A court in Malaysia has reserved judgment in a case concerning the country's former ruler who allegedly owes Standard Chartered Bank Malaysia Berhad around US$1 million.

The case involves a standby letter of credit (L/C) for the same amount established by Tuanku Ja'afar, who was Malaysia's equivalent of a king during the second part of the 1990s and who remains the ruler of the state of Negeri Sembilan. A company in Texas used the L/C to open a credit line with a US bank.

Unreliable evidence

No evidence was produced before the Special Court to suggest that Tuanku Ja'afar owed US$1 million to Standard Chartered according to his defence lawyer, Datuk Dr Cyrus Das, who said the certificate of indebtedness on which the bank's claim is based was unreliable and manifest with uncertainty and error.

"The sums stated in the certificate to be due, and owing by Tuanku Ja'afar, cannot be relied on and must be disregarded," he said.

Irrevocable L/C

The case centres on a standby L/C established by Tuanku Ja'afar in 1999 with Standard Chartered for US$1 million made in favour of the Connecticut Bank of Commerce (CBC) of the US for credit facilities to be extended to a US company, Texas Encore LLC (TEC).

Standard Chartered's counsel maintains the L/C was irrevocable and could only be revoked with the consent of CBC as the beneficiary and that no such consent was forthcoming.

Obligation to pay

He said that upon presentation of documents, Standard Chartered Bank of New York, as the confirming bank, was under an obligation to make payment to CBC.

According to the bank's counsel, Tuanku Ja'afar had undertaken to indemnify the bank against all losses and associated costs it might incur or sustain by reason of the issuance or establishment of the credit and provide funds to the bank to meet payments made by the bank in relation to the credit and its associated costs.

Royal investigations

The Special Court, established to hear cases involving royalty, was hearing a civil suit brought by the bank against Tuanku Jaafar for allegedly failing to pay US$1million.

Tuanku Ja'afar is countersuing the bank and seeking a declaration that Standard Chartered was not legally entitled to uplift his fixed deposit to settle the sum.

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