PROOF OF SHIPMENT UNDER LETTER OF CREDIT TRANSACT...

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PROOF OF SHIPMENT UNDER LETTER OF CREDIT TRANSACTIONS: EXPECTATION OF BANKS

Description: Letters of Credit (documentary credits) is the most frequent method of payment for goods in the export trade.
By Asanga Gunawansa * Introduction A Letter of Credit is a letter issued by a Bank at the Buyers' request in favour of the Seller that states that a Buyer's payment to a Seller will be received on time and for the correct amount. Thus, contained within the Letter of Credit is the Issuing Bank's promise to pay a specific amount of money upon receipt of specific documents that specify the shipping date, insurance, arrival in port, terms of sale and whatever other conditions the two agreeing parties have put forth. The use of Letters of Credit (documentary credits) is the most frequent method of payment for goods in the export trade. Kerr LJ has described them in RD Hardbottle (Mercantile) Ltd v. National Westminster Bank Ltd1 as "the life blood of international commerce." Donaldson LJ and Ackner LJ expressed similar sentiments in Intraco Ltd v, Notts Shipping Corporation of Liberia. The Bhoja Trader2: "Irrevocable Letters of Credit and bank Guarantees given in circumstances such that they are equivalent to an Irrevocable Letter of Credit have been said to be the life blood of commerce. Thrombosis will occur if, unless fraud is involved, the Courts intervene and thereby disturb the mercantile practice of treating rights thereunder as being equivalent to cash in hand". Put into very basic terms, a Letter of Credit is a method of guaranteeing that the Shipper gets paid, and the Purchaser gets a shipment. However, the reality is not always quite so well defined. The Letter of Credit is only a good method of providing payment for freight - it is not a solid Guarantee that ensures that what was ordered is what gets shipped. The reason for this is that Banks issuing the letter of Credit and Paying Bank or nominated Advising Bank that facilitates payment to the Seller only deal with documents and not goods. A Bank can thus be satisfied that what was ordered by the Buyer was in fact shipped in a timely manner as agreed between the parties (Buyer and Seller) if on the face of the documents submitted to the Bank it so appears. In the circumstances in modern trade transactions it is of utmost importance that documents dealing with the financing of the transaction and all documents necessary for passing of payment from Buyer to Seller and passing of goods from Seller to Buyer are clear and precise. There are several types of Letters of Credit, which include Revocable Letters of credit, Irrevocable Letters of Credit, Standby Letters of Credit and Confirmed Letters of Credit. Many have authored descriptive material on the use of different types of Letters of Credit * State Counsel, LL.M. (Warwick), Research Scholar (NUS) 1[1978] QB 146,155 2 [1981] 2 LI R 256,257 in international commerce. Thus the aim of this work is not to add any thing further to what is already well written. This article is intended to deal with one aspect of the Banker-Shipper relationship in Letters of Credit transactions, i.e. presentation of documents in proof of shipment. This aspect is of interest to all those who deal with Letter of Credit transactions as strict adherence to accepted practices and norms in presentation of documents is extremely important to ensure that the Seller will get paid without unusual delay, Buyer will receive goods, and during the period between payment to Seller and payment by Buyer to Issuing Bank, the Bank will have title over goods. Universal Use of Letters of Credit The fast growth in international trade especially after First World War made it commercially necessary to adopt an internationally unified approach in respect of Documentary Credit Transactions. Although up to now there is no international treaty or other agreement that spells out universally applicable principles of law relating to letters of credit, since its earliest years, the International Chamber of Commerce (ICC) has provided important international leadership in the field of international banking operations, particularly as a forum for developing rules of practice. The greatest impetus came from the ICC when it originally published its Uniform Customs and Practice for Commercial Documentary Credits (UCP) in 1933 which banking institutions in more than 140 countries worldwide accepted for the purposes of documentary credit transactions. The Uniform Customs and Practice for Documentary Credits (UCP 500) that came in to effect on 1 January 1994 replacing UCP 400 has been since adopted

