Fraud in Documentary Credits under Jordanian Law: A Socio-Legal and Comparative Analysis
Abstract
Documentary credits represent one of the most significant banking instruments facilitating international trade by ensuring payment security and reducing commercial risks between contracting parties. However, fraud in documentary credit transactions continues to generate complex legal challenges, particularly in light of the legislative shortcomings within the Jordanian legal framework and the absence of explicit statutory provisions regulating the fraud exception and the autonomy principle. This study argues that the current Jordanian legal framework governing documentary credits remains inadequate to address the practical and legal complexities arising from fraud-related disputes in international trade transactions. Accordingly, the study aims to examine the fraud exception in documentary credits under Jordanian law through a socio-legal and comparative analytical approach, with particular focus on judicial interpretation, banking practice, and the extent to which Jordanian law aligns with international banking standards such as the Uniform Customs and Practice for Documentary Credits (UCP 600) and the International Standby Practices (ISP98). The study adopts a qualitative doctrinal and comparative legal methodology based on the analysis of Jordanian legislation, judicial decisions, international banking rules, and comparative legal scholarship. The findings reveal that Jordanian courts rely extensively on judicial interpretation and international banking customs due to the absence of comprehensive legislative regulation governing documentary credit fraud. The study further concludes that legislative reform is necessary to enhance legal certainty, strengthen commercial confidence, and harmonize Jordanian law with contemporary international banking practice.
Keywords
Full Text:
PDFReferences
Al Amaren, E., & Ibrahim Aletein, S. (2022). The Uniform Customs and Practices (UCP 600) and letters of credit: How do the Jordanian banks’ compliance practices? Yustisia Jurnal Hukum, 11(1), 42–58. https://doi.org/10.20961/yustisia.v11i1.61054
Al Amaren, E., Ismail, C. T., & Nor, M. Z. (2021). The fraud rules in the letter of credit under Jordanian legal system. Sriwijaya Law Review, 5(2), 218–235. https://doi.org/10.28946/slrev.Vol5.Iss2.1058.pp218-235
Al-Amaren, E. M., Md Ismail, C. T. B., Md Nor, M. Z., & Indriyani, R. (2020). Documentary letter of credit in conventional and Islamic banks in Jordan. International Journal of Multidisciplinary Sciences and Advanced Technology, 1(4), 1–15.
Alavi, H. (2016). Documentary letters of credit: Legal nature and sources of law. Journal of Legal Studies, 17(31), 106-121.
Alavi, H. (2017). Fraud in documentary letters of credit: A comparative study of existing international legal frameworks. Bratislava Law Review, 1(1), 48–69. https://doi.org/10.46282/blr.2017.1.1.65
Al-Baroudi, A. (1968). Contracts and operations: Commercial banks. Manshet Al-Maaref.
Al-Kilani, M. (2014). Commercial and banking encyclopedia, Volume Four: Bank operations, comparative study (3rd ed.). House of Culture for Publishing and Distribution.
Alqudah, A., Hazlina Shaik Md Noor Alam, & Mohd Shahril Nizam Md Radz. (2026). Fraud exception in documentary credits under Egyptian and Jordanian law. Veredas do Direito, 23(2). https://doi.org/10.18623/rvd.v23.n2.4401.
Awad, A. (1989). Al-Itimadat Al-Mostanadieh: Derasah le Al-kada’a wa Alfekeh Almokaran wa Kawa’ed Sanat 1983 Al-Dwalieh. Dar Al-Nahda Al-Arabiya.
Awad, A. J. A. (1983). Letters of credit: A study of comparative judiciary and its rules. Dar Al-Nahda Al-Arabiya.
Dalhuisen, J. H. (2004). Dalhuisen on international commercial, financial and trade law (2nd ed.). Hart Publishing.
De Roover, R. (1942). Money, banking, and credit in medieval Bruges. Journal of Economic History, Supplement Issue, 52.
Gao, X. (2021). The fraud rule in the law of letters of credit revisited. In C. Hare & D. Neo (Eds.), Trade finance: Technology, innovation and documentary credits. Oxford Law Pro. https://doi.org/10.1093/law/9780198854470.003.0006
Garcia, R. L. F. (2009). The autonomy principle of the letter of credit. Mexican Law Review.
ICC. (2007). Uniform Customs and Practice for Documentary Credits (UCP 600). ICC No. 600.
Jack, M. (2001). Documentary credits (3rd ed.).
Jordanian Court of Cassation. (2009). Decision No. 1215/2005. Retrieved from Adaleh Legal Information Center.
Khanderia, S. (2024). The law applicable to documentary letters of credit in India: A riddle wrapped in an enigma? Journal of Private International Law, 20(1), 26–67. https://doi.org/10.1080/17441048.2024.2338623
Lipton, J. D. (2000). Documentary credit law and practice in the global information age. Fordham International Law Journal, 22(5), 1972.
McCurdy, W. (1992). Commercial letters of credit. Harvard Law Review, 53.
Meral, N. (2012). The fraud exception in documentary credits: A global analysis. Ankara Bar Review, 39(2), 41-76.
Monteiro, F. (2007). Documentary credits: The autonomy principle and the fraud exception: A comparative analysis of common law approaches and suggestions for New Zealand. Auckland University Law Review, 13, 144–170.
Musa, T. H. (2011). Commercial papers and banking operations.
Pullen, A. (2019). Recent developments in letters of credit. F&CL, 1(5).
RD Harbottle (Mercantile) Ltd v. National Westminster Bank Ltd (1978) QB 146, 155 (Kerr LJ); Power Curber International Ltd v. National Bank of Kuwait SAK (1981); Lloyd’s Rep 394, 400 (Griffiths LJ); Hong Kong and Shanghai Banking Corporation v. Kloecker & Co AG (1989) 2 Lloyd’s Rep 323, 330 (Hirst J).
Texts of Articles (118-121) of the Jordanian Trade Law No. 12 of 1966.
Texts of Articles (121/1) of the Jordanian Trade Law No. 12 of 1966.
Texts of Articles (121/2) of the Jordanian Trade Law No. 12 of 1966.
The Jordanian Court of Cassation, Case no. 152/75. Journal of Jordanian Bar Association (1976), 173.
Trimble, R. F. (1948). The law merchant and the letter of credit. Harvard Law Review, 1982-1986.
UCP 600, Article 4; URDG, Article 2(b); UNCITRAL Convention, Articles 2 and 3; UCC, sections 5-10(1)(a), 5-114(1), and 5-103(d).
UN. (2018). Trade facilitation implementation guide: Letters of credit (pp. 10-30).
United City Merchants (Investments) Ltd v. Royal Bank of Canada (The American Accord) [1983] 1 A.C. 168.
Wong, W. (2023). A principled conflict of laws characterisation of fraud in letters of credit. Journal of Private International Law, 19(3), 383–419. https://doi.org/10.1080/17441048.2023.2294611
DOI: http://dx.doi.org/10.17576/ebangi.2026.2303.27
Refbacks
- There are currently no refbacks.
-
_________________________________________________
eISSN 1823-884x
Faculty of Social Sciences & Humanities
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor Darul Ehsan
MALAYSIA
© Copyright UKM Press, Universiti Kebangsaan Malaysia