The parties had contractual disputes as to letters of credit governed by Iraqi law. The arbitration was in London applying Iraqi law. They now disputed whether the Enforcement of arbitration award was as an award made in London. Each appealed against elements of the orders made at first instance.
Held: The appeals and cross appeals failed.
Although a bank must carefully assess the creditworthiness of its own customer before agreeing to open a letter of credit, the process of doing so is essentially mechanical. The terms of the credit are likely to be determined largely, if not entirely, by the seller and will be communicated by the buyer to its bank. The bank in its turn will then issue the credit in the terms required, undertaking a liability to the beneficiary against which it will seek an indemnity from its customer. Moore-Bick LJ added that one should therefore be very cautious before construing letters of credit by reference to extraneous circumstances and there was no evidence before the court of the extent to which those engaged in financing the trade in Iraqi oil were or were not generally aware of the arrangements.
The parties disputed the terms of their contract and had undertaken an arbitration in London, but under Iraqi law. There was no reason in principle why a letter of credit should not be issued in favour of joint beneficiaries, as for example if goods or property were being sold by joint owners.
Judges:
Moore-Bick VP CA, Sullivan, Briggs LJJ
Citations:
[2015] EWCA Civ 835, [2016] 1 Lloyd’s Rep 42, [2015] CP Rep 48
Links:
Statutes:
State Immunity Act 1978 13(2) 14(4)
Jurisdiction:
England and Wales
Citing:
Appeal from – Taurus Petroleum Ltd v State Oilmarketing Company ComC 18-Nov-2013
The parties referred their contract disputes to an arbitration in London which was to apply Iraqi law. As to enforcement of the award, the defendant denied that they were situated in London.
Held: The debts were situated in London rather than . .
At ComC (2) – Taurus Petroleum Led v State Oil Marketing Company of The Ministry of Oil, Republic of Iraq ComC 18-Nov-2013
. .
Binding – 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 – Rogers v Whitely QBD 1889
Money in a bank account included money of which the judgment debtor was trustee.
Held: That money could not be ordered to be paid to the judgment creditor who obtained the charging order: ‘he can only obtain payment out of the debtor’s own . .
Cited by:
Appeal from – Taurus Petroleum Limited v State Oil Marketing Company of The Ministry of Oil, Republic of Iraq SC 25-Oct-2017
The parties disputed their contract arrangements. It was referred to an arbitration in London, but applying Iraqi law. The respondent failed to meet the award made against it, and the claimant sought to enforce the award here by means of third party . .
Lists of cited by and citing cases may be incomplete.
Arbitration, Banking, International
Updated: 01 October 2022; Ref: scu.550645