LAW OF THE KYRGYZ REPUBLIC

of July 23, 2002 No. 123

About letters of credit

Accepted by General Court of Jogorku Kenesh of the Kyrgyz Republic on June 11, 2002

Approved by the Meeting of national representatives of Jogorku Kenesh of the Kyrgyz Republic on July 3, 2002

Article 1. Subject of regulation of this Law

This Law establishes action in the territory of the Kyrgyz Republic of "The unified rules and customs for the documentary credits" prepared by International Chamber of Commerce (Uniform Customs And Practice For Documentary credits, UCP, ICC publication No. 500).

Article 2. The basic concepts used for the purposes of this Law

1. The letter of credit represents the conditional monetary commitment of bank issued to them at the request of the client for benefit of his partner under the agreement under which bank, the opened letter of credit (emitting bank), makes to the supplier payment or confers powers to other bank to make such payments on condition of submission of the documents provided in the letter of credit to them and in case of accomplishment of other conditions of the letter of credit.

In the stipulated cases payment by the performing bank can be guaranteed to the receiver by other bank (confirmatory bank). When the performing bank makes payments to the receiver (to person specified as "receiver") according to the letter of credit, emitting bank has the obligation to make the corresponding payment (plus remuneration of the performing bank) to the performing bank. If the performing bank does not make payment according to the obligations, the confirmatory bank has the obligation to make payment to the receiver (person specified by "receiver") provided that to the performing bank the required and properly processed documents were submitted.

2. Rules of International Chamber of Commerce (further - Rules MTP) the "Unified rules and customs for documentary credits" prepared by International Chamber of Commerce in editions of 1993 or later edition, and also any other document changing provisions of Rules MTP which in subsequent can be published by International Chamber of Commerce (or her legal successor).

Article 3. Applicable law

1. Legal relationship according to letters of credit are regulated by the Civil code of the Kyrgyz Republic, this Law, other laws and regulatory legal acts of the Kyrgyz Republic published on the basis and according to them and also international treaties according to the legislation of the Kyrgyz Republic.

2. In case of absence in the conditions of the letter of credit of the reference to the right which is subject to application according to the letter of credit provisions of Rules MTP are used. In case of the disagreements connected with the translation of Rules MTP into Russian the version in English which is the original will be applied.

3. Provisions of Rules MTP are not applied fully or partially:

a) if the letter of credit does not correspond to provisions of Rules MTP as in general, and concerning its separate provisions;

b) if conditions of the letter of credit otherwise contradict provisions of Rules MTP.

4. The letter of credit opened by resident bank of the Kyrgyz Republic shall be considered in form and in content according to the legislation of the Kyrgyz Republic if according to Article 1198 of the Civil code of the Kyrgyz Republic in the letter of credit it is not stipulated that it is regulated by other legislation.

Irrespective of the right which is subject to application according to the letter of credit in case of opening of the letter of credit by resident bank of the Kyrgyz Republic at the request of the client, the performing bank or the bank participating in carrying out letter of credit transaction or the receiver (or person designated by the receiver) in addition to any other equitable remedy which will take place, has the right to address to judicial authorities of the Kyrgyz Republic if there is any dispute concerning validity of the letter of credit, conditions of its accomplishment or any other question.

Article 4. Form and conditions of the letter of credit

1. All letters of credit shall contain the word "letter of credit". In case of opening of the letter of credit:

- in the Kyrgyz and Russian languages the word "letter of credit" shall be used;

- in English the words "letter of credit" or "documentary credit" shall be used;

- in other foreign language the corresponding terminology determined by the legislation shall be used.

When opening the letter of credit at the same time in English and other foreign language the text of the letter of credit in English prevails.

2. The either party of the letter of credit (the payer, the emitting bank performing bank, the receiver and any person designated by the receiver) can determine conditions of the letter of credit by agreement among themselves. In cases of incomplete determination by the parties of conditions of the letter of credit the conditions provided by Rules MTP are applied.

3. When opening the letter of credit the minimum requirements to form and conditions of the letter of credit determined by the Civil code of the Kyrgyz Republic, this Law, other laws, regulations of the Kyrgyz Republic and Rules MTP shall be observed.

Article 5. Obligations of the parties according to the letter of credit

1. Issue of the letter of credit according to the legislation of the Kyrgyz Republic creates the rights and obligations between the relevant parties which can be performed judicially in the Kyrgyz Republic.

The emitting bank bears responsibility according to the letter of credit just because it opens the letter of credit, the confirmatory bank bears responsibility according to the letter of credit just because he confirms payment. Responsibility of such banks does not require any form of acceptance or confirmation of executive bank or the receiver of the letter of credit.

2. According to the letter of credit all participating banks have the obligation to perform payment according to the letter of credit provided that the documents submitted by the receiver are documents which are determined in the letter of credit. At the same time any of the parties of the letter of credit has no right to refuse implementation of payments with reference to any external factors, such as failure to carry out or violation by the receiver of any obligation for the letter of credit (including the obligation of the receiver to deliver goods or to deliver goods meeting the requirements of specific quality), and any of the parties will not have opportunity to refuse the obligations according to the letter of credit, except those which are specified in the letter of credit or correspond to Articles 782 - 788 Civil codes of the Kyrgyz Republic or to Rules MTP.

In case of violation of such obligations of the party will have the appropriate rights according to the agreement or the legislation from which there were obligations.

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