Magazine article American Banker

Arbitration Firm Set Up for Letter of Credit Disputes

Magazine article American Banker

Arbitration Firm Set Up for Letter of Credit Disputes

Article excerpt

The U.S. Council on International Banking Inc., the Institute of International Banking Law and Practice Inc., and Citicorp have joined forces to offer alternatives to costly trade-finance court disputes.

They have formed a company called Center for International Letter of Credit Arbitration Inc., which they say will reduce the time and associated legal costs when banks and beneficiaries of letters of credit are at odds.

The new company is to provide "alternative dispute resolution," or ADR, sidestepping such problems with the judicial system as judges' and juries' unfamiliarity with letter of credit procedures, the center's sponsors said.

The center is to form panels of arbitrators with expertise in the highly technical letter of credit business.

Speaking at the U.S. Council on International Banking's annual conference in Hilton Head, S.C., Michael F. Quinn, a Citicorp vice president, said the center would be the banking industry's attempt to address the "problems" in resolving letter of credit disputes.

"The ultimate objective," he said, "is to provide a body of sound decisions which become predictable over time, available to all participants, and are able to be resolved by the participants themselves."

It's not a matter of "the competency of lawyers and the judicial system," he added, but of "people lacking the appropriate technical knowledge."

Citicorp has incorporated alternative-resolution terminology in its standard correspondence with business customers.

James G. …

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