US UCC Article 5’s Non-Variable Provisions
How UCC Article 5 governs letters of credit in the US, its non-variable provisions, and the legal nuances that affect issuers and beneficiaries.
Key takeaways from expert report issued in the KEB Hana Bank v. Korean Export Insurance Corporation court case.
Filed Before the Korean Supreme Court in Keb Hana Bank V. Korean Export Insurance Corporation
Summary prepared for the ABA’s UCC Letter of Credit Subcommittee Meeting by Carter Klein* 15 September 2022
Gary Collyer, known for his work with the ICC Banking Commission, prepared at the request of KEB Hana Bank (KEB) a 40-Page Report submitted in support of KEB’s position in the standby LC case before the Korean Supreme Court filed by KEB against the Korea Export Insurance Corporation (KEIC).
KEB sought to enforce KEIC’s counter-guarantee issued to KEB backing KEB’s standby LCs of approximately USD 100 million issued to the Libyan Housing Authority to support the ultimate applicant’s 5,000 unit housing development project in Libya. The standbys were confirmed by Sahara Bank. Due to the Libyan civil war and the need for parties to discuss their differences on resumption of the project, the beneficiary, confirming bank and KEB each sent extend or pay demands to keep the standbys in force. KEIC declined to extend its counter-guarantee and refused to pay KEB on the ground that no default certificate accompanied the demand to pay. The Korean Supreme Court ruled that the demand to pay was proper and KEIC should pay KEB since it did not extend its counter-guarantee.1
Although Gary Collyer’s Expert Report will not be made available for publication, I have read it and believe it contains a number of salient points. In my view, the following observations based on its content are worth mentioning:
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