A previous edition of this Guidance contained a statement that sanctions clauses are non-documentary conditions for the purposes of the UCP and the URDG.
This statement has now been deleted, to avoid any implication that sanctions clauses are to be analysed differently from other clauses in trade finance instruments.
Whether or not a sanctions clause is a non-documentary condition for the purpose of the UCP and the URDG will depend on the drafting of the clause: if it is drafted as a condition for a complying presentation under the letter of credit, the confirmation, the guarantee or the counter-guarantee without stipulating the document to indicate compliance with the clause, it could be considered as a non- documentary condition for the purpose of article 14(h) of the UCP and of article 7 of the URDG.
Conversely, if the sanctions clause is drafted as a term of payment, thus operating in certain circumstances to override the payment obligation and permit the obligor in the letter of credit, guarantee or counter-guarantee not to pay the beneficiary against a complying presentation, it could be permissible under the UCP/URDG.
Validity and enforceability are to be determined under the applicable law.