Back in 2016, the ICC Banking Commission released a paper on the principle of strict compliance - https://cdn.iccwbo.org/content/uploads/sites/3/2016/05/ICC-Banking-Commission-Executive-Committee-Issues-Paper_Notes-On-The-Principle-Of-Strict-Compliance.pdf
As mentioned in the paper, the question of ‘strict compliance' has often been raised with regard to documents presented under documentary credits and a significant number of ICC Opinions and DOCDEX decisions have dealt with this issue.
The paper details the most relevant ICC rules and practices, backed-up by a summary of a number of DOCDEX decision and ICC Opinions.
A summary of the legal perspective highlights the interpretation given in a number of court cases, and reference is also made to a number of expert opinions.
The conclusion emphasises that developments in the past have proved that, as time goes by, it is customs and practice that will provide the required clarity in respect of ‘strict compliance'. And once such customs and practice have become commonplace, they will form part of a future revision of ISBP.
However, the above relates to documentary credits: does the same apply to demand guarantees?
This was considered in a recent UK court decision in December 2016, ‘MUR Joint Ventures BV v Compagnie Monegasque de Banque'.
The court looked at whether the principle of strict compliance as it applies to documentary credits would also apply to demand guarantees.
The final decision stated that ‘the principle of strict compliance does not necessarily extend to demand guarantees'. In this respect the court referred to an earlier decision which stated that ‘the degree of compliance required by a performance bond may be strict, or not so strict.' (IE Contractors Ltd v Lloyds Bank Plc).