Fortis Bank SA/NV and Anr v Indian Overseas Bank - Court of Appeal (Arden, Thomas and Etherton LJJ) - 31 January 2011

Documentary credits - Issuing bank refusing to pay under letters of credit - Whether documents complied with contract - Whether issuing bank precluded from relying on discrepancies - Whether issuing bank failed to return documents with reasonable promptness

The second claimant (“Stemcor”) entered into five contracts, incorporating Incoterms 2000, under which they sold containerised scrap to SESA International Ltd. The contracts were made through MSTC Ltd, an Indian government-owned company. Payment was to be by sight letter of credit by a first class bank acceptable to Stemcor. The advising bank was nominated as the first claimant (“Fortis”) in London. The defendant (“IOB”), upon MSTC’s application, issued five letters of credit in favour of Stemcor. Each letter of credit was expressly subject to the Uniform Customs and Practice for Documentary Credits, 2007 Revision (“UCP 600”).