China's banking and legal systems have been the subject of
much reform in the past few years. The changes have been many
and they have been made rapidly. Generally the reforms have
The developing Chinese legal system faces big challenges at
this time of rapid change in finance law and practice. The
Chinese judicial system has to deal with a wide range of new
problems covering a large area and a vast population. It would
be surprising if Chinese courts generally had developed a
sophisticated understanding of international documentary
credits and other similarly complicated technical issues within
such a short period of time. However, it is essential to the
development of the Chinese banking system that international
banks are confident in the ability of the Chinese judiciary to
deal with these issues.
A recent case in Hong Kong has shown some of the dangers to
international banks of relying...