Research On Advance Against Inward Bills Under Letter Of Credit

Growing out of bank letter of credit practice, Advance against Inward Bills mainly resolves the issue of letter of credit financing, and has acquired relevant legislation and precedent support in countries including Britain, United States, Germany and Japan. In recent years, with the rapid development of economy, the scale and efficiency of our country's foreign trade has promoted continuously, and the letter of credit as an important means of payment in international trade has also become a main clearing form of the export and import trade of our country. Consequently, the disputes concerning letter of credit appear more and more often. Among those dispute issues, the questio juris related to Advance against Inward Bills under credit become more and more urgent, and the main problem is that the law circle and financial circle have different understandings about those legislation issues. From announced judgments, most of the courts only confirm the impawn or mortgage relationship established through general Letter of Hypothecation between bank and importer, and they also confirm the fact that the bank delivered papers of right over cargos and other pledged properties to the debtor. However, they all avoid or do not confirm the fact that the bank transfers the pledged property to the debtor according to trust receipt is to pay through the method of concessive guarantee. Also, their legal confirmations of Negotiating Bank's mutual safeguard measure in the judicatory result are usually extremely unfavorable for the bank. The Regulations of People's High Court on Several Issues of Letter of Credit Dispute Case has turned down our hope of a satisfactory reply as the regulations are still of principle and does not involve the specific issues of Advance against Inward Bills. According to the current situation, we could only continue to make further exploration of the issue in academia and seek the practical directive meaning.The author, beginning with typical domestic cases of Advance against Inward Bills under letter of credit, taking account of the actual situation of our Advance against Inward Bills, by illuminating different opinions of relevant questio juris from all directions and comparing with foreign law's relevant regulations, interpretation and problems under their systems, had conducted synthetic theory research, put forward her own ideas. It is hoped to for some extent clear the questio juris with regard to Advance against Inward Bills that are not specifically explained in the Regulation mentioned above, and provide a piece of useful reference to the legislation and justice practice of our country.The thesis is divided into four chapters.Chapter I Introduction: It mainly included the definition of Advance against Inward Bills, the antecedent conditions of the business, and the advantages-disadvantages relationship between banks and companies in this business. The first section presented the origin of "documentary bills" and the business, the routine practice of current main commercial banks, and the features of the business. The second section made a list of the antecedent conditions required to commence the business of Advance against Inward Bills. The third section made a further explanation of the win-win meaning for opening bank and orderer, and analysis of the legal risk that the bank would face in concrete operations.Chapter II section (I), starts from the point of view that there exists a financing legal nexus with a special guarantee measure, analyze the legal nature of Advance against Inward Bills. In the following second and third section, aiming at the question of great dispute during justice and trial practice, namely "whether the legal nexus of Advance against Inward Bills is the same with the original letter of credit", introduces several different theory of the enjoyments that Negotiating Bank hold to the inward papers as guaranty in this special guarantee legal nexus. It then compares and analyzes the legal nexus between Negotiating Bank and orderer in under credit business and after inward documentary business. It also pointed out that the two sides of documentary bills have established a independent legal nexus beyond the letter of credit transaction during inward documentary business. In the fourth section two typical cases were presented to further prove the above analysis and the result. Another important issue to be discussed in this thesis, namely the guaranty of Advance against Inward Bills is put forward by the impeachment of the judgment made to a case in which the Shenzhen Futian branch of Industry and Commerce Bank v. Sanjia Shoes Manufacturing Co. Limited &. Shenzhen Goods and Material Group .The third chapter explored foreign legal systems from the comparative law angle, in order to construct a reasonable guarantee law system, better protect the interest of bank, and promote this multi-winning business. This chapter was divided into five sections. The first section made a short introduction of the two types of guarantee measure used by the circle of Practice of Lawyer in our country. The second section evaluated the trust receipt system in Britain, pointed out the Negotiating Bank hold the right to the hypothecation of bill of lading under credit as well as the cargo it represents, and the purpose that the bill could be released to the orderer as a trust receipt is to pay the funds of letter of credit that the Negotiating Bank paid in advance by reselling the cargo or proceedings of production. It also pointed out the trust receipt is not a independent guarantee contract, and without compulsory registration publishing system, there exists the disadvantage that the Negotiating Bank could not with stand the third party acting in good faith. The third section evaluated the System of Guarantee Transaction in the United States, and pointed out that the protection of the creditor could not be completed as the prior protect of legal lien, despite the fact that the external publishing system is completed and the Negotiating Bank right is recognized guarantee profit according to the Uniform Commercial Code of the United States. The fourth section gave a detailed account of the System of Alienation Guarantee in Germany and Japan. Comparing with typical Guarantee Property Right, the advantage of Alienation Guarantee in protecting creditor and the legal risk it would face are also analyzed and the conclusion of the thesis is prepared. The fifth section gave a short discussion of the Chattel Mortgage Act formulated on the basis of and guided by the American act.The fourth chapter concluded from the above that the current Advance against Inward Bills guarantee measure in our country were more using the credit receipt of Britain and the States, and partly from the traditional mortgage method in continental law system. However, without complementary law, the thoughts of the academia and the practice operation of commercial banks could not find support from current laws in the justice practice. Therefore, the author has pointed out that it would be beneficial to learn from and make suitable changes to the system of Alienation Guarantee in Germany and Japan, and the system of Chattel Mortgage in Taiwan District in the construction and completion of the law system in China Mainland with respect to Advance against Inward Bills under credit.We should act with practical spirit to make further theoretical research of the questio juris with respect to Advance against Inward Bills under credit and help the law system construction. And only on this basis the lesson drawing and completion could produce cogent and effective method, and truly realize the value of the system, in which Advance against Inward Bills could bring a win-win situation to the banks and the enterprise.