This article first appeared in the September 2022 edition of JIBFL.
Herbert Smith Freehills LLP have published an article in Butterworths Journal of International Banking and Financial Law on interpreting International Chamber of Commerce (ICC) standardised rules in trade finance disputes.
Banking practice in areas of trade finance such as demand guarantees and letters of credit is standardised by a collection of contractual rules published by the ICC. The application of domestic contractual interpretation principles may risk inconsistency in the way such rules are construed between jurisdictions. However, in relation to the most commonly used rules (the UCP 600, which apply to letters of credit), several courts (including the English courts) have tried to ensure that the rules are interpreted consistently with reference to their international consequences, as opposed to strictly in accordance with the governing law of the contract.
In our article we examine a number of decisions demonstrating a trend towards construing other sets of ICC standardised rules in the same way as the UCP 600 and the broader implications for ICC standardised rules.