Chiyoda Steel of Japan has reportedly said it plans to take Bank of China Hong Kong (BOC) to court over a dispute concerning a letter of credit (L/C) transaction.

The Japanese steel giant contends that BOC refused to honour payment of the L/C because the documents were incomplete.

Missing words

The bank maintains that it did not honour the L/C because the words "steel grade" were missing from a trade document, according to a report in the South China Morning Post.

The High Court of Hong Kong had previously thrown out Chiyoda's application for summary judgment when Chiyoda tried to obtain payment from the bank.

Dispute outline

The dispute concerns a US$1.5 million shipment of steel bars that Chiyoda was selling to a Korean buyer on L/C terms.

According to BOC, the words "steel grade" were required under the L/C documents but were not written on the packing list of the metals.

Court judgment

Chiyoda says the steel grade numbers and description were shown on the packing list even though the words "steel grade" were missing.

But in his judgment, Deputy High Court Judge S T Poon said BOC has "clearly raised a triable issue as to whether the bank should be placed with such a burden whether to honour a L/C upon presentation of document."

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