On The Application Of Law In Letter Of Credit

Letters of credit (hereinafter referred to as L/C) is an important and indispensable instrument of payment in international transactions. Disputes would arise when using L/C. Because of L/C’s internationality, problems concerning conflict of laws would occur. However, few countries have legislations about L/C, let alone regulations about the applicable law in L/C disputes. Therefore, this thesis would focus on how to determine the applicable law in L/C disputes.On the basis of discussing the nature of L/C, this thesis works out the natures of relations in L/C disputes. Relations among L/C parties should be determined as contract relations. L/C fraud disputes should be determined as tort. Determining the applicable law of relations among L/C parties should follow the routine of “Principle of Autonomy of Will—Principle of the Most Significant Relationship”. Counties around the world all respect parties’ autonomy of will, but share different opinions about places of the most significant relationship in L/C disputes. The applicable law of L/C fraud disputes should be governed by lex loci delicti.Provisions of the Supreme People’s Court on Some Issues Concerning the Trial of Cases of Disputes over Letter of Credit (hereinafter referred to as Provisions) is a piece of Judicial Interpretation about L/C issues. It also regulates how to determine the applicable law of L/C disputes. Courts should respect parties’ autonomy of will when they choose international customs. When absent of choice of law, courts should apply The Uniform Customs and Practice for Documentary Credits or other international customs. Provisions has its own distinguishing features, but at the same time contradicts with law and could not correspond with international practices. Therefore, regulations about applicable law of L/C disputes still need to be polished in judicial practices and legal theories.