La défenderesse, une banque turque, émit une lettre de crédit à la demande d'une société turque aux fins de financer le paiement de matériel industriel fourni par une société allemande. Les fonds furent mis à disposition par la banque allemande demanderesse. Celle-ci paya la société allemande mais ne put se faire rembourser par la banque défenderesse qui estimait que la demande faite par la banque allemande n'était pas conforme aux stipulations de la lettre de crédit.

Le différend porte sur l'interprétation des stipulations relatives au paiement du solde aux termes de la lettre de crédit ; la défenderesse prétendant que le solde n'était dû que sur présentation d'un certificat de réception tandis que la demanderesse estimait que le paiement était dû indépendamment de celui-ci.

'Considerations of the Tribunal

12. The provisions on arbitration of the Swiss Private International Law Act ("PILA") apply in the case at hand, as the seat of the Tribunal is in Switzerland and none of the Parties is domiciled in Switzerland (Article 176 Section 1 PILA). Article 187 Section 1 PILA provides that parties may choose the law applicable to their dispute. Article 17 Section 1 of the ICC Rules corresponds therewith. Based on the Parties' agreement . . . and as confirmed by the Terms of Reference, German law is applicable to the contractual relationship between the Parties and to the issues of the present dispute. Insofar as the law applicable to the contract has not been agreed upon as provided in Article 27 of the Introductory Act to the German Civil Code (EGBGB), German conflict-of-law rules provide for the law of the country to which the legal relationship has the closest connection to be applied as the substantive law. In the present case, all aspects of performance under the Letter of Credit are related to Germany. Respondent has requested Claimant, a German bank, to add its confirmation to a German beneficiary. The documents had to be submitted in Germany. The credit was to be available at Claimant's place of business and payment of the credit was to be effected in Germany to the German beneficiary. In addition to German law, the Uniform Customs and Practice for Documentary Credits of the ICC must be taken into consideration, as the guidelines to swift message, no. . . . provide inter alia for their applicability. As confirmed by the Terms of Reference, the Parties agree to the UCP being applicable in the present case.

13. The main issue which is the subject of the disagreement among the Parties is the meaning of the text in the third Paragraph of Clause 78 of the Letter of Credit. The text, as amended, reads as follows:

"Upon receipt of your counter guarantees texts of which are given in our . . . we will pay 20 pct of the L/C amount i.e. DEM.870.000,00 2 Turkish business days later as per your instructions.

Upon receipt of your authenticated msg stating the remittance of the credit conform docs we will pay 50 pct of the docs amount after 2 Turkish business days.

The balance DEM.1.305.000 will be paid 2 Turkish business days after presentation of the acceptance signed by both parties latest 140 days after despatch of the last system equipment."

In order to analyse and interpret this text, there are two initial questions which the Tribunal must examine, namely:

(i) does the payment of the balance of DEM 1,305,000 require the presentation of documents, such as an acceptance document signed by the Parties, or does the amount become due solely because of the lapse of the 140 days? and,

(ii) if the presentation of such a document is required, does the acceptance document submitted by the Respondent . . . constitute the document which is in conformity with the terms under the Letter of Credit?

The Tribunal will first analyse the text of the Letter of Credit on its face and draw its conclusions from those clauses which it holds to be relevant. In a second instance it will revert to an interpretation of the words and phrases used by both Parties.

13.1 Where one has to examine questions relating to conditions precedent and the maturity under a letter of credit and whether a document was presented on time, it is important to distinguish between the expiry date and the maturity date.

Pursuant to Article 42 (a) UCP, all credits must stipulate an expiry date; it is obvious that there can only be one expiry date for a letter of credit. The consequence of such an expiry date is that documents must be presented on or before this date (Article 42 (b) UCP). On the other hand, the expiry date does not mean that the beneficiary must request payment before that date and that he is excluded from making claims thereafter (Schütze, Das Dokumentenakkreditiv im Internationalen Handelsverkehr, 4th ed., Heidelberg 1996, p. 161).

For fixing the maturity for payment for a letter of credit, the parties have several alternatives (Articles 9 and 10 UCP), namely to provide for

(i) payment at sight of the documents;

(ii) payment on the maturity date(s) determinable in accordance with the stipulations of the credit;

(iii) payment at the maturity of accepted drafts drawn on the issuing bank; or,

(iv) payment after negotiation.

Where payment as a whole or in part has to be made not upon presentation of the documents, but after delivery of the goods or at the end of a period specified in the letter of credit, the instrument would be considered a deferred payment credit in the sense of Article 9 (a) ii) UCP. The period is often calculated as a number of days after the presentation of a document or after the shipping date. Where the letter of credit provides for such a deferred payment, i.e. for paying on the maturity date(s) determinable in accordance with the stipulations of the letter of credit, a confirmation of an irrevocable letter of credit constitutes a definite undertaking, provided that the required documents were presented and that the terms and conditions of the letter of credit were complied with.