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by banking associations and individual Banks in over 175 countries. Thus since 1933, the Uniform Customs and Practice for Documentary Credits (UCP), in its various revisions, has become a universally recognized standard, stating and establishing custom and practice for Letter of Credit, ICC rules cannot be fully effective in all countries without their being recognized under local law. In this respect, the recent work of UNCITRAL on the United Nations Convention on Independent Guarantees and Stand-by Letters of Credit (New York 1995) provides an important impetus to attain this objective. The Convention sets forth the basic principles of law for independent undertakings in a manner which fully assures their independent nature, which guarantees widest possible party autonomy and which establishes a uniform international legal standard for limits to the exception for fraudulent or abusive drawings. Although, the use of Letters of Credit and the principles applicable to the legal relationships created by such use have become universal, payment for goods sold in international sales transactions is often problematic, due to the international character of the transaction. The parties usually have their places of business in different countries, and are therefore subject to different national legal systems. Furthermore, the Seller will often transport goods across national borders. Under such circumstances, the Seller has a great interest in ensuring that it will receive payment for goods sold once the goods leave its possession and control. The Buyer has a corresponding interest to ensure that the Seller has dispatched conforming goods before making payment in terms of the agreement. When goods travel across national borders and they are outside the jurisdiction in which the Seller resides, any attempts to regain control or possession of the goods will be significantly more difficult for the Seller. Similarly, if the Seller does not receive payment once the goods are delivered, it is all the more difficult to pursue the Buyer for payment, because the Buyer and all of his assets will probably be outside the Seller's jurisdiction. Thus in international sales, foreign law may govern many aspects of the transaction including procedures to obtain payment. This will lead to parties having to rely on the interference of courts or tribunals of a foreign jurisdiction to enforce payment or performance of the contract. This may prove to be inconvenient and expensive. However, the system of Documentary Credits that is in use in current international trade has largely alleviated these problems relating to payment and performance. The parties establish a Letter of Credit, which enables the Seller to obtain payment from a Bank within his jurisdiction. The Buyer establishes the Letter of Credit in such a manner, that payment is promised on presentation of certain documents, the contents of which confirm that the goods being delivered to the Buyer are goods that conform to the terms and conditions of the underlying sales agreement. The Seller need only comply with the documentary conditions as specified in the credit, and is thereafter assured of payment. How Bankers Safeguard their Interests As noted above a feature common to all types of Letters of Credit used in the present day trading is that as a result of the underlying agreement between the Seller and the Buyer, the Buyer arranges for payment by a Bank to the Seller on presentation of specified documents. The Letter of Credit will usually require production of the transport documents as proof that the goods have been shipped, and the performance of other specified conditions. The essence of the Letter of Credit transaction is thus in its documentary character independent of the physical goods. Usually as shown in the following table which shows the different stages of a Letter of Credit transaction, the Issuing Bank of the letter will seek the services of an advising and or Paying Bank, mostly in the Sellers country to facilitate payment of the sale price to the Seller upon presentation of transport documents in proof of shipment along with other documents specified in the Letter of Credit as agreed between the parties. The advising and or Issuing Bank will have the least risk in the transaction as it merely acts as an intermediary, and will be guaranteed payment by the Issuing Bank, if in fact the Seller was paid upon satisfactory submission of documents specified in the Letter of Credit. 3See Good, R.M. ""The Characteristics and Organisation of International Sales Transactions" Commercial Law. Pages 878-879(1995) Buyer and Seller agree terms, including means of transport, period of credit offered (if any), latest date of shipment, Incoterm to be used. BUYER SELLER Bank Actasing Bank Buyer applies to Bank for issue of Letter of Credit. Bank will evaluate Buyer's credt standing, and may require cash cover and/or reduction of other lending limits. Issuing Bank issues L/C, sending it to the Advising Bank by airmail or (more commonly)

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electronic means such as telex or SWIFT BUYER SELLER Bank Bank Advising Bank establishes authenticity of the Letter of Credit using signature books or test codes, then informs Seller (beneficiary). Advising bank MAY confirm L/C, i.e. add its own payment undertaking Seller should now check that L/C matches commercial agreement, and that all its terms and conditions can be satisfied, (e.g. all documents can be obtained in good time.) If there is anything that may cause a problem, an amendment must be requested. > BUYER SELLER Issuing : Bank Pol IBS MBF BUYER SELLER Seller ships the goods, then assembles the documents called for in the L/C (invoice, transport document etc.) Before presenting the documents to the Bank, the Seller should check them for discrepancies with the L/C, and correct the documents where necessary. 