LETTERS OF CREDIT ISSUED IN FRENCH

QUERY FROM THOMAS (KOREA)

Dear friends,

How do you deal with Algerian banks which insist on
issuing their letter of credit in French ?

With warmest regards,
Thomas
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COMMENT FROM NGUYEN HUU DUC (VIETNAM)

Dear Thomas,

UCP does not have any articles dealing with the language of the credit, whereas the interpretation in ISBP para. 23, which says under international standard banking practice, it is expected that documents issued by the beneficiary will be in the language of the credit, makes us understand that L/Cs can be issued in French or even in any language other than English.

It is admitted that French is one of the official languages of the United Nations but it is not a popular language used in East Asia countries like your Korea. The key issue is whether your bank is ready to advise the and/or whether the beneficiary is ready to accept the letter of credit issued in French.

I think your bank may advise the letter of credit as it is, drawing the beneficiary’s attention to the some difficulties that the beneficiary may cope with when presenting the documents for negotiation.

During my eighteen years working for Vietcombank, I saw only one L/C issued in French. The issuing bank had to re-issue another in English as the beneficiary refused to take up the L/C issued in French.

Best regards,
Nguyen Huu Duc

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COMMENT FROM EMILE RUMMENS (BELGIUM)

Dear colleagues,

It is not unusual that Algerian banks (and also banks in Morocco and
Tunisia) issue their Lucy’s in French. For them, French is their second
language, especially when the applicant is a governmental entity, they
insist in using French because a.o. their laws and regulations are also in
French. This is also a reason why the majority of guaranties you have to
issue in favour of Algerian governmental beneficiaries are in French (the
wording is often mandatory).

Working with LC's in French causes no big problems for most banks in
Western Europe as it is still an important language and many bank employees
know sufficient other language. However, the use of French is declining
also in EU.

If your staff does not know sufficient French (which I can understand)
there are several possibilities to cope with
(1) you obtain free translations (but always make clear to your customer
that it is only a free translation without any responsibility on yr part)
(2) or you advise the LC as such without any responsibility, and you warn
the bene that you will NOT the docs. If your customer has concluded a
contract with Algeria , the chances are high that he will know French
(3) you refuse the LC (which i do not recommend) or you prefer to advise it
through another bank which understands French. This will create some extra
costs but can be a practical solutions

I wish you all the best

Yours truly,
Emile Rummens
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# Chang-Soon Thomas Song
Senior Manager, Intl Dispute Resolution (Letters of Credit) Trade and Services Division
Korea Exchange Bank, Korea
Member of ICC Commission on Banking Technique and Practice Banking Commission
Editorial Adviser of DC World …