Applicable Law to Relationships in International Letters of Credit

Applicant, beneficiary, issuing bank and advising bank (in most cases) are the four parties that have the mutual rights and obligations in the letter of credit. In many cases, the letter of credit is also confirmed by another bank (the confirming bank). International letters of credit always have a foreign element and in spite of the existence of "Uniform Customs and Practice for Documentary Credits (UCP)", in many cases it is necessary to determine applicable law to these relationships. Accordingly, in this paper applicable law to relationships in international letters of credit will be studied in four categories by a descriptive-analytical method 1-Relationship between issuing bank and applicant, 2- Issuing bank and advising bank relationship with beneficiary, 3- Relationship between issuing bank and advising bank, 4- Relationship between confirming bank and other parties of the letter of credit. The results show that in each of the aforementioned relationships, the applicable law is the law of issuing bank or advising bank's country or the country where the center of gravity of the contract is situated.