A Fronting Letter of Credit is utilized when a bank issues a letter of credit on behalf of another bank, typically in situations where the original bank may lack direct presence in a particular market or when specific regulatory or commercial requirements necessitate such an arrangement. This document, governed by Dutch law, outlines the terms under which the fronting bank will issue and handle the letter of credit, backed by a counter-guarantee from another bank. It includes essential details such as the credit amount, validity period, required documents, and payment terms. The arrangement is particularly useful in international trade finance where multiple jurisdictions are involved or when regulatory requirements necessitate the involvement of a local bank. The document must comply with both Dutch financial regulations and international banking practices, particularly the UCP 600 rules.

1. Bank Details and Reference: Issuing bank's letterhead, contact details, and unique LC reference number

2. Date: Date of issuance of the Letter of Credit

3. Beneficiary Information: Full name and address of the beneficiary

4. Credit Amount and Currency: Specification of the maximum amount and currency of the Letter of Credit

5. Form of Credit: Statement that this is an irrevocable fronting letter of credit

6. Expiry Details: Expiry date and place for presentation of documents

7. Applicant Information: Full name and address of the applicant (account party)

8. Counter-Guarantor Bank: Details of the bank providing counter-guarantee

9. Available With/By: Specification of how and where the credit is available (payment, acceptance, negotiation)

10. Partial Shipments/Transhipment: Whether partial shipments or transhipment are allowed

11. Documents Required: List of documents that must be presented for drawing under the LC

12. Additional Conditions: Any special conditions or terms specific to this fronting arrangement

13. Charges: Specification of which party bears which bank charges

14. Presentation Period: Time period within which documents must be presented after shipment

15. Governing Law and Jurisdiction: Specification of Dutch law as governing law and relevant jurisdiction

16. UCP Declaration: Statement that the LC is subject to UCP 600