《國際結(jié)算（英文）》chapter6 Standby Credit

INTERNATIONALSETTLEMENTChapter6StandbyLetterofCredit

6StandbyLetterofCredit

6.1OverviewandDefinitionofStandbyLetterofCredit6.2CharacteristicsofStandbyLetterofCredit6.3PartiestoStandbyLetterofCredit6.4MainContentsofstandbyletterofcredit6.5ProcedureofStandbyLetterofCredit6.6TypesofStandbyLetterofCredit6.7DifferencesbetweenStandbyLetterofCreditandDocumentaryLetterofCredit

6.1OverviewandDefinitionofStandbyLetterofCredit

1Emergence:TheemergenceofstandbycreditcomesfromtheNationalBankActoftheUnitedStates.AspertheregulationofthisAct,commercialbankisprohibitedfromundertakingobligationsunderguaranteesandonlyinsuranceandbondcompaniesareallowedtoissuebonds(guarantee).Asthecustomerincommercialbankhasdemandtoissuebonds,StandbycreditisafinancialinnovationconductedbyAmericancommercialbankstobypassthisregulation.2Development:Uptonow,therestrictionthatbanksareprohibitedtoissuebondhasalreadybeencanceled,asthestandbycreditbearsthecharacteristicsofindependent,documentaryanddemandpayment,,comparedwithguarantee,Itismorewidelyacceptablebybanks,importersandexporters,itisnownotonlyadoptedinAmerican,butarealsoworldwideadopted.3Definition

TheICCpublicationNo.515

internationalchamberofcommercedocumentaryletterofcreditguidelinedefinesstandbyletterofcreditasanydocumentarycreditorsimilararrangement,howevernamedordescribedwhichrepresentsanobligationtotheBeneficiaryonthepartoftheissuer:(A)torepaymoneyborrowedbyApplicant,oradvancedtoorfortheaccountoftheApplicantor;(B)tomakepaymentonaccountofanyindebtednessundertakenbytheApplicantor;(C)tomakepaymentonaccountofanydefaultbytheApplicantintheperformanceofanobligation.6.2CharacteristicsofStandbyLetterofCredit1.irrevocableThestandbyL/Cisirrevocable;anissuer’sobligationsunderastandbycannotbeamendedorcanceledbytheissuerexceptthatallrelativepartiesagreedwithsuchamendmentorcancellation.2.independentThestandbyL/Cisindependent.Oncethestandbycreditisissued,itexistsasaseparateself-sufficientdocument.Itisseparatedfromthebasictransactionsalesbetweentheapplicantandbeneficiarywhichisthebasestoissuethestandbycredit,itisalsoseparatedfromthecontractualrelationshipbetweentheapplicantandtheissuingbank.3.documentaryWewouldliketoemphasisagainthatstandbycreditisdocumentarycredit.aspertheexplanationofinternationalcustoms,“documents”meansallthecommercialdocumentsbesidesbillofexchange,promissorynoteandcheque.4.demandpaymentStandbycreditisaguaranteecredit.whenthebeneficiaryhaspresentedthebillofexchangeanddefaultcertificatethatinapparentcomplieswiththetermsandconditionsofcredit,upondemand,theissuingbankshouldeffectpaymentimmediately.5.enforceableWhenthestandbycredithasbeenissued,nomatteritisauthorizedbytheapplicant,chargeshavebeentakebytheissuingbankornot,beneficiaryhasreceivedthecreditornot,theissuingbankisboundtotaketheresponsibilitystipulatedincredit.6.3PartiestoStandbyLetterofCreditBasicpartiestoStandbyL/Ctransactionsaredescribedasfollows:(1)Applicant“Applicant”isapersonwhoappliesforissuanceofastandbyL/Conbehalfofhimselforforaccountofothers,andanissueractingforitsownaccountisalsocalledapplicant.(2)Issuingbank“Issuingbank”isapartythatissuesthestandbyL/Cattherequestofapplication.Issuingastandbymeanstheissuermustpaytheholderofthedraftonpresentationinthecasethatthetermsandconditionsofthestandbyonitsfacearecompliedwith.(3)Advisingbank“Advisingbank”isapartythatisrequestedtoadviseastandbyL/C.theadvisershouldnotifytherequestingpartywhenhedecidesnotadvisedthestandbyL/C.theadvisershouldchecktheapparentauthenticityoftheadviser’sstandbyL/CinaccordancewithstandbyL/Cpractice.(4)Beneficiary“Beneficiary”isanamedpersonwhoisentitledtodrawunderastandby.Thebeneficiarycantransferthedrawingrightseffectivelytoanotherpersonwhichiscalledtransfereebeneficiary.(5)Confirmingbank“Confirmingbank”isapartywhich,uponanissuer’snomination,addsitsownundertakingtotheissuer’sundertakingtohonorastandbyL/C.theconfirmercanbeconsideredasaseparateissueranditsconfirmationhassameeffectivenessastheissuer.(6)Reissuingbank“Reissuingbank”isthepartythatissuestandbycredittoitsdomesticbeneficiaryaspertherequestoftheforeigncounterguarantor.Reissuingstandbycreditisalwaysestablishedasperthebeneficiarycountry’slaw,governmentregulationortherequestofthebeneficiary.Thepurposeofdoingthisistochangetheoverseaguaranteeintodomesticguarantee,onceclaimoccurred,thebeneficiarycanbereimbursedquicklyandarbitrationwilltakeplacebyusingdomesticlaw.6.4MainContentsofstandbyletterofcreditthemaincontentsofstandbycreditarethesameandcanbesummarizedasfollows:1.Nameanddetailedaddressoftheapplicant;2.Nameanddetailedaddressofthebeneficiary;3.Nameanddetailedaddressoftheissuingbank;4.Nameanddetailedaddressoftheadvisingbankandtransmittingbank(ifany);5.Issuingdateandnumberofstandbycredit;6.Referencenumber,dateandsubjectofthebasictransactioncontractwhichstandbycreditisbasedon;7.Theamountwhichthestandbycreditundertakestoreimburse,bothinwordsandinfigures;8.Natureofthestandbycredit,thatthetypeofstandbycredit,performancestandby,bidbondstandbyoretc.9.Thevalidityperiodofstandby,whenthestandbyiseffective,whenitceasestobeeffective10.Primeliabilityoftheissuingbank,rightsandobligationofapplicantandbeneficiary.11.Claimdocumentsrequirements.I.Ewhatcertificate/documentsisrequiredtopresentwhenbeneficiaryclaimagainstissuingbank.12.Theapplicableregulationandlawofstandbycredit.Itindicateswhendisputesanddisagreementoccurs,whichlaworregulationwillbereferredforarbitration.ThestandbycreditsubjecttoUCP600,ISP98orotherinternationalcustomsandpractices.6.5ProcedureofStandbyLetterofCreditprocedureofstandbyL/C:

