Message to the Senate -- The UN Convention on Independent Guarantees and Stand-by Letters of Credit
TO THE SENATE OF THE UNITED STATES:
With a view to receiving the advice and consent of the Senate to ratification, subject to certain understandings set forth in the enclosed report, I transmit herewith the United Nations Convention on Independent Guarantees and Stand-By Letters of Credit (Convention), done at New York on December 11, 1995, and signed by the United States on December 11, 1997. The report of the Secretary of State, which includes an overview of the proposed Convention, is enclosed for the information of the Senate.
As a leader in transactional finance, the United States participated in the negotiation of this Convention at the United Nations Commission on International Trade Law with the support of U.S. commercial and financial interests. The Convention establishes common rules on stand-by letters of credit and other independent guarantees, instruments that are essential to international commerce, and thereby reduces the uncertainty and risk that may be associated with cross-border transactions. With two minor exceptions, the Convention's provisions are substantively similar to the uniform State law provisions in the Uniform Commercial Code Article 5 (Letters of Credit), which all States and the District of Columbia, Puerto Rico, and the Virgin Islands have enacted.
Ratification by the United States of this Convention can be expected to encourage other countries to become parties to the Convention. While eight countries currently are parties to the Convention, having a greater number of parties to the Convention would promote the stability and efficiency of international commerce.
The Convention has been endorsed by leading banking and business associations in the United States.
The Convention would be implemented through Federal legislation to be separately transmitted by my Administration to the Congress.
I recommend, therefore, that the Senate give early and favorable consideration to the Convention and give its advice and consent to its ratification, subject to certain understandings set forth in the enclosed report.