Table of Contents

List ofContributors                                                                                                               xv

List OfAbbreviations                                                                                                           xvii

Table of Cases                                                                                                                     xix

Table of Legislation                                                                                                         xxxiii

PART I: LEGAL AND PRACTICAL CHALLENGES TO TRADITIONAL TRADE FINANCE

1.    The UCP Regime: Past, Present, and Future                                                           3

James E Byrne, Soh Chee Seng, and Christopher Hare

I.            Introduction                                                                                                   1.01

II.          The Historical Perspective                                                                               1.02

III.         The Present Context                                                                                       1.08

face="Times New Roman">A.                 Reliability                                                                                                 1.10

B.                  Competition                                                                                             1.12

C.                  Technology                                                                                              1.14

D.                 Language, Development, and Regulation                                                   1.17

IV Towards UCP 900?                                                                                                1.21

A.                 TheProceduralQuestion                                                                             1.23

B.                  TheSubstantiveQuestion                                                                           1.26

V Conclusion                                                                                                            1.36

2.     The Letter of Credit as a Contract                                                                           22

Sandra Booysen

I.            Introduction                                                                                                   2.01

II.          Overview of the Letter of Credit Contractual Relationships                              2.06

A.                 Buyer and Issuing Bank                                                                            2.06

B.                  Issuing Bank and Correspondent                                                               2.07

C.                  Buyer and Correspondent                                                                          2.08

D.                 Collecting Bank and Seller                                                                        2.09

III.         lang=EN-US style='font-size: 9.0pt'>Issuing/Confirming Bank and Seller                                                                2.10

A.                 The Letter of Credit and the Requirements for Contract Formation            2.13

B.                  Fitting the Letter of Credit into an Existing Legal Category                        2.24

C.                  Contract Alternatives                                                                                2.28

D.                 LegalFiction                                                                                             2.35

E.                  Custom and Usage                                                                                    2.37

IV.          Conclusion                                                                                                    2.43

3.     Soft Clauses in Letters of Credit                                                                                40

Martin Davies

I.            Introduction: A Rod for the Beneficiary’s Own Back                                       3.01

II.          Little Sympathy for Beneficiaries                                                                    3.08

III.         Fraud in the Underlying Transaction, Unconscionability, Good Faith:

A Sword Instead of a Shield?                                                                                      3.16

IV.      What Are the Beneficiary’s Alternatives?                                                        3.28

A.              Documentary Collections and Bills of Exchange/Time Drafts: Back

to the Future?                                                                                                         3.29

B.               Open Account/Standby Letter of Credit: Not Really the Future at All?       3.32

C.size=1 face="Times New Roman">               Blockchain: The Real Future?                                                                   3.34

V.       Conclusion                                                                                                     3.36

4.     Perspectives on the Role of the Nominated Bank in a Letter of Credit               55

Toh Kian Sing and Chen Zhida

I.        Introduction                                                                                                    4.01

II.        Decision in Grains                                                                                         4.02

III.      Practical Implications of the Decision in Grains                                              4.07

A.              Practical Implications from Issuing Bank’s Perspective                              4.08

B.               Practical Implications from Nominated Bank’s Perspective                        4.11

IV.      Conceptual Implications of Treating Nominated Bank as Issuing

Bank’s Agent                                                                                                          4.14

A.              The Nominated Bank as Defined in UCP 600                                            4.15

B.               A Narrow Reading of Grains                                                                     4.30

V.       Conclusion                                                                                                     4.43

5.     Determining a Complying Presentation in Letter of Credit Transactions:

A Principled Appraisal of Current Requirements and Challenges                         71

Ebenezer Adodo

New Roman">I.        Introduction                                                                                                    5.01

II.     Proper Approach to Interpretation of the UCP 600 as to Documentary Compliance    5.07

A.              Background to  the UCP Regime                                                               5.07

B.               Contractual Interpretation of Letters of Credit and the UCP 600                5.10

C.               Treatment of Expert Testimony                                                                5.24

D.              Credit Stipulations Tying Payment to Performance of

the Underlying Contract                                                                                          5.31

III.      Effect of a Draft Drawn on the Credit Applicant                                             5.42

IV.      Implications of the Place for Documentary Presentation                                  5.46

V.       Conclusion                                                                                                     5.50

6.     The Fraud Rule in the Law of Letters of Credit Revisited                                   101

Xiang Gao

I.        Introduction                                                                                                    6.01

II.        The Current Status of the Fraud Rule                                                             6.06

A.              International Rules and Conventions                                                         6.07

B.               National Laws                                                                                          6.13

size=1 color=black face="Times New Roman">III.      Refining the Current Fraud Rule                                                                    6.45

A.              The Rationale                                                                                           6.45

B.               The Way Out                                                                                            6.48

IV.      Conclusion                                                                                                    6.57

7.     Letters of Credit and Stop Payment Orders Made in the Issuer’s Country 118 Nelson Enonchong

I.        Introduction                                                                                                    7.01

