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Note: European Metal Recycling Ltd (Seller/Beneficiary), based in England, sold goods to Sony Ipsat Ltd (Buyer/Applicant), based in India. Bank of Ireland (Confirmer), based in Northern Ireland, confirmed the LC. Payment was by commercial letter of credit subject to UCP [opinion does not state which version] issued by State Bank of India (Issuer). When it had honoured, Confirmer sought reimbursement in the amount of US$ 460,000 from Issuer, but Issuer refused, claiming discrepancies in the documents.

Issuer sued Confirmer in India seeking an antisuit injunction to prevent Confirmer from suing in Northern Ireland. The Indian trial court denied Issuer's request, and the Indian appellate court affirmed but ruled that Confirmer was amenable to the jurisdiction of the Indian courts and directed the trial court to move to the substantive merits of the case within nine months.

Immediately after the Indian appellate court disposed of the appeal, Confirmer initiated proceedings against Issuer in Northern Ireland for breach of contract, and Issuer applied to stay proceedings on the basis that the appropriate forum was India. The trial court in Northern Ireland, High Court Queen's Bench, Weatherup, J., applying the Rome Convention on the Law Applicable to Contractual Obligations, gave judgment for Issuer and stayed the proceedings in Northern Ireland while the proceedings continued in India. Article 4 (Applicable law in the absence of choice) of the Rome Convention provides that where no claim of law has been made, "a contract is to be governed by the law of the country with which it is >most closely connected'". Article 4(2) creates a presumption that close connection is where the person is bound who is "to effect the performance which is characteristic of the contract".

The Judge rejected Confirmer's claim that the place of performance for reimbursement was Northern Ireland and ruled that the place of performance was India where Issuer would make payment to Confirmer. The Judge concluded that India was a more appropriate forum than Northern Ireland because India was the country with which the contract was most closely associated. Asking what performance was "characteristic of the contract", the Judge stated "Essentially the characteristic performance is reimbursement on receipt of the appropriate documents. Which party is to effect that characteristic performance? The [Issuer] as the reimbursing bank is the party making the payment that is the characteristic performance of the contract between the [Confirmer] and the [Issuer]. The [Issuer]'s principal place of business is India."

[JEB/mcp]

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