Disputes arising from documentary credit

Abstract

Documentary credits are among the most prominent legal and financial tools in the field of international trade, as they provide mutual guarantees between the seller and the buyer, through the intervention of an intermediary (the bank), which undertakes payment under specific conditions.

While this instrument has regulatory flexibility and a well-established position in commercial transactions, practical reality reveals the multiplicity of disputes arising from it, both between direct parties and with intermediary banks. Not only do such disputes arise as a result of a breach of obligations, but in many cases they are due to technical document complexities, differing interpretations of contractual terms or gaps in the wording of adoption that give rise to difficulties in establishing conformity or the validity of examination and rejection procedures, hence the urgent need to study the legal means available for the settlement of such disputes, focusing on the effectiveness of alternative means such as arbitration and mediation, as opposed to traditional court litigation.