Lloyd's Law Reporter
FORTIS BANK SA/NV V INDIAN OVERSEAS BANK
[2009] EWHC 2303 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Hamblen, 25 September 2009
Banking - Letters of credit - Issuing bank refusing to pay under letters of credit - Whether documents complied with contract - Whether confirming bank validly appointed - UCP 600
Stencor agreed to sell containerised scrap to SESA under five contracts, facilitated by MSTC (a company owned by the Indian government). Payment was to be under letters of credit issued by an Indian bank, IOB, and confirmed by Fortis Bank in London. IOB refused to make any payment under the letters of credit, on the basis of alleged documentary discrepancies. It also asserted that Fortis was not a confirming bank and thus not entitled to an indemnity. Fortis sought summary judgment. The court held as follows. (1) The fact that the documents presented to IOB, including the invoices and the bills of lading, referred to a sale between Stencor and MSTC, did not render the documents non-compliant. The only instance of non-compliance related to a consolidated certificate which certified that Fortis was to despatch documents at IOB's cost rather than at Stemcor's cost. The defence succeeded to that extent, subject to further argument on whether IOB was precluded from relying on it by failing to return the rejected documents as required by UCP 600, article 16. (2) IOB did not have any real prospect of defending the claim by Fortis on the ground that Fortis was not a confirming bank. IOB had expressly agreed that the letters of credit could be confirmed, and Fortis had been validly nominated.