On Legal Institution Of International Letter Of Credit Fraud Prevention

The letter of credit has always play a very important role in the international commerce. And the convenience, speediness and safety has gives it a dominant position in international payments. As a reason the dominant position roots in its independence. However the independence is the origin of the fraud in the letter of credit. Till now, the classification of fraud in the letter of credit mainly concludes the seller’s fraud, the buyer’s fraud, the buyer along with the seller’s fraud, and the buyer along with the bank’s fraud. Moreover the fraud in the letter of credit has become more and more international and complex. Even though Uniform Customs and Practice for Documentary Credits(UCP) made by International Chamber of Commerce(ICC) has developed to UCP600, it is far beyond the effect of resolving the complex and changeable fraud in the letter of credit. Except to UCP600, the law of the credit in different countries is varied. Among them, the United States and Germany are the typical countries. The United States owns the most mature letter of credit system. And as the first trade power in the world, the fraud exception principle credited by her as the most important theory in the fraud prevention of letter of credit greatly influenced other countries in the world. In addition, we can learn the injunction system of hers which is most important relief system of fraud in letter of credit.The law of letter of credit in our country is very less, and the judicial interpretation is the authority. However there has no clear definition of the fraud of the letter of credit which concludes the composing of the fraud, the extent of the fraud, the resolvent to the third part fraud. And the relief system also not clear. To improve the legal system of the fraud prevention of the letter of credit, we can deal with it from two aspects. First, relevant laws should be enacted. And in the substantive laws, the content should conclude establishing the independence principle, clear defining the standard of the fraud, radicating the fraud exception principle, and establishing the exception of the fraud exception; And in the procedural law, the content should conclude perfecting the judicial remedy system, and in this aspect we can learn from the injunction system in the United States. In addition, the proof standard of the letter of credit fraud should be more strict. At last, in the judicial practice, the discretionary power of the judge should be strictly standardized and strengthen international judicial cooperation.