5-Letter$ of Credit includes provisions of warranties, remedies, and so on that UCP 500 and eUCP do not include. But the liabilities of the Issuing Bank on the wrongful dishonor in L/C transaction is very important legal problem. First, this study is to justify concepts of honor and dishonor, and sufficient conditions for dishonor of the issuing bank. in UCC. Second, this study is to examine closely the liabilities of the Issuing Bank on the wrongful dishonor in L/C transaction. Third, this study is suggest distinctive features on the Liabilities to wrongful dishonor of the issuing bank in UCC ${\S}5-Letter$ of Credit and our trader's matters to be attended to L/C transactions governed by UCC.

• Journal of KIISE:Information Networking
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• v.37 no.2
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• pp.135-141
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• 2010

Mobile payment system has many problems in real mobile payment networks because of the characteristics of mobile device and the security of mobile payment process. Specially, the previous suggested mobile payment protocol can not verify a trust of issuing bank. Therefore, this paper has analyzed the efficiency of a mobile payment with a delegating authority for an issuing bank to trust issuing bank. As a result, the mobile payment protocol with a delegating authority for a payment verification of an issuing bank has improved the time complexities for key computation and communication resilience.

• International Commerce and Information Review
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• v.14 no.4
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• pp.433-456
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• 2012

The confirming bank undertakes to make payment to the beneficiary, provided that a complying presentation is made and complies with its confirmation. In case L/C fraud is evident, though, the confirming bank as well as the issuing bank does not have the obligation to make payment. That is, the confirming bank does not take the risks involving documentary fraud. The confirming bank cannot exercise the right to recourse toward the beneficiary or the nominated bank when the issuing bank finds the discrepancies which the confirming bank has not noticed. This is because under UCP600, the issuing bank or the confirming bank cannot refuse to make payment with the cause of documentary discrepancy after 5 banking days following the presentation of documents. Even if the issuing bank accepts the discrepant documents following the confirming bank's request to do so, the confirming bank does not have the responsibility for the confirmation. When under Usance Negotiation Credit, the confirming bank acts as the nominated bank, the confirming bank should make payment in no time if the beneficiary presents complying documents. Therefore, unless the confirming bank intends to make immediate payment, they should consider using Deferred Payment or Acceptance L/C in Usance Credit. It is also safer for the beneficiary to have the reimbursing bank's undertaking to the reimbursement than just have confirmation of the credit because in the latter case they may not have full payment due to disputes regarding discrepancies of the documents even if they have confirmation of the credit.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.76
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• pp.77-101
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• 2017

This article provides the definitions of the negotiation of credit, the negotiating bank and the negotiation credit. It further describes a number of legal status of negotiating banks by looking into the legal relations firstly between the beneficiary and the negotiating bank and secondly between the issuing bank and the negotiating bank. This study is in large part based on relevant provisions of UCP 600 and decisions of the Supreme court of South Korea. Under UCP 600 the definition of negotiation requires the purchase by the nominated negotiating bank of the required documents by advancing funds on or before the banking day on which reimbursement is due to the negotiating bank. A negotiation credit authorizes the negotiating bank who is a nominated bank to purchase from the beneficiary the documents required by the letter of credit and to present those documents to the issuing bank for reimbursement. If the credit is to be honoured at sight, reimbursement is due when the issuing bank determines that there has been a conforming presentation. Reimbursement under a letter of credit available by acceptance or by deferred payment is due at maturity of the credit. In particular, while the timing of advance by the nominated negotiating bank is up to the parties, a promise of the negotiating bank to advance the purchase price to a fraudulent beneficiary does not confer immunity from letter-of-credit fraud prior to its performance. This requires the negotiating bank who is notified of material fraud prior to making an advance to beneficiary to avoid a loss by using the fraud.

• Journal of Arbitration Studies
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• v.19 no.3
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• pp.179-198
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• 2009

This paper aims at assessing reasonableness for restraining the independence principle in the operation of documentary credit in case of the illegality appeared in the underlying transactions. It has been a major rule under the independence principle to keep the credit operation free from the defences made by the issuing bank and/or credit applicant with a view to prevent the payment as specified under the credit. And also, it is generally accepted in the international commercial community to examine a presentation to determine, on the basis of the document alone, whether or not the documents appear on their face to constitute a complying presentation. Even though these two essences are major rules in the credit operation, if a presentation is made with the documents forged or materially fraudulent, the issuing bank can refuse to pay the documents in respect of fraud rule based on fraud exception for which a court of appropriate jurisdiction would enjoin such honour. Now we have newly come to another situation to determine whether or not we have to apply the same as fraud rule which is applicable to the illegality in the underlying contract under the new conception of illegality principle based on illegality exception. English Commercial Court handled the illegality case under the case of Mahonia Ltd., v. JP Morgan Chase Bank in 2003 and Justice Colman decided that issuing bank can rely on illegality affecting a letter of credit as an excuse for failure to pay. This judgement brought about the acceptance of illegality principle based on illegality exception as a defence to payment under a letter of credit as far as the illegality concerned in the underlying transactions. It is noticeable that this case will affect our international commercial community more to rely on the illegality in the underlying transactions as a good issue to stop payment for the issuing bank in the L/C operation.

