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Non Recourse Sblc for the United Kingdom

Non Recourse Sblc Template for England and Wales

A Non-Recourse Standby Letter of Credit (SBLC) under English and Welsh law is a financial instrument where the issuing bank's recovery rights are limited to specific collateral, with no further recourse to the applicant's other assets. This document, governed by English law, provides security for commercial transactions while limiting the bank's recovery options, making it particularly attractive for project financing and structured trade transactions.

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Non Recourse Sblc

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What is a Non Recourse Sblc?

The Non-Recourse SBLC is a specialized financial instrument used when parties seek to limit potential liability to specific assets or collateral. Under English and Welsh law, this document combines the security of a traditional SBLC with non-recourse provisions, making it particularly suitable for project finance, asset-based lending, and structured trade transactions. The document typically includes detailed provisions on collateral identification, drawing conditions, and explicit limitations on the issuing bank's recovery rights, ensuring clarity and certainty for all parties involved.

What sections should be included in a Non Recourse Sblc?

1. Parties: Identification of issuing bank, beneficiary, and applicant

2. Background: Context of the SBLC issuance and underlying transaction

3. Definitions: Key terms used throughout the document including UCP 600 and ISP98 references

4. Credit Amount: Specified amount of the SBLC and currency denomination

5. Terms of Drawing: Conditions under which the SBLC can be drawn and required documentation

6. Non-Recourse Provisions: Specific clauses limiting recourse to collateral only and waiver of personal liability

7. Expiry Date: Validity period of the SBLC and conditions for extension or termination

What sections are optional to include in a Non Recourse Sblc?

1. Transfer Rights: Provisions allowing the SBLC to be transferred to another beneficiary

2. Partial Drawings: Terms and conditions for multiple partial drawings under the SBLC

3. Governing Law Choice: Explicit choice of English and Welsh law and jurisdiction provisions

4. Anti-Money Laundering Compliance: Specific provisions ensuring compliance with UK AML regulations

What schedules should be included in a Non Recourse Sblc?

1. Schedule 1 - Form of Demand: Standard template for making a drawing under the SBLC

2. Schedule 2 - Required Supporting Documents: Comprehensive list of documents required for drawing under the SBLC

3. Schedule 3 - Collateral Description: Detailed description of assets securing the SBLC

4. Schedule 4 - Fee Schedule: Breakdown of all applicable fees, charges, and commission rates

5. Appendix A - Regulatory Compliance Checklist: Checklist ensuring compliance with FSMA 2000 and other relevant regulations

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions

































Clauses






























Industries

UCP 600: Uniform Customs and Practice for Documentary Credits - Primary rules governing letters of credit and standby letters of credit in international trade

ISP98: International Standby Practices - Specific rules governing standby letters of credit, providing detailed operational guidelines

Bills of Exchange Act 1882: Key UK legislation governing negotiable instruments and certain aspects of documentary credits

Contract Law Act 1999: Fundamental legislation governing contract formation and enforcement in England and Wales

Financial Services and Markets Act 2000: Primary legislation for financial services regulation in the UK, including banking services and credit instruments

FCA Regulations: Financial Conduct Authority regulatory requirements governing financial institutions and their products

PRA Requirements: Prudential Regulation Authority requirements focusing on banks' capital adequacy and risk management

Bank of England Guidelines: Central bank guidelines affecting banking operations and financial instruments

Basel III Requirements: International banking standards for capital adequacy and risk management applicable to UK banks

Money Laundering Regulations 2017: UK regulations governing anti-money laundering requirements in financial transactions

Proceeds of Crime Act 2002: Legislation dealing with money laundering and proceeds of crime, affecting financial transactions

Unfair Contract Terms Act 1977: Legislation controlling unfair terms in contracts, relevant for SBLC documentation

Financial Collateral Arrangements Regulations 2003: Regulations governing financial collateral arrangements in the UK financial system

ICC Bank-to-Bank Reimbursement Rules: International Chamber of Commerce rules governing reimbursement between banks in documentary credit operations

Teams

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