Introduction to Legal Trade Finance
Since the world economy has evolved towards an ever-increasing globalisation, trade finance has acted as a core factor in this process. Indeed, trade finance, as a means to manage and secure the payment of goods, has allowed international trade transactions to extend to a point where they are now an everyday occurrence. To build valuable financial structures, the law underpinning trade and commodity finance is of crucial importance, especially in governing the outcome in relation to any default.
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A variety of legal structures are provided for the financing of trade transactions, in areas such as asset-based lending and structured finance, of which law firms specialised in trade finance usually deal with.
Regarding these financing structures, a broad spectrum of specialised legal products are available to set up a financial arrangement, including:
- Borrowing base facilities
- Export credit agency financing
- Pre-export financing and prepayment facilities
- Receivables and supply chain finance
- Reserve base lending
- Revolving trade facilities
- Senior secured facilities
- Syndicated facilities
- Warehouse loan facilities
These legal structures are used to finance goods where cashflow or balance sheet would be insufficient, allowing companies to meet their various financial needs.
In structuring effective financial arrangements, law firms specialised in trade finance represent the primary experts and representative for businesses. Owing to the complexity of transactions and the increasing competitiveness of the international trade market, companies seek to build financial arrangements which best secure their assets.
With their accurate knowledge and breadth of experience, trade finance law firms offer tailored advice and help companies in providing the most beneficial solutions for the financing of their trade transactions and support their business clients in resolving disputes.
In this regard, following The Legal 500 which highlights the leading lawyers in their field, the main trade finance law firms are listed below:
- Allen & Overy LLP
- Clifford Chance LLP
- Clyde & Co LLP
- Hogan Lovells International LLP
- Linklaters LLP
- Norton Rose Fulbright
- Reed Smith LLP
- Simmons & Simmons
- Sullivan & Worcester UK LLP
- White & Case LLP
When entering in a financial relationship, a key issue lies in choosing the financial instrument that best suits the transaction. Since trade finance involve a broad range of financial instruments, the step of choosing the adequate one is of crucial importance as it will be a part of the success of the transaction.
Given the characteristics and advantages/disadvantages of each financial instruments, legal counsel will be able to provide accurate advice as to which legal financial structure to adopt.
Another key legal issue in trade finance relates to the law that will apply to financial agreements. Actually, since most of the financial transactions are international, parties will have to determine which law will govern their agreement.
This choice is generally expressed through a choice of law clause and a jurisdiction clause to govern where legal disputes arising from the contract will be resolved.
1 | Introduction to Legal Trade Finance
2 | Standard Legal Charges
3 | Borrowing Base Facilities
4 | Governing law in trade finance transactions
5 | SPV Financing
6 | Guarantees and Indemnities
7 | Taking security over assets
8 | Receivables finance and the assignment of receivables
9 | Force Majeure
10 | Arbitration
11 | Master Participation Agreements
12 | Digital Negotiable Instruments
13 common Letter of Credit and Bill of Lading frauds: Learning from the Solo Industries and Saad Group fraud cases