Applicant

IssuerAdviserBeneficiary(1

)signanunderlyingcontract,andthebeneficiaryrequiresastandbyL/C;(2)appliesforastandbyL/C

(3)notifiesthestandbyL/C(4)notifiesthestandbyL/C(5)presents(6)presents(7)examstherelativedocumentsandthenpays(8)transferstheproceeds(9)claimsindemnity6.6TypesofStandbyLetterofCreditThestandbyL/Ciscommonlyclassifiedintoseventypesbasedontheirfunctionsintheunderlyingtransaction.1Tender/BidBondStandbyL/C——supportsanobligationoftheapplicanttoexecuteacontractiftheapplicantisawardedabid.Iftheapplicantdoesnotexecutethecontract,theissuerwouldpaybeneficiaryanindemnityaccordingtotherelativeclauseinstandby.2PerformanceStandbyL/C——supportsanobligationofapplicanttoperformthebasictransactioncontract.Theissuingbankguaranteescompensationwhenlossesarisefromadefaultoftheapplicantincompletionoftheunderlyingtransactions.Duringthevalidityofstandby,iftheapplicantisinbreachofcontract,theissuershouldpaythebeneficiarytheindemnityprescribedinthestandbyL//C.3AdvancePaymentStandbyL/C——supportsanobligationoftheissuertoaccountforanadvancepaymentmadebythebeneficiarytotheapplicant.TheAdvancePaymentStandbyL/Cisusuallyusedintheinternationalcontractedprojectandtheimportandexporttrade.4CounterStandbyL/C——servesasabackuptotheissuanceofaseparatestandbyorotherundertakingbythebeneficiaryofthecounterstandby.Itissimilartoacounterguarantee.5FinancialStandbyL/C——supportsanobligationoftheissuer,guaranteeingthattheborrowedmoneywouldbepaid.Thefinancialstandbyiswidelyusedininternationalloansandfinancingfacilities.Theforeigninvestorscouldobtainthecreditfundsofferedbyhostnationagainstthefinancialstandby.6DirectPayStandbyL/C——supportspaymentwhendueofanunderlyingpaymentobligation,typicallyinconnectionwithafinancialstandbywithoutregardtoadefault.Thedirectpaystandbyhasbeenappliedinpaymentownwithusuryonacertaindateinissuingbondandmakinganindenturecontract.Thedirectpaystandbybreaksthetraditionalqualityofguarantee.7CommercialStandbyL/C——supportstheobligationoftheissuertopayforgoodsorservicesintheeventofnon-paymentbyapplicant.Iftheapplicanthasn’tfulfilledthepaymentobligation,theissuerwouldpayagainstthedocumentspresentsbythebeneficiary,normally,thedocumentsincludingcommercialinvoice,claimdocumentsandthecertifyingthattheapplicantisinthebreachofcontract.6.7DifferencesbetweenStandbyLetterofCreditandDocumentaryLetterofCredit1CommonsBothofthemareinthenatureofcredit,the“bible”theyarebothsubjecttoistheUniformCustomsandPracticeforDocumentaryCreditUCP600;Bothindependentdocumentsseparatingfromtheunderlyingcontractwhichitisbasedon;Bothbearthebankingcredit,banksaredealingwithdocuments,notdealingwithgoods;Underbothsituations,theissuingbankbearstheprimaryliabilitytoeffectpayment;Alotsimilaroperationprocedures,suchasnominatedparty,advising,presentation,confirmation,transferandassignment,andetc.2DifferencesDocumentaryL/CStandbyL/CFocusonthepaymentininternationaltrade.Focusonguaranteeorfinancing.Fullsetofdocumentsneedtobepresented.Demandforpaymentandstatementofdefaultneedtobepresented