Search Results

You are looking at 1 - 10 of 12 items for

  • Author: Hamed Alavi x
Clear All Modify Search
Open access

Hamed Alavi

Abstract

There is no doubt about risky nature of international trade. Such risk can be conceptualized as country risk, transportation risk, customer risk and etc. Documentary Letters of Credit (LC) are used as a method of payment in international business for many centuries in order to reduce risk of trade specially when parties are located in different countries and do not have precise information from financial standing of each other. In such occasion LC will reduce the risk of trade by shifting payment obligation from buyer as an individual to a payment guarantee of a bank as a legal entity in return for presentation of complying documents with terms of credit by seller. Familiarity with legal nature and different legal frameworks which govern the international operation of documentary letters of credit can facilitate the process of international trade for businessmen and boost national economies. However, lack of knowledge about them can impose huge losses on international traders. Situation will be more complicated when we understand that there are many internationally recognized legal frameworks which can affect the operation of LC and they get frequently updated in order to address technological and economic developments in global market. In this paper, author tries to answer questions regarding (i) what are international legal frameworks governing operation of documentary letters of credit? (ii) which areas of LC operation has been covered by them and (iii) how do they address the legal questions regarding international operation of documentary letters of credit?

Open access

Hamed Alavi

Abstract

Article 4 of the Unified Customs and Practices of Documentary Letters of Credit establishes the notion of autonomy principle by separating credit from underlying contract between account party and beneficiary. Article 5 by recognizing the autonomy principle confirms that effectuate the payment under credit, banks only deal with documents and not with goods. As a result, while documentary letters of credit are meant to facilitate the process of international trade, their sole dependency on compliance of presented documents to bank by beneficiary to actualize the payment will increase the risk of fraud and forgery in the course of their operation. Interestingly, UCP (currently UCP600) takes a silent status regarding the problem of fraud in international LC operation and leaves the ground open for national laws to provide remedies to affected parties by fraudulent beneficiary. National Laws have different approaches to the problem of fraud in general and fraud in international LC operation in particular which makes the access of affected parties to possible remedies complicated and difficult. Current paper tries to find answer to the questions of (i) what available remedies are provided to affected parties in international LC fraud by different legal systems? (ii) And what are conditions for benefiting from such remedies under different legal systems? In achieving its objective, paper will be divided in two main parts to study remedies provided by intentional legal frameworks as well as the ones offered by national laws. Part one will study the position of UCP and UNCITRAL Convention on Independent Guarantees and Standby Letters of Credit (UNCITRAL Convention) and remedies, which they provide to LC fraud in international trade. Part two in contrary will study available remedies to LC fraud and condition for access them under English and American legal system.

Open access

Hamed Alavi

Abstract

Despite the fact that Documentary Letters of Credit are involved in process of International Trade for many centuries, but their legal personality is very new and their life span is much shorter than their existence. In the middle of Eightieth Century, Lord Mansfield introduced legal aspects of LC operation for the first time to the Common Law System. Later, International Chamber of Commerce started to codified regulations regarding international operation of Documentary Letters of Credit in 1933 under the title of Uniform Customs and Practices for Documentary Letters of Credit and updated them constantly up to current date. However, many aspects of LC operation including fraud are not codified under the UCP which subjects them to national laws. Diversified nature of National Laws in different countries can be source of confusion and problem for many businessmen active in international operation of Documentary Letters of Credit. Such differences are more problematic in Common Law countries as a result of following precedent. For Example, legal aspects of International LC transactions under British Law are only based on case law, however, American Law addresses Letter of Credit Operation under Article 5 of Unified Commercial Code. Due to important role of English and American law in practice of international trade, current paper will try to compare their approach to autonomy principle of in LC operation, fraud rule as a recognized exception to it and search for answer to following questions what is definition of fraud, and what are standards of proof for fraud in LC operation, under English and American law?

