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Note: On 15 February 1996, Trust Bank Limited (Issuer), which was based in Nairobi, Kenya, issued five irrevocable commercial LCs on behalf of Kenya Digital Equipment, Ltd. (Purchaser/Applicant) to pay for five trucks in favor of Indoafric (Supplier/Beneficiary), based in Mumbai, India. State Bank of India (Advising Bank), located in India, advised the LCs and Citibank, a New York bank, confirmed them (Confirmer). Confirmer honored drawings under the first three LCs in May 1996. After Supplier/Beneficiary shipped the last two trucks to Purchaser/Applicant on 13 June 1996, it presented documents one day before the LCs expired. On 15 July 1996, Confirmer sent telexes dishonoring the drawings and stating the reasons for doing so. On 29 July 1996, Confirmer returned the presented documents to Advising Bank. On 29 August 1996, Confirmer closed its files and so informed Issuer.

On 8 September 1997, Advising Bank told Supplier/Beneficiary that it “should pursue the matter vigorously with the overseas buyer…which [Supplier/Beneficiary] interpret[ed] as [Advising Bank] ‘giving up’ on its attempts to contact [Confirmer].” From 1997-2012, Supplier/Beneficiary only pursued Issuer. On 28 June 2012, Issuer’s “liquidation agent” sent copies of Confirmer’s telexes to Supplier/Beneficiary. Supplier/Beneficiary restarted efforts to contact Confirmer to demand payment on the LCs. On 5 June 2014, Confirmer responded to Supplier/Beneficiary, and reiterated its past decision to dishonor the LCs.

In November 2015, Supplier/Beneficiary sued Confirmer in New York, United States, for wrongful dishonor, unjust enrichment, and promissory estoppel. Confirmer moved to dismiss the original complaint. In response, Supplier/Beneficiary filed an Amended Complaint in New York. Confirmer then requested leave to file a motion to dismiss the Amended Complaint and for attorney’s fees and sanctions. Supplier/Beneficiary opposed Confirmer’s motion to dismiss, arguing that the statute of limitations should be tolled because of Confirmer’s concealment and detriment incurred when India penalized Supplier/Beneficiary for not completing the contract.

The United States District Court for the Southern District of New York, Victor Marrero, J., granted Confirmer’s motion to dismiss Supplier/Beneficiary’s Amended Complaint but denied Confirmer’s motion for attorney fees and sanctions.

The Judge stated that the New York statute of limitations could not be tolled because Supplier/Beneficiary knew that it had not been paid and should have sued before the statute of limitations ran. The Judge ruled Supplier/Beneficiary’s claim for equitable estoppel also failed because the detriment was not incurred in reliance on Confirmer’s “word or deed”, was time barred, and was governed by a contract.

[GAC, CEF]

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