Nature and Legal-Social Implications of Documentary Credits(A Comparative Study)

Abstract

The increasing expansion of international trade, especially after World War II, on the one hand, and the interest of countries with free economic system to liberalize their commercial rules, on the other hand, have made law scholars to find ways to adapt with these changes. The result of this effort is called "International Trade Law." The necessity of economic and commercial cooperation between governments and the necessity of the cooperation of traders at the international arena as well as the uniformity of the laws and regulations governing documentary credits led the International Chamber of Commerce to for the first time introduce and approve this commercial customs and practice as a legal entity in 1933; these regulations were published under the title of Uniform Customs and Practice for Documentary Credits (UCPDC) and were made available to traders. These regulations have been adapted to the changing commercial customs in line with the rapid changes in the world economy. The regulations are revised every ten years, and its latest revisions were published in 1993 under the title of the Publication 500. This paper will review the Iranian, US, and international law approaches bank documentary credits in order to explain the nature and legal implications of these international trade mechanisms in the light of the studies conducted, and, ultimately, make a comparison between the three legal sources mentioned.