A Counter Letter of Credit, also known as a Back-to-Back Letter of Credit, is a specialized financial instrument that is used in international trade transactions to facilitate indirect payment arrangements between a buyer and a supplier when dealing with intermediaries or middlemen. It involves the issuance of two separate and independent letters of credit, with the first letter serving as the primary credit, and the second letter, known as the Counter Letter, being issued based on the first letter.

It is a specialized financial tool that enables indirect payment arrangements and facilitates complex international trade transactions involving intermediaries or middlemen. It provides flexibility, security, and efficiency in managing trade deals, reducing financial risks, and ensuring smooth and reliable execution of transactions between multiple parties across different jurisdictions. It is essential to understand the complexities and requirements associated with Counter Letters of Credit and consult with financial and legal experts to structure and manage these arrangements effectively and compliantly.