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CIMB Bank Berhad, Singapore Branch (Issuing Bank) opened ten LCs in favor of Global Tradinglinks Ltd. of Hong Kong (Beneficiary) to facilitate the purchase of cotton by Cashcot Industries Pte. Ltd. (Applicant). The LCs resulted from an agreement between Applicant and Issuing Bank. Deutsche Bank, London Branch (Confirming Bank), confirmed and honored all ten LCs. Confirming Bank then sought reimbursement from Issuing Bank, which refused, claiming that the presented documents resulted from fraudulent misrepresentations by Beneficiary, Applicant, and Bhadrash Trading Corp. (Guarantor).

A series of lawsuits were initiated in Singapore related to the underlying transaction in this case. First, Issuing Bank sued Applicant “seeking a declaration that [Issuing Bank] is entitled to an indemnity pursuant to the Facility Letter . . ..” Second, Issuing Bank sued Guarantor as it “had issued two guarantees of [Applicant’s] obligations under the Facility Letter.” Third, Issuing Bank sued Applicant, Beneficiary and Confirming Bank’s Singapore Branch, claiming they sought to defraud Issuing Bank.

Before the third Singapore case was filed, Confirming Bank sued Issuing Bank for reimbursement under the LC in England. Two motions were filed and decided on in this case. In this case, Issuing Bank first moved to dismiss the action on forum non conveniens grounds. Secondly, the Issuing Bank submitted a Request for Further Information to compel Confirming Bank to show Beneficiary was actually paid. The High Court of Justice, Queen’s Bench Division, Criminal Court, Teare, J., denied the first motion, and Blair, J., granted the second.

I. Motion to Dismiss for Forum Non Conveniens

In moving to dismiss on the basis of forum non conveniens, Issuing Bank claimed that Singapore was the proper forum for this case because: 1) the duplication of efforts required to litigate in both England and Singapore would be burdensome, 2) there was a risk of conflicting judgements, 3) Singapore was the only venue where all relevant parties could be joined, and 4) evidence was more readily available in Singapore than England.

In rejecting these arguments, the Judge ruled that in forum non conveniens cases, the moving party is required not only to show that there was a risk of conflicting judgements or a burdensome duplication of efforts, but also why that the other jurisdiction is “distinctly a more appropriate forum” to hear the dispute. The Judge additionally determined that the concern regarding joinder of parties was without merit, as the only party where joinder would have been an issue, Applicant, had been dissolved. Finally, the Judge determined that it would not be difficult for the evidence to be produced in England, since the evidence Issuing Bank claimed was more readily available in Singapore was exclusively documents.

II. Request for Information

Later, Issuing Bank also filed a formal Request for Further Information (RFI) to compel Confirming Bank to show that it in fact paid Beneficiary. In resisting this motion, Confirming Bank claimed that it was entitled to reimbursement under UCP600 Article 7(c). Confirming Bank argued that this sub article provided that it was entitled to reimbursement by Issuing Bank when Confirming Bank submitted a statement that it had honoured a complying presentation. Confirming Bank further argued that to construe Article 7(c) to require proof of actual payment would endorse a position that is “uncommercial, unworkable and plainly not what the parties must be taken to have intended.”

Issuing Bank, however, cited the direct language of Article 7(c) which provides “issuing bank undertakes to reimburse a nominated bank that has honoured . . . a complying presentation.” Issuing Bank argued this position meant that Confirming Bank must have actually paid out to Beneficiary, and therefore should be in a position to prove as much.

Blair, J., determined that Article 7(c) should be read closely with the definition of “honour” given in UCP600 Article 2 ¶ 9, which specifically defines the term as an act to either “pay at sight,” “incur a deferred payment undertaking,” or “accept a bill of exchange.” The Judge ruled, therefore, that Issuing Bank was correct in its assertion that honour of the LC required payment, and granted the Request for Further Information only to the extent it is “strictly necessary to understand another party’s case (emphasis added)” to avoid a “fishing expedition.”

[ARB]

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