3. Issuer's or Nominated Person's Jurisdiction. Subsection (b) [Maine cite subsection (2)] defers to the rules established under Section 5-116 for determination of an issuer's or nominated person's jurisdiction.

Example: An Italian bank issues a letter of credit that is confirmed by a New York bank. The beneficiary is a Connecticut corporation. The letter of credit provides that the issuer's liability is governed by Italian law, and the confirmation provides that the confirmer's liability is governed by the law of New York. Under Sections 9-306(b) [Maine cite section 9-1306, subsection (2)] and 5-116(a), Italy is the issuer's jurisdiction and New York is the confirmer's (nominated person's) jurisdiction. Because the confirmer's jurisdiction is a State, the law of New York governs perfection and priority of a security interest in the beneficiary's letter-of-credit right against the confirmer. See Section 9-306(a) [Maine cite section 9-1306, subsection (1)]. However, because the issuer's jurisdiction is not a State, the law of that jurisdiction does not govern. See Section 9-306(a) [Maine cite section 9-1306, subsection (1)]. Rather, the choice-of-law rule in Section 9-301(1) [Maine cite section 9-1301, subsection (1)] applies to perfection and priority of a security interest in the beneficiary's letter-of- credit right against the issuer. Under that section, perfection and priority are governed by the law of the jurisdiction in which the debtor (beneficiary) is located. That jurisdiction is Connecticut. See Section 9-307 [Maine cite section 9-1307].

4. Scope of this Section. This section specifies only the law governing perfection, the effect of perfection or nonperfection, and priority of security interests. Section 5-116 specifies the law governing the liability of, and Article 5 (or