Effective Notice of Refusal in Letter of Credit Transaction

Abstract:     
The main purpose of this paper is to consider the obligations of the issuing bank to provide a notice of refusal under Art 14. Rather than elaborating the substantial standard for refusal, Art 14 expressly details the procedure rules, which fall broadly into three aspects, namely, contents of the notice, time limits in giving the notice, form of the communication of the notice. This paper will examine each of the said three aspects in order, taking account of court decisions and relevant provisions of ISP98, so as to ultimately identify the circumstances in which the issuing bank's notice may be valid. An attempt will also be undertaken in this paper to consider some of the problems arising from this context in conjunction with established banking practices and further to suggest the revision of Art 14 as well.

Number of Pages in PDF File: 45

Keywords: UCP, Notice of Refusal, Strict Compliance, Independence Principle

JEL Classification: K33

working papers series