For the present Letter of Credit, the maturity date must be determined on the basis of the language in field 78 ("... latest 140 days alter despatch of the last system equipment") and not by reference to the stipulation in field 31 D, in which the expiry date was set for 25 December, 1997. The latest date when the shipments (including the last system equipment) could be made was 15 December, 1997 (field 44 C). The obligation to pay the second installment of 50% of the Letter of Credit, as well as the balance, was made contingent upon presentation of the documents within ten days of shipment and before the expiry date of the Letter of Credit (field 48). It is undisputed among the Parties in the present proceedings that the documents required to be submitted before the expiry date were actually submitted and that they complied with the terms of the Letter of Credit.

From this agreement between the Parties, it is clear that a deferred payment credit was implied. This does not, however, answer the question of whether, in addition to the deferred maturity, payment was made contingent upon the presentation of a further document, namely the "acceptance signed by both parties" (field 78).

13.2 Both Parties refer to fields 41 A and 42 M and argue that the phrase "mixed payment" supports their respective interpretations of the third Paragraph of Clause 78 of the Letter of Credit. The Claimant is of the opinion that, as the UCP provides for four different forms of payment, namely on-sight payments, deferred payments, payments by acceptance and payments by negotiation, whenever a letter of credit provides for more than one of these different types of payment, one would be dealing with a mixed payment. The Respondent takes the view that whenever there are different payments, as in the present case, with different installments and different documents to be presented, the term "mixed payments" is used.

With reference to the different types of credits listed in Article 10 (a) UCP, it would not make sense to use the term "mixed payment", if only one type of payment, namely on-sight payment against the presentation of various documents, was intended by the parties. If this had been the intention, the term "payment details" would have been sufficient. The term "mixed payments" implies a combination of two or even more different types of payment, e.g. "on-sight" and "deferred" payments; a combination of alternatives which is, incidentally, also referred to in Respondent's submission of 1 April 1999 (p.2, para. 3). Consequently, the use of the term "mixed payment details" leads to the conclusion that Paragraph 3 of Clause 78 is to be construed as a deferral of the maturity and not as a "sight payment" provision.

14. Under German law and the UCP, the purpose of a letter of credit is generally to secure the proper performance, in the interest of both parties, of the underlying transaction. The applicant or the applicant's bank, respectively, shall only pay the purchase price against presentation of certain documents which prove e.g. the existence of the goods or which will provide title to the goods. Apart from this, the Banks are not, as a rule, involved in the underlying transaction (Article 4 UCP). Payment must be made unconditionally against presentation of documents which are in conformity with the terms of the letter of credit (Article 9 (a) UCP). These principles of autonomy of the letter of credit and of strict compliance are also recognised by German courts (for the principle of autonomy ["Abstraktheit"] see German Federal Court in BGHZ 60, 262, 264 and, recently, in BGH WM 1996, 58, 59; for the principle of strict compliance see German Federal Court in e.g., BGH WM 1958, 291, BGH WM 1960, 38, BGH WM 1970, 552, BGH WM 1971, 158; see also Swiss Federal Tribunal in BGE 100 II 150) and by legal scholars (see Schütze, op. cit., p.86; Nielsen, Bankrecht und Bankpraxis, 1996, sec.5/475, 5/492, 5/598, 5/603).

This rule of strict compliance does not, however, exclude that, like any other contract, a letter of credit is also open to interpretation. The rules of interpretation are the same as those generally applicable to contracts and to the parties' declarations of intention. As provided for by Articles 133 and 157 BGB, the true intentions of the parties rather than the literal text of the chosen expressions must take precedence. The principle of good faith, the customs of the trade and of the business community, as well as the expectations and understanding which an ordinary businessman in the relevant circumstances could and should have had, must likewise be taken into account (see, e.g., Mayer-Maly in: Münchener Kommentar, BGB, 3rd ed. 1993, § 157 sec. 3 et seq. and sec. 15 et seq.). In BGH WM 1994, 1063, the German Federal Court (Bundesgerichtshof) held that:

"Ein Standby Letter of Credit ist ebenso wie ein Dokumenten-Akkreditiv einer Auslegung zugänglich, die nicht nur auf den Wortlaut, sondern auch auf den aus der Urkunde erkennbaren Sinn und Zweck der in ihm enthaltenen Bestimmungen abstellt. Dem steht weder die Unzulassigkeit von Einwendungen aus den Grundgeschäft noch der Grundsatz der Garantiestrenge entgegen." 1

14.1 The Tribunal is of the opinion, within the given purpose of a letter of credit, the issuing bank may, only within clearly defined limits, request the presentation of further documents to release payment. Otherwise, one would in effect give the issuing bank the authority and discretion to forestall payment, with the result that an irrevocable letter of credit would become a revocable instrument. With this principle in mind, the questionable language in the third Paragraph of Clause 78 of the Letter of Credit must not be interpreted to broaden the influence of the Claimant and to introduce a further requirement for payment which is not explicitly provided for by the terms of the Letter of Credit. This restrictive interpretation is further supported by the well-established general principle that unclear language should be interpreted against the interest of the draftsman ( "in dubio contra stipulatorem"). Even if the Respondent is not the genuine author of the provisions and received instructions for drafting the text from the Applicant, it must bear this risk of unclear language, particularly since it acted for the Applicant and since the other contracting party, the Claimant, as is regularly the case with respect to letters of credit, did not have the opportunity to exercise much influence on the wording of the provisions.

