A Comparative Analysis of the Letter of Credit Execution under the Civil Code of the Russian Federation and UCP-600

Abstract

The article provides a comparative analysis of the letter of credit execution under Russian law and Uniform Customs and Practice for Documentary Credits. All things considered, the author concludes that, despite amendments to Paragraph 3 Chapter 46 of the Civil Code of the RF concerning the letters of credit execution, after the adoption of the Federal Law of 26 July 2017 № 212-FZ, serious discrepancies in the legal regulation remain, inter alia, in the area of the order and principles of the letter of credit execution. Russian law does not provide for the deferred execution of the letter of credit, under UCP-600 the letter of credit cannot be executed through "other actions.” In turn, Russian law does not contain provisions concerning the concept of "negotiation" of the letter of credit. A legal peculiarity of the letter of credit under the UCP-600 as compared with the Civil Code of the RF is the opportunity set forth in the ICC to submit documents in accordance with the terms of the letter of credit not only to the issuing bank or performing bank but also to the confirming bank. The Civil Code of the Russian Federation does not contain any principles of bank verification of documents submitted to banks adopted in international banking practice: 1) due diligence, and 2) strict conformity of the documents submitted with the terms of the letter of credit.