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Note: Bank of China (Issuer) issued an LC to finance the purchase of iodine at the request of Sinopharm Jiangsu Co. (Applicant). Although Issuer honored three drawings, no iodine was delivered, allegedly because Yuang Feng (Beneficiary) had presented fraudulent documents. Claiming the possibility of negligence on the part of Issuer, Applicant sought a court order permitting discovery against Issuer as permitted under Australian law. The Supreme Court of New South Wales, McDougall, J., denied Applicant's petition.

The court found that Applicant failed to make reasonable inquiries, a requirement under Australian law in order to force the presentation of documentary evidence. Applicant only inquired of Bank's Chinatown branch, located in New South Wales, although Issuer informed Applicant that all original documentation was forwarded to Issuer's Jiangsu Branch in the People's Republic of China, the LC was issued from the Jiangsu Branch, Applicant was a customer of the Jiangsu Branch, and the general contract was made in the People's Republic of China.

[JEB/alh]

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