147 Thus the Banks concern is that every piece of documentation (the paperwork - not the cargo), that was asked for, is provided in the time required, that every piece of documentation matches in every minutiae detail precisely what the Letter of Credit demands, and that, if they want additional changes made to the paperwork, this/these changes is/are done and delivered back within the prescribed time limit. That done, they will pay the Shipper within a time they set, regardless of what arrives at destination, in whatever condition it is in, however early or late it is, on whatever conveyance, flying whatever flag it arrived on, regardless of whatever the paperwork showed. As a result of slow and non-payment by some Banks who refused to part with funds simply because very minor flaws were found in the documentation presented, the Paying Banks usually institute a very high parity check for all Letter of Credit documents. Mundane documents that are noted in the Letter of Credit such as faxes sent from Shipper to Consignee, fax transmittal receipts, courier slips, and attachments, all these documents (not just the real important commercial invoices, certificates of origin, original bills of lading, and insurance certificates) are checked against the letter for minute flaws. Any error in presentation, spelling, punctuation, stamps, and signatures - anything at all that the bank can find could thus sometimes be a discrepancy. The primary concern of the Issuing Bank is to determine whether the Seller has presented documents that comply with the terms of the Letter of Credit. The Bank deals only in documents presented by the Beneficiary when deciding whether to pay on a Letter of Credit. It is now well-established law that if the documents comply, the Bank must pay the Seller and if the documents do not comply, the Bank cannot make payment under the Letter of Credit, unless the Buyer agrees otherwise. Most courts hold that the documents must strictly comply with the Letter of Credit before payment can be made. Requirements for the Issuing Bank's Rejection of Non-compliant Documents Simply stated, when determining whether to honour a Letter of Credit on a Seller's presentation of documents, the Issuing Bank must examine the documents and decide whether to accept or reject them within a reasonable time, which is not to exceed seven banking days following the day of receipt of the documents.5 If the Bank determines that the documents presented do not comply with the Letter of Credit's terms and conditions, the Bank must give notice of rejection to the Seller expeditiously and no later than the seventh banking day following the receipt of the documents by the Bank.6 The Bank's notice of dishonour must list all of the discrepancies in the documents presented, or in other words, every ground for the Letter of Credit Issuing Bank's refusal to make payment on the Letter of Credit. If the Issuing Bank fails to follow all of these requirements and gives an untimely, incomplete or improperly communicated notice of rejection, the Bank is precluded from claiming that the presented documents are nonconforming and must, therefore, make payment to the Seller. The reason for this procedure and the penalty it imposes on the Issuing Bank is to force the Bank to respond in a timely manner to a Seller's presentation and notify the Beneficiary of all the mistakes in the Letter of Credit drawing and of the resulting refusal by the Issuing Bank to pay on the Letter of Credit. This is designed to give the Beneficiary an opportunity (if the letter of credit has not already expired) to correct the mistakes in the documents initially presented and make a second presentation of conforming documents that would require payment by the Bank. Accordingly, a Seller or Beneficiary is not necessarily out of luck when it presents

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documents that do not comply with the requirements of the Letter of Credit as the Issuing Bank has certain duties to timely and properly notify the Beneficiary of discrepant documents and sufficiently identify the discrepancies. If the Bank fails to follow these rules to the letter, it may be forced to make payment to a Beneficiary that presented noncompliant documents, thereby saving the beneficiary from its own mistakes. However, Beneficiaries should still be cautious and should review the Letter of Credit 4In the English case of Howe Richardson Scale Co.Ltd v. Polimex - Checop and NatWest Bank (1978) Lloyds Law reports Vol.1.pg. 161. it was held that Letters of credit are used in international commerce and the banks only have the simple concern to see whether the event upon which its obligation to pay has risen. In the case of Power Curber v. Bank of Kuwait (1981) 3 All ER 607 at 613, the court held that, if the courts should interfere with the obligation of the bank under a Letter of credit by ordering the banks not to pay under Letters of credits, it would strike at the very heart of the country's international trade. Also sec the local cases of Indica Traders (Pvt.) Ltd. v. Seoul Lanka Construction (Pvt.) LTD and others (1994) 3 SLR 387 and Hemas Marketing (Pvt.) Ltd. v. Chandrasiri and others (1994) 2 SLR 181. 5 UCP 500, Article 13. 