Study On Strict Compliance Standard

The key of the L/C transaction is documentary compliance. Strict compliance standard is the basic standard followed by the banking industry while determining the documentary compliance under letter of credit. However, there is no universal comprehension of this standard both in an academic and a judicial sense, which has a serious detrimental effect to the regime of L/C. Issues associated with the standard draw more and more attention from scholars and practitioners in banking industry. On the basis of the relevant case law and theories, this thesis discusses strict compliance standard mainly from the following perspectives: its definition, its judicial interpretations, its reformation in case law and in theory, measures tempering its rigidity in equity law, its development in UCP600 and China's legal position as well.In addition to Introduction and Conclusion, this thesis consists of four chapters.Chapter One mainly discusses the implications of strict compliance standard. Firstly, it analyzes the definition of strict compliance standard. The category of compliance not only refers to the documents presented but also includes the conducts involved. Secondly, it illustrates the various judicial interpretations of strict compliance standard, including a literal mirror image of the credit, an ostensibly but not truly literal mirror image and a mirror image as redefined by the court. Finally, based on the underlying aims and values of the regime of letter of credit, some general comments are made.Chapter Two mainly analyzes the foreignization of strict compliance standard, which happens in two different ways. One is to reform strict compliance standard internally; the other is to adopt other legal regimes to reformulate it externally. In an internal sense, it was transformed into substantial compliance standard and bifurcated standard in case law and the reasonable document checker in theory. In the external sense, Waiver and Estopple in common law soften the rigidity of strict compliance standard. This Chapter illustrates the origin, the contents of these foreignization and some comments are made as well.Chapter Three focuses on the strict compliance standard's development in UCP600. From a general compliance standard perspective, UCP600 still adopts the strict compliance standard, meanwhile, it enriches its contents and loosens the strictness. From a specific compliance standard perspective, this thesis explains the time limit for documentary examination, the judging standard of the qualified documents and the address of the involved parties, etc.Chapter Four explains China's legal position and practice as to strict compliance standard. On the basis of reviews of certain typical cases and reference to the relevant laws and regulations, the author holds, China mainly employs the strict compliance standard, but adopts substantial standard in few cases. The thesis points out the advantages and disadvantages of China's documentary examination standard as well.