Creative Commons

This thesis was written as part of the LLM in Transnational and European Commercial Law, Banking Law, Arbitration/Mediation at the International Hellenic University. Documentary letters of credit, have gained, over time, near universal acceptance as means of ensuring the payment process in international sales of goods. The structure and operation of documentary credit transactions is subjected to two fundamental and globally recognized principles, namely the autonomy principle and the principle of strict compliance. Documentary letters of credit rely on the autonomy of the credit as to the underlying contract for their appeal and commercial utility. In principle, insofar as the tendered documents strictly comply with the terms and conditions of the credit, the beneficiary is assured that payment is guaranteed. The aim of this study is to provide a critical and comparative analysis of the various exceptions to the principle of autonomy of documentary credits; namely, fraud, nullity, unconscionability and illegality. As the analysis will demonstrate, said concepts have received a non-consistent, fragmented treatment among common law jurisdictions, to the detriment of international commerce where certainty and predictability are of upmost value. In appraising these exceptions, the current study argues that the acceptance of the narrow fraud and nullity exceptions shall uphold the commercial utility and viability of the documentary credit system, while limiting interference as to the cardinal autonomy principle. Conversely, this research shall reject the prospective general recognition of the unconscionability and illegality exceptions on the grounds that said concepts utterly erode the independent and irrevocable assurance of payment provided to the beneficiary-exporter under the credit, obliterating the very essence of documentary credits. In balancing the autonomy principle and its exceptions, it is argued that the ICC, considering its expertise in regulating international documentary credit transactions, constitutes the appropriate body to provide the pertinent regulation. Keywords: documentary letters of credit, fraud, nullity, unconscionability, illegality