On 8 June, an article from Hannaford Turner says that there has been concern for many years amongst trade finance practitioners and corporates dealing with LC that both the autonomy and irrevocability of LC are at risk of being undermined through the increasing use of a varied range of sanction clauses. It says that it is accepted, certainly as a matter of English law, that sanctions (if they apply) override obligations under LC, such that the financial institution may be prevented from making payment regardless of the terms of the LC. For that reason, it says, there are 2 key questions to be considered when considering the impact of sanctions on an LC transaction. It warns that it cannot be assumed that any liability of the institution to make a payment under the LC is extinguished once the sanctions clause bites; the clause may simply have the effect of suspending the payment obligation for the period that the prohibition remains in place9 and limiting consequential liability, e.g. due to delay.
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NOTE THAT THE ABOVE LINK IS NOW CORRECTED AND WORKS!