6 UCP 500, Article 14. carefully to make sure that they can submit all the documents required by the letter in the precise manner specified. Proof of Performance of Contract by Seller When presenting documents to receive payment under a Letter of Credit, the most important document that the Claimant should present is the Bill of Lading. A Bill of Lading is a receipt from a Ship Owner, or his Authorised Agent, acknowledging receipt of goods of a specified nature and quantity for shipment to specified destination, subject to the conditions of carriage, which it sets out in detail. In addition to being a receipt for the goods, a Bill of Lading is a memorandum of contract of carriage and a document of title to the goods, which it lists. As it is a document of title a Bill of Lading allows its negotiation while goods are in transit. It is of paramount importance in a Letter of Credit transaction as it provides security to the Bank over the goods after parting with the sale price. Thus until the advising Bank or the Paying Bank is paid by the Issuing Bank (in the event there is a Paying Bank) and until the Issuing Bank is paid by the Buyer, the bill of lading will provide ownership of the goods to the Bank that holds the document. It should be noted however, that independent of the Bill of Lading giving rights to the Bank over the goods in transit, in the event of default of payment by the Seller, the Banks would have recourse to the Buyer on the underlying application on which the Letter of Credit was issued. Thus, there is a close relationship between Bills of Lading and Letters of Credit. When a Bill of Lading or other transport documents that establish proof of shipment to the extent specified in a Letter of Credit are tendered to a Bank, the Bank will scrutinise them to ensure they comply with the terms of the Letter of Credit. The Banks should be extremely careful and pay attention to every relevant detail when this function is performed, as they owe a duty to its Customers to refuse documents, which do not strictly conform. If the document in proof of shipment specified in a Letter of Credit is a Bill of Lading, it must satisfy a number of requirements: 1. It must be negotiable 2. It must be clean, meaning a bill, which bears no superimposed clause or notation, which expressly declares a defective condition of the relative goods or packaging. A bill of lading bearing a clause or notation such as "received in wet condition", "damaged cases" etc is termed a claused Bill of Lading.7 3. Most importantly, it must prove shipment.8 The possession of an original Bill of Lading allows the holder to claim the goods from the carrier. The Bill of Lading transfers the right to claim the goods from the carrier, and the transfer of the Bill of Lading from one Buyer to the next Buyer and so on makes it a 7 Tokio Marine v. Retla [1970] 2 LI R 91. Also see Canadian Sugar Co v. Canadian SS Ltd [1947] AC 46. Westpac Banking Corp v. South Carolina National Bonk [19861 1 LI R 311 quasi-negotiable document. The right of the holder of the Bill of Lading to claim the goods from the carrier is a possessory and not a proprietary right. The contract of sale determines the transfer of the proprietary right. However, in some circumstances, a document may be used which resembles a Bill of Lading, but in fact is not, and is nothing more than a non-negotiable receipt, such as a sea-waybill or a "received for shipment bill". On-Board Requirement Article 23(a)(ii) of UCP 500 sets out in detail the "on-board" requirement in Letter of

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Credit transactions. This issue arises from the growing use of combined transport or through Bills of Lading, which are issued prior to the goods being actually shipped onboard the carrying vessel. Previously, Bills of Lading were issued as the goods were shipped on-board and this problem did not exist. No problem arises if the date of issuance of the Bill of Lading is deemed to be the date of loading on-board and the date of shipment, otherwise loading on-board a named vessel must be evidenced by a subsequent notation on the Bill of Lading giving the date on which the goods have actually been loaded on-board the carrying vessel. It is important to note that a "received for shipment" bill is an acknowledgement that the goods have been received for shipment, but does not constitute evidence of shipment. In the circumstances it is important to understand that when a Letter of Credit requires a Bill of Lading as proof of shipment, a document such as a "received for shipment bill" or any other document, which falls short of providing evidence of actual shipment, is insufficient evidence for payment under the letter of credit to be made. Article 23(a)(ii) also requires proper execution of the on-board notation when the Bill of Lading presented indicates an "intended vessel". The wording requires the on-board notation to show explicitly that the on-board notation reflects the condition of carriage on-board the actual ocean vessel of a port-to-port carrier. This removes the burden on Banks to decide whether the on-board notation relates to placing the goods on-board the "intended vessel" or the actual vessel. In modern day shipping, the non-negotiable sea waybill has been introduced by the transport industry to avoid delay in handling the goods once they arrive at the port of discharge. The sea waybill is not a traditional negotiable bill of lading or a document