Payment Methods in International Trade as Legal Risk-Allocation Structures: A Critical Analysis under Georgian Law and the EU-Georgia DCFTA Framework
Abstract
Introduction: This article examines the legal structure and function of payment methods in international trade, focusing on their role as mechanisms of risk allocation and aiming to provide an overview of this topic from the perspective of Georgian law. It argues that instruments such as letters of credit, documentary collections, and open account transactions operate not only as mere commercial tools but also as legal architectures. While Georgian law formally, and in the author's view, to some extent insufficiently, incorporates international trade finance standards through the Civil Code and recognition of international commercial practices, this area still remains underdeveloped in doctrinal articulation and judicial interpretation.
Methodology: For the purposes of preparing this article, the following scientific research methods have been applied:
- the comparative method;
- legislative analysis;
- doctrinal analysis, and
- a literature review.
Results: This article, above all, by means of comparative analysis with the European Union law, doctrines and practices of EU countries and the framework of the EU–Georgia Deep and Comprehensive Free Trade Area (DCFTA), aims to demonstrate that Georgia’s trade finance system exhibits certain structural dependence on external norms. Accordingly, it concludes with proposing some doctrinal and institutional reforms with the goal of strengthening legal certainty and enhancing judicial engagement with trade finance principles.
Downloads
PlumX Statistics
References
ASSOCIATION AGREEMENT between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part (signed 27 June 2014, entered into force 1 July 2016). https://eur-lex.europa.eu/eli/agree_internation/2014/494/2018-06-01.
Bundesgerichtshof, Urt. v. 10.11.1998, Az.: XI ZR 370/97, https://www.anwalt24.de/urteile/bgh/1998-11-10/xi-zr-370_97.
Civil Code of Georgia, 06/27/1997;
EU-Georgia Deep and Comprehensive Free Trade Area, https://trade.ec.europa.eu/access-to-markets/en/content/eu-georgia-deep-and-comprehensive-free-trade-area.
International Chamber of Commerce, Uniform Customs and Practice for Documentary Credits (UCP 600, 2007) http://static.elmercurio.cl/Documentos/Campo/2011/09/06/2011090611422.pdf;
International Chamber of Commerce, Uniform Rules for Collections (URC 522), https://aloqabank.uz/upload/medialibrary/6f9/w3msrb5nhqe4b3kni0y2exy8hh9ip6r6/URC522.pdf;
Order of the President of the National Bank of Georgia No. 24/04 "On Approval of Instructions on Opening Accounts in Banking Institutions", 07/04/2011;
Bridge M., The Law of International Sale of Goods (3rd edn, OUP 2013); DOI: https://doi.org/10.1093/law/9780199658251.003.0014
Carr I., Stone P., International Trade Law (5th edn, Routledge 2018); DOI: https://doi.org/10.4324/9781315543970-2
Case C-117/06, Möllendorf and Möllendorf by the Court of Justice of the European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:62006CC0117.
Case C-72/15, The Minister for Justice and Equality v PJSC Rosneft Oil Company by the Court of Justice of the European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:62015CJ0072.
Crozet, M., Demir, B., & Javorcik, B. (2022). International trade and letters of credit: A doubleedged sword in times of crises. IMF Economic Review, 70(2). https://doi.org/10.1057/s41308-021-00155-3; DOI: https://doi.org/10.1057/s41308-021-00155-3
Devitt, M.R. and Sannicandro, L.A. (2017). Substantial Compliance vs. Strict Compliance. In Qualified Appraisals and Qualified Appraisers (eds M.R. Devitt and L.A. Sannicandro). https://doi.org/10.1002/9781119449379.ch4; DOI: https://doi.org/10.1002/9781119449379
Ferrero S., SOME CONSIDERATIONS ON THE DOCTRINE OF STRICT COMPLIANCE AND THE AUTONOMY PRINCIPLE IN DOCUMENTARY CREDIT, 4 BusinessJus 25 (2013);
Gabisonia Z., Banking Law, 2nd revised and expanded edition, Tbilisi, "World of Lawyers", 2017;
Goode R., Commercial Law (4th edn, Penguin 2010);
Hwaidi M., Four uncertainties around the fraud exception in documentary letters of credit under English law (The Journal of International Maritime Law), January 2018. https://www.researchgate.net/publication/336702812_Four_uncertainties_around_the_fraud_exception_in_documentary_letters_of_credit_under_English_law_The_Journal_of_International_Maritime_Law;
Jarzemskis A., Jarzemskiene I., The Upgraded Complex of Payment Methods Following Expansion of Contract Manufacturing in International Trade. Journal of Business and Economic Development. Vol. 8, No. 1, 2023. doi: 10.11648/j.jbed.20230801.13; DOI: https://doi.org/10.11648/j.jbed.20230801.13
Korkelia K., Georgian Private Law (Tbilisi University Press 2015);
McKendrick E., Goode on Commercial Law (5th edn, Penguin 2016);
Methods of Payment, Official Website of the United States government, https://www.trade.gov/methods-payment;
ÖNÜR ASLAN A., INTERNATIONAL PAYMENT METHOD SELECTION IN IMPORT-EXPORT MANAGEMENT IN ECONOMIC UNCERTAINTY PERIODS: ANALYSIS WITHIN THE SCOPE OF MCDM, Journal of Administrative Sciences, Volume: 24, No: 60. https://doi.org/10.35408/comuybd.1811323; DOI: https://doi.org/10.35408/comuybd.1811323
Scotiabank, INTERNATIONAL TRADE FINANCE SERVICES, DOCUMENTARY LETTERS OF CREDIT, A PRACTICAL GUIDE, 9671811(10/99), https://instruction2.mtsac.edu/rjagodka/Importing_Information/Letter_Of_Credit_Guide.pdf;
Court Ruling N 2b 2057-07 by Tbilisi Court of Appeals dated 1 May 2008;
United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168 (HL);
Zambakhidze T., Commentary on Article 876 of the Civil Code of Georgia, 6, http://gccc.tsu.ge;
Copyright (c) 2026 Levan Gotua
This work is licensed under a Creative Commons Attribution 4.0 International License.