Open access

Hamed Alavi

Summary

In some circumstances and despite having right to draw under the Letter of Credit, beneficiary agrees in underlying contract that he would not exercise his right before realization of certain conditions stipulated in the contract or any other agreement with applicant. Despite the fact that the instrument itself (documentary letters of credit and bank guarantees) entitles beneficiary for being paid upon presentation of complying documents, making such commitment will impose restrictions on beneficiary within the framework of underlying contract and creates different scenarios that raises respective questions. First scenario would be that beneficiary fulfills his commitments in underlying contract and receives payment under the credit and there will be no dispute between parties. Second scenario is where beneficiary presents complying documents to bank and demands for being paid the amount stipulated in the credit despite existence of an ongoing dispute with applicant regarding his performance in underling contract. Here, it will be a valid question if we ask whether or not breach of such restrictions by beneficiary will influence principle of autonomy? Consecutive question would be, shall the court consider beneficiary’s violation of his restrictive commitment in underlying contract as a new exception to principle of autonomy? To put it in different way, where beneficiary of documentary letters of credit or demand guarantee regardless of his awareness from independence of underlying contract from the credit commits in underlying contract to condition which restricts his right to draw on the credit; will he be allowed by court to rely on the principle of autonomy to neglect his commitment in underling contract? In short, should law recognize other exception in addition to fraud which is in accordance with limits imposed by underlying contract on beneficiary’s right to draw on the credit? In quest of answering above mentioned questions, this paper will be divided into six main parts. After the introduction, second part will describe nature of documentary leers of credit and principle of autonomy. Third part will analyse the nature of exception while fourth one will look at approach of different jurisdictions to this issue. Fifth part will provide different arguments in favour and against recognition of “underlying contract exception”1 and finally last part provides concluding remarks on the subject matter.

Open access

Hamed Alavi

Abstract

In this article, the author reviews the approach of English courts to limits of autonomy principle and tries to answer the following research questions: What obligations should the applicant fulfil while opening a credit in accordance with the underlying contract? What are the seller’s remedies when the buyer fails to perform his duties regarding opining and performance of the credit? On the other hand, what are the seller’s duties in the process of opening the credit and what will be the buyer’s remedy in case of his failure? What is the legal position regarding variation of the credit? What is the position of court regarding absolute or conditional nature of the credit? In order to answer the above research questions, paper is divided into seven parts: after the introductory comments, the second part will review the nature of the buyer’s obligation in opening the credit. The third part is focused on effect of non-compliance by the buyer and the fourth part studies the variation of the credit and its effect on party’s rights within the underlying contract. Part five deals with the buyer’s rights after opening the credit while part six will discuss the absolute or conditional nature of the payment obligation to pay under the LC. Last but not the least, the final part will provide some concluding remarks.

Open access

Hamed Alavi

Abstract

Documentary Letters of Credit are among most popular methods of payment used in international trade. They function as an irrevocable promise of issuing a bank to pay instead of an applicant buyer to a beneficiary seller under the condition that the beneficiary presents complying documents with terms and conditions of the credit to the bank. One of the reasons for the popularity of the LCs in international trade is shifting the payment risk from an individual buyer to a bank with a much stronger financial standing. However, LC operation in international trade is not free of risk. Despite the fact that two main principles of the Documentary Letter of Credit’s Operation (Principle of independence and principle of strict compliance) facilitate the process of international trade significantly, but still all parties involved in LC operation are supposed to be cautious about the existing risks relevant to their role in LC operation. Current paper tries to use legal principles of documentary credits and risk management theory in order to define existing risks to each party (beneficiary, applicant and bank) in international LC transaction and find an answer to the question of what are exposing risks for involved parties? For this purpose, the paper starts with an explanation of the two main principles of LC operation and moves forward with using the risk management theory to explain existing risks for each party in detail.

