The High Court of Australia has declined to intervene in the case concerning an abandoned 185 million Australian dollar (A$185 million - US$115 million) property development in Gosford, New South Wales.

This decision leaves in place a stay on a A$37 million judgment that the developer, The Gosford Pty, had previously secured against the Australian subsidiary of China's Shanxi Construction Investment Group.

Overview

The Chinese group procured a A$37 million standby letter of credit (L/C) from the Bank of China's Shanxi Branch in favour of The Gosford to secure its subsidiary Shinetec's obligation to fund the development's initial tranche of construction costs.

When the development stalled, The Gosford presented a demand on the standby L/C to the Bank of China's Shanxi Branch, seeking payment under the terms of the credit.

Legal Proceedings

In an initial judgment, the Supreme Court of New South Wales ruled in favour of The Gosford, ordering the Bank of China to honour the A$37 million standby L/C.

Subsequently, the court stayed the judgment, pending further proceedings in China, where a court had issued a civil ruling suspending payment under the standby L/C.

High court decision

The High Court of Australia declined to lift the stay on the A$37 million judgment, effectively upholding the suspension of payment under the standby L/C until the resolution of related proceedings in China.

The involvement of international legal proceedings complicates the enforcement of the standby L/C, highlighting the complexities in cross-border financial instruments and legal disputes.

The stay on the judgment meanwhile prolongs uncertainty regarding the financial recovery for The Gosford and the future of the development project.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.