of title, as consignment and delivery of the goods is made to a nominated consignee upon proof of identity and not upon delivery of the original sea waybill. A Sea Waybill is a mere receipt for the goods which provides evidence of the contract of carriage under which the goods are carried, but it is not negotiable and can not transfer title in the goods. The greatest difference between a Sea Waybill and a Bill of Lading is that the Sea Waybill does not transfer rights of the Shipper to the Consignee thereby depriving the Cargo Owner of the rights and obligations, which exist to protect cargo interests. Some may tend to argue that documents or receipts issued by Shippers or some times by forwarding agents that resemble a Bill of Lading and provides proof of receipt of goods for shipment should be sufficient evidence for Banks to honour payment under Letters of Credit. However this argument holds no strength, as during the period between the Seller being paid and Buyer paying the Issuing Bank, the only document that may provide title over goods in transit and in fact establishes that goods are in transit, will be a proper bill of lading. In the case of Diamond Alkali Export Corp. v. Fl. Bourgeois9, McCardie J held that a "received for shipment" Bill of Lading is not good tender under a c.i.f. contract because: 1. The tender of documents is the method by which the goods are delivered (at p. 448, McCardie J. cited Ireland v. Livingston10, and the judgments of Hamilton J. and Kennedy L.J. (dissenting) in Biddell Bros. v. E. Clemens Horst Co.11 , later upheld in the House of Lords12. 2. The received for shipment bill is not a document of title at common law (see p. 450) Lickbarrow v. Mason (1794) T.R. 685 and the Preamble and s. 3 of the Bills of Lading Act 1855 were relied on in support of this view). 3. The received for shipment bill is not a Bill of Lading within the 1855 Act - at pp. 452-453. McCardie J reached the above decision in spite of strong evidence of a trade custom, "inasmuch as the form of the document before me is of frequent use at American ports" (p, 447), but it does not necessarily follow that a term expressly providing for tender of a received for shipment bill would be repugnant to a c.i.f. contract. Note also that this Bill of Lading did not even unequivocally identify the ship upon which the goods were to be shipped. At 451 (bottom): "The document seems to me to be (in substance) a mere receipt for goods which at some future time and by some uncertain vessel are to be shipped." However, in the context of documentary credits, a Bank may dictate the ways in which a Sea Waybill or other transport documents that do not in fact establish shipment, but merely established the fact that goods were received for shipment, may be used without losing the security and control, which it otherwise has when a Bill of Lading is used. For example an airway bill is not a document of title like a Bill of Lading. A method, which has been adopted by Banks in relation to Air Waybills, is to have the document addressed to the Bank. This procedure is also available in respect of Sea Waybills and, in addition, the Shipper can assign its right of control to the Consignee so that the Consignee becomes the only party who can give delivery instructions to the carrier. Article 27(a)(iii) of UCP 500 deals with the issues of "on-board" or "shipment" in the context of air carriage. Unless otherwise stated in the credit, the date that the air

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transport document is issued is deemed to be the date of shipment. Where the credit calls for an actual date of dispatch, then a specific notation of the date is required, which is then deemed to be the date of shipment. Thus, where goods have been sent to a Buyer by ship, the proof 9 [1921] 3 K.B. 443 10(1872)L.R. 5 H.L. 395,406 11 [1911] 1 K.B. 214, 221 and [1911] 1 K.B. 934,956 12 [1912] A.C. 18 13 Article 27 lists the air transport document requirements and the conditions for acceptance of an air transport document under UCP 500. required by Banks where the transaction is financed by a Letter of Credit is normally proof of actual shipment. The mere statement found in some Bills of Lading, which provide that the goods will be loaded onboard an "intended vessel", will not be sufficient. The Bill of Lading should indicate with certainty the date on which the goods were shipped or kept on board and on what vessel. It is important to understand that as noted above the proof of actual shipment or on board requirement is necessary only when goods are shipped to a Buyer on board a vessel. Due to convenience of trade practice, this strict requirement is not applied when the mode of transport specified in a Letter of Credit is air or by road, and proof. In such case proof that goods were received for shipment is sufficient.14 The major difference between the Air Waybill15 and the Bill of Lading is that the former does not have the function of securities, but the latter has. It is basically an order to the airline company in terms of transportation of the goods. At the same time it functions as an agreement between the Shipper and the Carrier, which details terms of air transportation. An Air Waybill also has the function of certifying the receipt of the goods to be shipped by the airline company. It is