Email this article 
.png){kind=logo}
_b.png)
10.png){kind=logo}
The Jordanian Bank's Compliance Practice on Custom and Letter of Credit
Abstract
The Uniform Custom and Practice (UCP 600), has defined letter of credit as: “Any arrangement, however, named or described, that is irrevocable and thereby constitutes a definite undertaking of the Issuing Bank to honour a complying presentation". UCP 600 is subject to four main principles: Strict Compliance, Autonomy, Documents handling and virtue examination. This study aims to identify the fundamental principles governing letter of credit operation under the Jordanian Banks practice. Through a qualitative and doctrinal legal approach, this study analyses the organization of UCP 600 regarding the principle governing L/C and the extent to which Jordanian banks adhere to the principles of UCP 600. It also examines, via case approach the Jordanian court's approach towards this matter. The findings reveal that the Jordanian banks (Conventional and Islamic) with 100% are fully committed to the UCP. Moreover, this study also has found that Although Jordanian legislators did not regulate letters of credit operations under the commercial law, it can be noticed, based on the commercial law, that the autonomy principle is applicable in Jordan, even if it is applied in a different context.
Keywords
Full Text:
PDFReferences
AAOIFI. (2017). Sharīʿah Standards. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), 1262.
Al-Ababna, Mahmoud and Al-Nosour, A. H. (2014). Standard Virtual Matching Documents Documentary Credit in light of the UCP 600 and the Decisions of the Jordanian Court of Cassation. Journal of Law, 11(2), 184–226.
Al-ekhesherwem, M. O. and A. (2009). Mekhater Ala’etemad Alemsetnedy.
Al-Ababna et. al., M. (2014). Standard Virtual Matching Documents Documentary Credit In light of the United Customs 600UCP and the Decisions of the Court of Cassation – Jordanain Bulletin/600. Journal of Law, 11(2), 183–226. https://doi.org/10.12785/law/110205
Al Amaren, Emad and Ismail, Che and Nor, M. . (2020). Risks and Remedy in Islamic and Conventional Letter of Credit: Jordanian Practices. International Journal of Islamic Economics, 2(1), 54–68.
Al Amaren, Emad Mohammad, Che Thalbi Bt Md Ismail, and M. Z. bin M. N. (2021). The Fraud Rules in the Letter of Credit under Jordanian Legal System. Sriwijaya Law Review, 5(2).
Alavi, H. (2016). Documentary Letters of Credit, Principle of Strict Compliance and Risk of Documentary Discrepancy. Korea University Law Review, 19(3).
Alavi, H. (2017). Risk Analysis in Documentary Credit Operation. Financial Law Review, 4(1).
Alwi, Sharifah Faigah Syed, Ibrahim, Uzaimah and Sawari, M. F. (2013). An Issue on Uniform Customs and Practice for Documentary Credits (UCP) No 600 for Islamic Documentary credit. Procedia Economics and Finance, 7.
Bankers Trust Company v State Bank of India, (1991).
Buckley, G. X. and R. (2003). “The Unique Jurisprudence of Letters of Credit: Its Origin and Sources.” San Diego International Law Journal, 4(1).
Chatterjee, C. (2015). Legal aspects of trade finance. In Legal Aspects of Trade Finance (1st ed.). https://doi.org/10.4324/9781315707969
Che Hashim, R., Othman, A. A., & Abdul Aziz, A. (2012). PRINCIPLE OF AUTONOMY IN LETTER OF CREDIT: MALAYSIAN PRACTICE. IIUM Law Journal, 19(2). https://doi.org/10.31436/iiumlj.v19i2.9
Collyer, G. (2006). The Origins of the UCP 600 Revision, Coastline Solutions, (http://www.coastlinesolutions.com/news.htm), accessed on 25 November 2021
Corre, JI. (2000). 'Reconciling the old theory and the new evidence', Michigan Law Review, vol. 98, no. 8
Davidson. (2003). “Fraud Exception, The Prime Exception to the Autonomy Principle in Letters of Credit.” International Trade & Business Law ANNUAL VII.
Department of Policy and Business Practices. (2006). Commission on Banking Technique and Practice: Executive Summary of Meeting on 16 and 17 May at Vienna Austria (Document Number 470/1078), International Chamber of Commerce, Paris, France
Du Plessis, J. (2006). Comparative law and the study of mixed legal systems. In The Oxford handbook of comparative law.
Hashim, Rosmawani Che; Othman, A. A. and A. (2011). Principle of Autonomy in Letter of Credit: Malaysian Practice. IIUM Law Journal, 19(2).
Hashim, R. C. (2016). The UCP 600 Rules in Letter of Credit (LC): Selected Issues. UUM Journal of Legal Studies, 7.
Hwaidi, Mohd. (2015). An Evaluation Of The Efficacy Of Ucp 600 Within English And Jordanian Legal Orders And Jordanian Commercial Practices (Phd). DOI: 10.13140/RG.2.2.26121.26727.
International Federation of Freight Forwarders Associations. (2006). FIATA Worried About UCP 500 Revision (Doc.PR06/03), FIATA, accessed 25 November 2021
Krazovska, D. (2008). Impact of The Doctrine of Strict Compliance on A Letter of Credit Transaction. University of Aarhus.
Kreitman, R. (2005). 'UCP 600: The End in Sight?' Mantissa Support, no. October 2005, (http://www.mantissa.co.uk/Support/nextucp3a.htm%3e), accessed on 19 November 2021
Mann, R. (2000). The Role of Letters of Credit in Payment Transactions. Michigan Law Review, 98(8).
Othman, A. A., Che Hashim, R., & Abdul Aziz, A. (2010). An overview of Shari’ah issues regarding the application of the Islamic letter of credit practice in Malaysia - IIUM Repository (IRep). ISRA International Journal of Islamic Finance, 2(2), 37–36.
Thier, J. (1981). Letters of Credit: A Solution to the Problem of Documentary Compliance. Fordham Law Review, 50(5).
The Uniform Customs and Practice for Documentary (UCP 600), (2007). https://www.iccindonesia.org/icc-uniform-customs-and-practice-for-documentary-credits-ucp-600/, accessed on 20 November 2021
Uniform Commercial Code (UCC), In the United States, article 5-103(d).
United Nations Convention on Independent Guarantees and Standby Letters of Credit, (1996).
Zoaby. (2008). Legal Culture: The Law in our Life: Comprehensive Study of Jordanian Law in Light of The Updated Legislations and the New Practices, 1st edn, Wael
Refbacks
- There are currently no refbacks.