Open access

Hamed Alavi

Abstract

Despite the fact that documentary letters of credit (LC) are meant to facilitate the process of international trade, their specific characteristics may increase the risk of fraud while being used as the method of payment in the process of international transaction. Many factors like exclusive use of documents, geographical distance, absence of efficient prosecution, the diversity of legal system at the global level and restricted application of fraud rule can be considered as reasons for LC fraud. While billions of dollars are lost annually due to fraud in the course of LC operations, such vulnerability can result in reducing the global popularity of documentary letters of credit as the main method of payment used in international trade. Meanwhile, it is worth mentioning that fraud risk management is an unexplored territory in the practice of documentary letters of credit operation. Existing research tries to fill the gap in the study on comprehensive methods for mitigating fraud risk in operations with documentary letters of credit by using risk management theory in order to answer the question of how to manage fraud risk in LC transactions? In a quest to answer the research question, the paper is divided into two parts: the first part is dedicated to preventive measures while the latter explores responsive measures of an enterprise to manage fraud risk in LC transactions.

Open access

Hamed Alavi and Tatsiana Khamichonak

Abstract

Estonian immigration policies have been largely influenced by its historical development. The figures from 1989 show that the population was only 61.5 percent Estonian by origin with the remaining 38.5 percent belonging to other ethnic backgrounds. Remarkably, 26 percent of the Estonian population were foreign born.(1) After joining the European Union in 2004, Estonia faced a high rate of outward migration, which was connected, inter alia, to the higher average salaries of the other Member States. The rapid expansion of the Estonian economy and growth of employment coupled with the negative population growth contributed to the need of foreign skilled labour.(2) Besides, the recent reform in the education system accounts for shortage of technical specialists in some labour areas.(3) It is thus not surprising that Estonian government employs focused, selective and demand-based immigration strategies to fight the ‘global war for talents’.(4),(5) The objective of the restrictive immigration policy is to attract first and foremost highly qualified professionals in the strategic economic areas while avoiding uncontrolled immigration and increase the sustainability and competitiveness of the Estonian economy. First part of current paper provides an overview of who falls under the classification of a ‘skilled’ worker and the Estonian perspective on talent attraction and retention. The second part lays down the existing legal framework, which covers the conditions and procedures of knowledge-worker’s immigration to Estonia. Particularly, this includes the relatively recent amendments to the Aliens Act 2004, which came into force in 2008 and set forth a facilitated approach towards entry and residence requirements.

Open access

Hamed Alavi and Tatsiana Khamichonak

Abstract

Export controls for dual-use items are an important constituent element of both the security policies of state exporters and WMD non-proliferation efforts. Dual-use goods and technologies can be used for both civil and military purposes, which requires careful oversight over their export to countries that are considered unfriendly or have ambiguous foreign policy attitudes. By their very nature, dual-use items may be used both to further legitimate ends, like promoting technological development and strengthening economic ties, and to aid in unwarranted acts. State exporters are faced with the responsibility of balancing the security objectives pertaining to exports of dual-use items with the competitiveness of local economies. The paper discusses the EU export control regime and EU membership in international export control groups. In doing so, comparative and normative research methods are chosen to analyze existing literature on Council Regulation 428/2009 and other international export control groups, including the Wassenaar Arrangement, the Missile Technology Control Regime (MTCR), the Australia Group (AG) and the Nuclear Suppliers Group (NSG). The paper will conclude by identifying shortcomings and addressing possible amendments to the regulation.

Open access

Hamed Alavi and Patrycja Hąbek

Abstract

Alongside other disciplines in social sciences, management researchers use mixed methods research more and more in conduct of their scientific investigations. Mixed methods approach can also be used in the field of production engineering. In comparison with traditional quantitative and qualitative research methods, reasons behind increasing popularity of mixed research method in management science can be traced in different factors. First of all, any particular discipline in management can be theoretically related to it. Second is that concurrent approach of mixed research method to inductive and deductive research logic provides researchers with opportunity to generate theory and test hypothesis in one study simultaneously. In addition, it provides a better justification for chosen method of investigation and higher validity for obtained answers to research questions. Despite increasing popularity of mixed research methods among management scholars, there is still need for a comprehensive approach to research design typology and process in mixed research method from the perspective of management science. The authors in this paper try to explain fundamental principles of mixed research method, its typology and different steps in its design process.