II.        The Role of Choice of Law Rules                                                                    7.06

III.      Stop Payment Orders at Common Law                                                           7.12

A.              Where Documents Are to Be Presented Directly to the Issuer                     7.13

B.               Where Documents Are to Be Presented to Another Bank                           7.14

IV Stop Payment Orders under the Rome Convention                                              7.19

A.              Article 4(2) Points to the Law of the Issuer's Country                                7.20

B.               Displacing the Law of the Issuer's Country under Article 4(5)                    7.23

V The Rome I Regulation: Has it Opened a Door to Stop Payment Orders? 7.29

A.              Does the Law of the Issuer's Country Apply under Article 4(1) or (2)?        7.30

B.               Can Article 4(3) Be Invoked to Displace the Law of the Issuer's Country?  7.35

name=bookmark259>VI.      Any Role for the Public Policy Exception?                                                      7.46

VII.   Claims by Correspondent Banks                                                                       7.49

A.              ConfirmingBank                                                                                       7.50

B.               Nominated Bank that Has Not Confirmed the Credit, but Has Honoured

or Negotiated a Complying Presentation                                                                   7.57

VIII.   Conclusion                                                                                                    7.60

8.     Injunctions to Restrain Payment on Independent Guarantees:

'Unconscionability' to Bolster the Fraud Exception                                             142

Dora Neo

I.        Introduction                                                                                                    8.01

II.      General Features of Independent Guarantees                                                    8.05

III.      The Fraud Exception                                                                                      8.09

IV     The Unconscionability Exception                                                                    8.17

A.              The Unconscionability Exception in Singapore                                          8.17

B.               The Unconscionability Exception in the UK and Other Jurisdictions          8.20

C.               Policy Reasons for an Unconscionability Exception in Performance

Bonds Cases                                                                                                            8.23

D.              Assessing the Unconscionability Exception                                               8.27

V.       The Underlying Contract                                                                                8.35

A.              Demand in Breach of the Underlying Contract                                          8.36

B.               Contractual Clauses Excluding Unconscionability                                      8.39

VI.      Change of Circumstances: Frustration and Force Majeure                               8.46

A.              General Principles                                                                                     8.47

B.               Frustration                                                                                               8.49

C.               Force Majeure                                                                                           8.50

D.              Government Action                                                                                  8.56

VII.   Limits of Unconscionability and No-Injunction Clauses                                    8.60

A.              Unconscionability Not Applicable to Commercial LCs                               8.60

B.               Unconscionability only Applicable to Injunctions                                      8.61

C.               Excluding the Fraud Exception?                                                                8.62

VIII.   Conclusion                                                                                                    8.63

PART II: TRADE FINANCE TECHNOLOGY

9.     The Electronic Bill of Exchange and Its Use in International Trade                    175

Benjamin Geva

I.        Introduction                                                                                                    9.01

II.      Physical and Electronic Formats for Bills: Legal Requirements                          9.05

IV     The Substitute Paper Bill                                                                                9.34

V.         Interbank Negotiation and Exchange of Bill Images                                         9.46

VI.        Electronic Bill (EB) as ‘Paperless Bill'                                                             9.54

VII.     DepositoryBills                                                                                                9.62

VIII.     Concluding Observations                                                                                9.64

10.    Digitalisation of Shipping and Insurance Documents: Implications for

Trade Finance                                                                                                          197

Miriam Goldby

I.          Introduction                                                                                                  10.01

II.     Background: The Presentation of Paper Documents under Documentary Letters of Credit with Special Focus on Bills of Lading and Insurance Certificates                                                                10.02

III.        The Digital Alternatives Landscape: State of Play and

Perceived Benefits                                                                                                   10.07

A.                Digital Alternatives to Bills of Lading                                                      10.11

B.                 Digital Cargo Insurance Certificates                                                         10.15

C.                 Trade Finance Communication Networks and Platforms                          10.17

IV.        size=1>Legal Framework Supporting the Use of Digital Alternatives to Paper

Documents in Documentary Credit Arrangements: Gaps and Uncertainties                      10.19

A.                         Content Compliance                                                                               10.20

B.                          LegalEffects                                                                                            10.24

V.         Filling in the Gaps: Contractual Frameworks and their Limitations                  10.26

A.                Contractual Rights Against the Carrier and Rights Over the Goods

Themselves                                                                                               10.27

B.                 Direct Claim Against the Insurer                                                             10.32

C.                 Trade Finance Platforms: The Bank's Legal Position                                 10.37

VI.        Filling in the Gaps: Legislation                                                                     10.38

VII.     Conclusion                                                                                                    10.41

11.    Implementation and Implications of the UNCITRAL Model Law on

Electronic Transferable Records in Trade   Finance                                              217

Alan Davidson

I.          Introduction                                                                                                  11.01