Taking into account the fact that the term "Acceptance signed by both Parties" is neither defined nor described in the Letter of Credit, the Claimant did not have to expect that the payment of the balance would be made contingent upon a further document. This would have been against the normal system in which a letter of credit is used and which is explained above under paragraph 13.1. After complying with the terms of the Letter of Credit and submitting the required documents before the expiry date, the Claimant could assume that no further documents were necessary. This is also confirmed by the language in field 46 A, which specifies the documents required under the Letter of Credit, but does not mention any acceptance. The Claimant could, in good faith, interpret the phrase "Acceptance signed by both Parties" to mean that such an acceptance document would trigger the maturity date, if presented before 140 days after the dispatch of the last system equipment. If no signed acceptance document was submitted, the maturity date would be marked by the end of the 140-days' period.

Where parties intend to secure the performance of a contract, including the warranty obligations thereunder, e.g. with respect to a contract for the production and delivery of goods, they usually provide for a separate guarantee, warranty or performance bond, and do not alienate the general purpose of a letter of credit to accommodate such an atypical effect. In the present case, the Parties appear to have agreed on such a guarantee, or at least discussed it as a separate security instrument . . . It appears, therefore, that even the Respondent did not expect the Letter of Credit to have that function, namely to secure the satisfactory functioning of the [industrial equipment].

14.2 The fact that the alternative character of the maturity dates were not precisely worded in Paragraph 3 of Clause 78 cannot be construed to the disadvantage of the Claimant. Article 9 (a) (ii) UCP states that the maturity date must be determinable in accordance with the letter of credit. The mechanism provided for in the Letter of Credit (field 46 A), "Beneficiary's shipment fax sent to our [i.e. Respondent's fax […] and Applicant's fax […] on shipment date indicating shipment date […]", made a precise determination of the maturity date (i.e. 140 days after shipment) possible, and the Claimant was not under any obligation to ask for a more precise wording of the third Paragraph of Clause 78. As established by the documents filed by the Parties, the necessary documents had indeed been presented and the maturity date thereby determined. The second alternative for the maturity was determinable, since it depended on a signed notice of acceptance. It is common practice, and falls within relevant trade customs to agree on alternative maturity dates, in particular, on an early maturity date based upon a confirmation of the arrival of the goods. Consequently, the Claimant's interpretation of this clause corresponds with what can be considered as customary and common procedure under the circumstances as they apply to the present case.

15. The Tribunal is aware of the controversy as to whether one should or might look at the underlying transactions to obtain guidance for the interpretation of a disputed clause in a letter of credit. In the present case, the analysis of the terms of the Letter of Credit and the interpretation outlined above offer such a clear conclusion that the Tribunal does not have to revert to the terms and conditions of the Supply Agreement between the Beneficiary and the Applicant, and in particular to its Clause 8.2.1 . . . Nevertheless, it may be pointed out that the above conclusion, drawn from the clauses of the Letter of Credit, and the interpretation of the third Paragraph of Clause 78 of the Letter of Credit, are fully supported by Clause 8.2. l .c of the Supply Agreement . . .

16. Taking the above considerations into account, the Tribunal holds that the Letter of Credit provided for a deferred payment with regard to the balance of DEM 1,305,000 and that the balance was due and payable by 4 May 1998, i.e. 140 days after shipment of the last system equipment on 15 December 1997. The presentation of a letter of acceptance signed by both Parties is not a requirement for payment.

Given this conclusion, it has become obsolete to examine the objections which the Respondent raised against the conformity of the signed acceptance as a prerequisite for the payment of the balance under the Letter of Credit.

17. Interest is due from the date of maturity of the deferred payment obligation (§ 353 HGB). The maturity is either 4 May, 1998, or two Turkish business days after presentation of the acceptance by the Claimant, if the Tribunal was to consider that the document submitted by the Claimant by letter dated 16 April, 1998 is an "acceptance" under the meaning given to this word in field 78 of the Letter of Credit. It is, however, not necessary to address this issue since the Claimant claimed interest as from 4 May, 1998, which is the latest date at which the deferred payment obligation could become due. Therefore, the Tribunal will award interest due from 4 May, 1998. The amount of interest claimed by the Claimant is 5% per annum, which is in accordance with § 352 HGB. The Respondent has not specifically disputed the amount of interest claimed by the Claimant. Therefore, the Tribunal adjudicates interest of 5% p.a. on the amount of DEM 1,305,000 since 4 May, 1998.'

1
In a tentative English translation: A standby letter of credit, as well as a documentary letter of credit, are subject to interpretation, which should not only be based on the wording, but also on the meaning and purpose of the stipulations set out therein. This is not contrary to the principle of inadmissibility of a defense based on the underlying contract and to the rule of strict compliance with the text of a guarantee.