usually prepared by the freight forwarder for the Shipper and signed by the airline company. If the transaction is on the pre-payment terms, the Buyer's name should be written as a Consignee on the Airway Bill. Therefore, the Buyer is entitled to receive the goods from the airline company at the airport of destination. However, if the transaction is financed by a Letter of Credit, the Consignee is made out in the name of the Bank (Reimbursing Bank or Issuing Bank) in the country of destination. The Air Waybill and other documents are usually sent by the same aircraft together with the goods. As soon as the goods arrive at the airport of destination, the airline company informs the Bank, which in turn informs the importer. When the payment is made to the Bank by the importer, the bank will make the endorsement in the Airway Bill so that the Importer can take delivery of the goods from the airline company. This way the Importer is prevented from clearing the goods from the airport without payment to the Issuing Bank. The main reason for the non negotiable nature of an Air Way bill is that air cargo can be transported to the airport of destination within a short period of time, say 2 days, and if the owner of the goods is changed during the period of this transportation, inconvenience such as piling-up of cargo at the airport while awaiting the new owner to come to the airport could happen. Like in the case of transport of goods by aircraft, when goods are transported to a Buyer by road16, on truck or other vehicle, it is sufficient to establish to the Banks that goods were received by the transport company for transporting to the Buyer. Thus evidence of actual transport is not necessary. 14 UCP 500, Article 27 and Article 28. 15 The 1929 Warsaw Convention (formally known as the Convention for the Unification of Certain Rules of Law Relating to International carriage by Air) and the 1955 Amended Warsaw Convention both of which have been widely adopted by countries, regulate the carriage of goods on aircraft. 16 The Convention on the Contract for the International Carriage of Goods by Road, 1956 regulate the carriage of goods by road. This Convention has been widely adopted by countries. 17 UCP 500, Article 28. Accordingly the issuance date of the Air Waybill when goods are transported by air, or the date of issuance of the truck consignment note when goods are transported by road is considered to be the date of shipment. However, if the Letter of Credit calls for an actual date of dispatch, the Air Waybill or the consignment note as the case may be, must indicate a specific notation of the date of dispatch, and the date indicated is considered to be the date of shipment.18 Conclusion Undoubtedly a Letter of Credit is one of the most efficient and convenient means of obtaining prompt payment in international trade transactions. However, if Sellers think that securing payment by use of this method is an easy process, they may be sadly mistaken. This is so because Sellers who expect payment under Letters of Credit usually do not have total control over the payment process. Documents which are

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required to be presented to the Bank in order to obtain payment under a Letter of Credit are often prepared by other parties like shipping or forwarding agents and may thus not meet strict compliance standards required by the Banks. Some times Banks may act over cautiously and refuse or delay payment on the simplest of discrepancy in the documents presented for payment. From the bankers point of view such caution is always justified as Banks part with money on the face of documents presented, and if there are discrepancies in the documents when compared to the requirements in the Letter of Credit, banks' may not be successful in making the Buyers reimburse the Banks. Sometimes parties to international trade transactions tend to ignore the importance of strict compliance with the terms of the Letter of Credit. This is a mistake as the Banks are rarely interested in the physical performance of the underlying sales contract between the Seller and the Buyer. The Bank's only concern is whether the documents are presented within the required time periods and if the presentation is timely, whether the documents confirm to the conditions specified in the Letter of Credit. Unless otherwise specified most Letters of Credit will require proof of shipment to be established on the face of the shipping document. Thus the Banks will need to be satisfied that if the goods were shipped on board a vessel, the Bill of Lading proves shipment and not merely receipt of goods for shipment. If the goods were transported by aircraft or by road, then evidence to the effect that goods were received for shipment should generally suffice. It is therefore very important that the Sellers understand the terms of the Letters of Credit and submit clear and unambiguous documents as specified in the Letter of Credit. Keeping documents simple and negotiating with the Buyer prior to the issuance of the Letter of Credit exactly what documents should be presented and what detail or information should be disclosed in such documents is thus of primary importance for smooth completion of a transaction financed by a Letter of Credit.

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