II.          Model Law on Electronic Transferable Records 2017                                      11.14

A.                Purpose                                                                                                  11.14

B.                 Operation                                                                                               11.17

C.                 Implementation                                                                                      11.32

III.        Conclusion                                                                                                   11.34

12.    Will Blockchain Transform Trade Finance?                                                         230

Jane K Winn

I.          Introduction: Why Transforming Trade Finance is Hard                                 12.01

II.          Believing in Blockchain                                                                               12.12

III.        Some Realism about Blockchain                                                                  12.22

IV.        Transforming the Architecture of Global Trade Systems                               12.40

V.         Transforming the Workflow of Global Trade Transactions                             12.57

VI.        Transforming Trade Finance Incrementally                                                  12.68

VII.     Conclusion                                                                                                   12.73

PART III: INNOVATION AND TRADE-FINANCE CHALLENGERS

13.    The Bank Payment Obligation as a Signal Step in the Evolution of Digital

Trade Finance                                                                                                        255

Agasha Mugasha

I.            Introduction                                                                                                 13.01

Obligation                                                                                                                13.05

A. Transaction and Contractual Setting                                                                    13.10

III.         Salient Features ofthe Legal Framework for the BPO                                     13.11

A.                 Applicable Rules and Notable Exclusions                                                 13.12

B.                  Establishment of the BPO and Amendment of an Established Baseline to

Add a BPO                                                                                                                      13.14

C.                  ExpiryDate                                                                                             13.16

D.                 Honour of the Undertaking                                                                     13.17

E.                  Duties of the Bank                                                                                  13.18

F.                  The Independence Principle: Separate and Independent Contracts             13.19

G.                 Data Supremacy in a Digital Bank-to-Bank Instrument                            13.23

H.                  The Boilerplate Provisions                                                                       13.25

I.                   Assignment of Proceeds (Article 16)                                                        13.26

J.                   Applicable Law                                                                                       13.27

IV Evaluation                                                                                                          13.28

V.

14.    size=2>Something Old, Something New: Open Account, Prepayment, and Supply

Chain Finance                                                                                                          273

Christopher Hare

I.            Introduction                                                                                                 14.01

II.           The Letter of Credit's Demise                                                                        14.02

A.                 Technology                                                                                             14.04

B.                  Regulation                                                                                              14.05

C.                  Competition                                                                                           14.10

D.                 Efficiency                                                                                               14.12

III.         The Rise of Open Account, Prepayment, and Supply Chain Finance 14.13

A.                 Open Account and Prepayment Terms                                                     14.13

B.                  Supply Chain Finance                                                                             14.17

C.                  Traditional Liquidity-Enhancing Techniques                                           14.22

D.                 Modern SCF Techniques                                                                         14.36

E.                  Problems                                                                                                14.51

IV.         Conclusion                                                                                                   14.60

15.    Islamic Trade Law and the Smart Contract Revolution                                       308

I.

II.           Trade in the Muslim World—Then and Now                                                 15.07

III.         The Development of the Modern Islamic Finance Industry                            15.11

IV.         Principles of Islamic Commercial Law                                                           15.15

A.                 Ownership and its Limits                                                                        15.15

B.                  The Nature of Property                                                                            15.16

C.                 Riba                                                                                                       15.19

D.                 Gharar                                                                                                   15.22

E.                  Freedom of Contract and the System of Islamic Nominate Contracts        15.25

V.          Islamic Trade Finance in Practice: The Murabaha Contract                            15.29

A.                 Structure, Profit, and Fees                                                                       15.31

B.                  PaymentSchedule                                                                                   15.35

C.                  Title to the Asset                                                                                    15.36

D.                 Agency                                                                                                   15.37

E.                  size=1>PossibleSyndication                                                                                15.38

F.                  Actual Sale                                                                                             15.39

G.                 Subject Matter and Liability for Defects                                                  15.40

H.                  Phasesofthe Murabaha Agreement                                                          15.41

I.                   Ensuring Performance                                                                            15.46

J.                   Default and Restructuring                                                                       15.47

VI.         Islamic Trade Finance in English Courts                                                       15.50

A.                 The Symphony Gems Case                                                                       15.51

B.                  Shamil Bank v Beximco                                                                            15.57

VII.      The Future: Blockchain for Islamic Trade Finance                                          15.59

VIII.      Conclusion                                                                                                  15.67

16.    Countertrade as Finance                                                                                         335

Christopher Hare

I.        Introduction                                                                                                  16.01

II.        Forms of Countertrade                                                                                 16.06

III.         Legal Problems of Countertrade                                                                    16.15

A.                 The Nature and Effectiveness of the Transactional ‘Link’                        16.16

color=black face="Times New Roman">B.                  CertaintyandCompleteness                                                                      16.23

C.                  Nature and Effect of ‘Blocked Accounts’                                                 16.29

D.                 Choice of Law Issues                                                                              16.32

IV.         Conclusion                                                                                                   16.37

Index

353