Singapore-based technology solutions provider CSE Global Limited and one of its subsidiaries is seeking to recover US$6 million paid under a standby letter of credit (L/C).

This action is directed against a customer in the US state of Texas, that had engaged CSE Global's wholly owned subsidiary, CSE W-Industries, as a subcontractor for a construction project.

Dispute background

In connection with the project, CSE Global and CSE W-Industries jointly applied for an standby L/C issued in favour of the customer, serving as the beneficiary.

The standby L/C was intended as a financial guarantee, drawable only to cover amounts due, owing, and unpaid from CSE W-Industries to the customer under their subcontract.

Invocation of standby L/C

In December 2024, the customer called on the standby L/C, prompting the bank to disburse US$6 million to the customer. CSE Global contends that this call was "frivolous and without merit," asserting that there were no outstanding payments justifying such action.

CSE Global therefore announced its intention to initiate legal proceedings against the customer in Texas to recover the US$6 million paid under the standby L/C. The company has sought legal advice and says it is committed to pursuing the claim vigorously to preserve its rights.

Potential financial impact

CSE Global has cautioned that if the legal proceedings do not result in the recovery of the full amount, there may be an impact on its financial performance for the current financial year ending 31 December 2024.

However, the company has stated that it is currently unable to quantify the potential impact, as the legal proceedings are in their preliminary stages.

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