Letter of Credit Litigation

Letter of credit (L/C) litigation has increased dramatically in China as foreign trade has grown. In recent years, PRC courts have grappled with a wide range of difficult issues and have started to establish a number of key principles. In 1999, the Supreme People's Court published a landmark decision in the Newco case that laid the foundation for subsequent cases.

Case Synopsis

On November 6 1995, the Appellate, the Huichun Branch of the China Construction Bank (CCB) issued an irrevocable documentary L/C. The applicant was the Jilin Provincial Import and Export Co., Ltd. (JIEC); the beneficiary and petitioner was a Swiss company, Newco Commodity Co., Ltd. (NCL); the advising bank was the New York Bank-Frankfurt Branch (NYB). The L/C expressly stated that the L/C was to be governed by the ICC Uniform Customs and Practices of Documentary Credits (UCP 500).