Article

Factual Summary:

To pay for the purchase and import of 27,000 cases of peeled tomatoes, the applicant caused a letter of credit to be issued for US$ 200,000 in favor of the seller in Italy. The seller's bank initially rejected a letter of credit issued by another US bank and then accepted the letter of credit at issue in this case. Pursuant to the LC, the seller's bank received disbursements and credited the seller's account. Subsequently, the applicant brought this action alleging that the exporter had failed to file the proper FDA and customs notices. As a result, the applicant alleged that the tomatoes did not reach their intended destination.


Legal Analysis:

1. Personal Jurisdiction: Applying Pennsylvania's long-arm statute, which allows the court to assert jurisdiction up to the U.S. Constitutional limits if it finds that the defendant established minimum contacts in the forum by "deliberately engaging in significant activities or by creating continuing obligations such that he has 'purposefully availed himself of the privilege of conducting business there'", the court found that the only evidence of systematic and continuous business being done by the seller's bank in Pennsylvania was the rejection of the first LC, the acceptance of the second LC, and an unsworn statement from the applicant's counsel that the seller's bank regularly conducted business in the jurisdiction. Finding the LC transactions to be insufficient, and the counsel's claim unsupported, the court ruled that it could not assert general personal jurisdiction over the seller's bank.

The court also found that the seller's bank had only been the recipient of the LC involved in this transaction and had not actively sought its issuance within the jurisdiction. Mere acceptance of a LC issued within the jurisdiction, the court held, was not enough to assert specific personal jurisdiction over the seller's bank. Accordingly, the court dismissed the applicant's complaint as related to the seller's bank.

@1998 INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE

COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE

The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.