The parties disputed the jurisdiction of the English courts over a letter of credit. It foresaw payment here and in sterling, made by the English bank as against the appropriate documents. Authority had been given for service out of the jurisdiction.
Held: The English courts had jurisdiction in this issue. ‘[T]he correct approach for the purposes of identifying the governing law is to look at how the contract was intended by its terms to operate at the time it was made, rather than to look at what in fact occurred. ‘ ‘The presumption contained in Article 4(2) is a blanket provision which falls to be applied across the entire field of contract law. It assumes the ability to identify a single party charged with the (single) performance characteristic of the contract. A letter of credit as such is not susceptible of such treatment. It is the source of a number of autonomous bilateral contracts arising successively between the parties and/or banks involved, each of which, considered separately, has a separate characteristic performance and therefore potentially a different governing law, albeit that a conclusion as to the law governing one contract may be the same in respect of another. Thus it is misleading to speak of the governing law in respect of a letter of credit. It is desirable but not essential that each of the contractual relationships arising in the course of the transaction have the same governing law. ‘
Judges:
Potter, Buxton, Hooper LJJ
Citations:
[2005] EWCA Civ 422, Times 18-May-2005, [2007] 2 Lloyd’s Rep 72
Links:
Statutes:
Rome Convention on the Law Applicable to Contractual Obligations 4, Contracts (Applicable Law) Act 1990
Jurisdiction:
England and Wales
Citing:
Cited – Bank of Baroda v Vysya Bank Limited ChD 1994
An Indian buyer had agreed to purchase a consignment of Latvian steel through its London office. The buyer instructed Vysya to issue a credit in favour of the seller beneficiary. The credit was confirmed by the Bank of Baroda’s London office. The . .
Cited – Banco de Portugal v Waterlow and Sons Ltd HL 28-Apr-1932
Lord Macmillan said: ‘Where the sufferer from a breach of contract finds himself in consequence of that breach placed in position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in . .
Cited – Offshore International SA v Banco Central SA ChD 1977
A standby letter of credit was issued by a Spanish bank and advised (but not confirmed) by a New York bank payable in New York.
Held: The governing law was the law of New York, as the place where the letter of credit was opened, the documents . .
Appeal from – Marconi Communications International Ltd v Pt Pan Indonesia Bank Ltd Tbk ComC 4-Feb-2004
Marconi claimed damages for the defendant’s alleged breach of contract in respect of the latter’s failure to honour its obligations as a confirmer of a Letter of Credit. Marconi alleged that Panin Bank wrongfully failed to accept drafts properly . .
Cited – Bank Melli Iran v Barclays Bank Ltd 1951
. .
Cited – Power Curber International Ltd v The National Bank of Kuwait CA 1981
The advising bank on a letter of credit was situated in Florida. The place where the credit was payable was North Carolina, and the place where the issuing bank had its place of business was Kuwait.
Held: (Waterhouse J dissenting) The contract . .
Cited – Land Rover Exports Limited v Samcrete Egypt Engineers and Contractors S A E CA 21-Dec-2001
The defendant appealed an order refusing a stay of the proceedings on the grounds of forum non conveniens. The contract of guarantee contained no choice of law clause, but the contract under which it was made set English law as the jurisdiction. The . .
Cited – Caledonia Subsea Limited v Micoperi Srl IHCS 12-Jul-2002
The court considered the proper application of Article 4 of the Convention. The Lord President expressed agreement with the position as stated in Samcrete: ‘I consider that the presumption under para 2 should not be disregarded unless the outcome of . .
Cited – Bank of Credit and Commers Hong Kong Ltd v Sonali Bank QBD 20-Oct-1994
There was no basis for a forum switch to Bangladesh of an action as of right under UK law. Under a Letter of Credit it is desirable that the same system of law should govern the co-existing contracts between (a) the issuing bank and the beneficiary, . .
Cited – Spiliada Maritime Corporation v Cansulex Ltd, The Spiliada HL 1986
Forum Non Conveniens Restated
The House reviewed the authorities on the principle of forum non conveniens and restated how to apply the principle where the defendant seeks a stay of proceedings on the ground that there is another more appropriate forum.
Held: ‘In the . .
Lists of cited by and citing cases may be incomplete.
International, Contract, Jurisdiction
Updated: 29 August 2022; Ref: scu.224500