• International Commerce and Information Review
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• v.12 no.2
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• pp.85-107
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• 2010

A comprehensive electronic trade portal such as the electronic bills of lading, e-negotiations and so on, is developed by the Korea Ministry of Knowledge Economy and International Trade Association and serviced by KTNET. The portal, so called u-TradeHub, formally started to provide its services on 22nd May, 2009. If the shipper issues electronic bills of lading, the negotiating bank examines it through the established e-Nego system. However, the issuing bank overseas cannot examine the electronic bills of lading, because any interactive system does not exist. So, after the e-Nego, the electronic bills of lading gets automatically transformed into the paper-type electronic bills of lading and issuing bank examine paper B/L. In process of examining documents, the beneficiary using electronic means in letter of credit transactions may face some risks such as the corruption to the electronic bill of lading after its issuance by the carrier, the corruption after e-Nego and the corruption after the presentation to the issuing bank. In this paper, we studied the problems on corruptions to occur in the middle of the examination process of the electronic bills of lading and suggestions how to solve them are discussed.

• Korea Trade Review
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• v.41 no.2
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• pp.231-250
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• 2016

The study attempts to consider L/G(Letter of Guarantee) in a different angle, which is internationally used as a way of commercial customs and practices in a case when the consignee wants to receive the goods without the original Bill of Lading, Thus, this study focuses more on verifying the usage of L/G in Mixed Payment System and the range of guarantee responsibility by an issuing bank through case analysis. This case uses a mixed payment method of L/C(Letter of Credit) and T/T(Telegraphic Transfer) in the transaction of goods. The issuing bank of L/C issues L/G with the amount of L/C which is the same as the amount as C/I(Commercial Invoice). However the carrier deliver all goods laden under both L/C and T/T payment with the production of L/G. In this case, because the buyer is unable to pay, the seller makes a claim for damages to the carrier that the carrier delivers the goods to the buyer against L/G. Finally, the judge gives a decision that the issuing bank of L/G should pay the whole amount of the goods. In this case, the main issue of the dispute is the range of guarantee responsibility by the issuing bank of L/G. As a result of the case analysis, the study suggests two counter strategies for smooth utilization in international trade environment. First, in the case of mixed payment system, a seller should issue a commercial invoice separately based on the amount of each settlement plan in order to clarify the liability of guarantee. Second, banks should establish a new form for L/G including a sentence for verifying liabilities of the bank's side in the current form of L/G.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.12
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• pp.519-551
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• 1999

When an issuing bank issues a documentary credit, it must decide if the reimbursement will be a direct or simple or a bank-to-bank reimbursement. This decision is based on the bank that is nominated to pay, incur a deferred payment undertaking, accept drafts or negotiate. If an issuing bank decided bank-to-bank reimbursement, it must include the information in the credit instructing the nominated bank on how to obtain reimbursement. This instruction includes the name of the reimbursing bank, an indication that the reimbursement is subject to the Uniform Rules for Bank-to-Bank Reimbursements Under Documentary Credits ('URR'), ICC Publication 525 and any additional information that affects the nominated bank's ability to receive reimbursement. Until recently, reimbursements were the subject of outline regulation by Article 19 of the Uniform Customs and Practice for Documentary Credits ('UCP') and national law. Now, however, the International Chamber of Commerce has drafted URR, designed to emulate the harmonization of rules governing documentary credits achieved by the UCP. The URR are complementary to the UCP, which they are not intended to override or change. They became effective on July 1, 1996. The purpose of this study is to promote understanding on the Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits. In this paper, I studied the following subjects:(1) Bank-to-Bank Reimbursements tranaction under Documentary Credits, (2) Meaning of the URR's promulgation, (3) Analysis on the URR's Article. (1) General provisions and definitions, (2) Liabilities and responsibilities, (3) Form and notification of authorisations, amendments and claims, (4) Miscellaneous provisions.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.49
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• pp.139-164
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• 2011

Traditionally courts have been adopted over the years two standards of dealing with compliance of documents such as strict compliance and substantial compliance and the substantial compliance, which was somewhat less demanding than the strict compliance. However the new guidelines of ICC's international standard banking practice for the examination of documents under documentary credits set up how the UCP is to be applied in practice. The payment obligations of an issuing bank to a beneficiary are independence of the performance or the nonperformance of any contract underlying the letter of credit. However, strictly applying the principle of independence and abstraction could produce unfair results by operating unjustly enrich an unscrupulous beneficiary in case of fraud. Accordingly, when a beneficiary presents complying documents, the issuing bank is bound to honour the presentation unless the fraud rule applies on the facts of the case such as forged or material fraud. If it does, the issuing bank(issuer) needs not pay despite the complying presentation of documents by the beneficiary under the Uniform Commercial Code Article 5-109 and case law in America. However the fraud rule was not addressed in UCP 600. In conclusion, view in terms of legal principle and the court cases is variable and difficult to honour or dishonour the presentation in case of application of the independence principle and fraud rule such as the problems on burden of proof timely, possibility of granting injunction in order to protect against victim for bona fide applicant.