Document background
The Non-Operative Letter of Credit is a specialized banking instrument commonly used in UAE international trade transactions where certain conditions must be met before the credit becomes active. This document type is particularly relevant when parties need to demonstrate a bank's preliminary commitment to issue a Letter of Credit, but specific requirements (such as regulatory approvals, document submissions, or payment of fees) must first be satisfied. The document follows UAE Federal Law No. 18 of 1993 (Commercial Code) and UAE Central Bank regulations, while also adhering to international banking standards through UCP 600. It provides a structured framework for complex international trade transactions, offering security to both importers and exporters while maintaining compliance with UAE legal requirements and banking practices. The non-operative status provides flexibility while legal, regulatory, or commercial conditions are being fulfilled.
