Economic Sanctions And Letter Of Credit

The economic sanctions are of paramount importance in international trade. Today, the economic sanctions regimes can be established either by national states or, by the European Union and the United Nations. Depending on the issuing legal order of the economic sanctions, the actors of the international trade are inevitably affected by those sanctions. Due to economic santions, the trade to target state, geographical region or persons becomes restricted or banned and use of the payment instruments such as accreditive becomes impossible. Economic sanctions trigger important legal problems for the parties to contractual relationship and the banks which involve in the transactions to provide secure payments. For instance, there are problems where a contract is terminated due to the fact that it falls within the scope of an economic sanction. The fate of accreditive is also problematic where the delivery of goods are prohibited by an economic sanction. The concept of economic sanctions and their effect on accreditive in international trade will be discussed in this paper. In addition, the use of sanction clauses in accreditive and the potential problems arising from those clauses will be examined