A court in Malaysia has ordered one the country's former rulers to pay US$1 million to Standard Chartered Bank Malaysia in settlement of a long-running dispute centred on a letter of credit (L/C).

The case involved a standby letter of credit (L/C) 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.

Special court

Malaysia's Special Court - which was established to hear cases involving Malaysian royalty - has told Tuanku Ja'afar to pay US$1 million to Standard Chartered.

The court also authorised Standard Chartered to realise the judgment by withdrawing the ruler's fixed deposit placed in the bank. The bank could withdraw the amount with interest at eight per cent and costs, the court said.

Landmark case

The case has created legal history in Malaysia, since this was the first time a full trial was conducted before the Special Court with evidence from witnesses.

The case centred 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 of the US for credit facilities to be extended to a US company, Texas Encore LLC. (DC World News, 22 August 2008).

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