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Note: The Ministry of Health of the Republic of Cyprus (Ultimate Buyer) accepted TMP's (Applicant/Broker's) bid for the supply of surgical gloves. The contract required that Applicant/Broker obtain an irrevocable bank guarantee (Guarantee) in favor of Ultimate Buyer. Applicant/Broker then entered into a contract with a Malaysian company, TGSB (Beneficiary/Seller), for the purchase of four shipments of surgical gloves. Applicant was to pay Beneficiary for each shipment with a separate LC. For the second shipment, Beneficiary/Seller claimed that the price in the contract was not fixed and demanded an increased price for the second shipment. Applicant/Broker, fearing forfeiture of Guarantee, had Central Cooperative Bank (Issuer) issue an LC for the increased price of USD 56,044.

Applicant/Broker then sued Beneficiary/Seller for breach of contract. Applicant/Broker obtained an ex parte order enjoining Issuer from releasing the LC. Beneficiary/Seller and Issuer filed separate opposition to the order, claiming that Applicant/Broker had not satisfied Section 32 of the Courts of Justice Law (14/1960) for an ex parte injunction.

The Judge granted the opposition and dissolved the injunction. Section 32 requires the existence of a serious issue, apparent probability that plaintiff is entitled to relief, and a condition of urgency to avoid a miscarriage of justice. The Judge ruled that Applicant/Broker had not met its burden because it failed to prove that the parties had agreed on a fixed price. The Judge then stated that the LC transaction was independent from the underlying transaction, and given the commercial importance of bank credits, the court should only intervene in cases involving fraud.

[JEB/mkg]

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