- Anti Money Laundering
- automatic extension
- bill of lading
- Counter Terrorist Financing
- financial crime
- Financial Guarantee
- Independent Guarantee
- LC Law
- LC Statistics
- Red Flags
- Standby LC
- Trade Based Financial Crime Compliance
- tranport documents
- wrongful dishonor
Recent LC Cases & the Issues Raised
Forwarding or Returning Documents
In revisiting the Grains (Singapore) case, one Singapore LC Law Summit attendee made the argument that although it is not a rule, it is expected based on international standard banking practice that a bank forwards or returns documents if it chooses not to take up its nomination.
Jabneel Development (Canada) is a post-honor case addressing the question of which party should hold funds until a court ultimately determines who is entitled to the proceeds from the standby. The case illustrates that once a complying presentation has been made, the standby must be honored. Challenges short of fraud have to be argued out at a later stage. These challenges should not be used to interfere with the independence principle of LCs.
In CKT Marine Services (Netherlands), a Dutch court acknowledged the bank guarantee was independent but enjoined payment after accepting the Applicant’s argument that the Guarantor owes a duty of care towards the Applicant. The case demonstrates another example of a court stretching further exceptions to the independence principle.
Identifying the Drawing Party
Sena Trucking (South Africa) involved a demand for payment by a beneficiary’s agent. The court rejected the applicant’s argument that payment could only be made by the named beneficiary. Are banks responsible for ascertaining the identity of the party drawing, verifying the party drawing, or making a determination if the party is duly authorized to demand payment? Issuers have no obligation other than to pay the named beneficiary upon presentation of complying documents.
For more expert analysis on recent court cases of note, join us at the upcoming LC Law Summit and Standby & Guarantee Forum this October in New York, where a panel of local, regional, and international experts will help bridge the gap between trade finance law and practice.