Banco Santander S A v Banque Paribas [2000] EWCA Civ 57 (25 February 2000)

Banco Santander S A v Banque Paribas [2000] EWCA Civ 57 (25 February 2000)

Santander's claim was as assignee of Bayfern's rights under the letter of credit. Since fraud by Bayfern was established prior to maturity, Paribas was entitled to raise the same defence against Santander as it would have had against Bayfern. The court declined to create an exception for deferred payment letters of credit in the absence of express contractual or UCP provisions protecting assignees. Santander was not entitled to reimbursement from Paribas, as it acted outside its mandate by discounting before maturity.

Citation
[2000] EWCA Civ 57
Parties
Claimant: Santander; Third Defendant: Banque Paribas (Paribas); Beneficiary/assignor: Bayfern Limited (Bayfern)
Jurisdiction
England and Wales
Judgment Date
25 February 2000
Procedural Posture
Appeal / Judgment on Preliminary Issues
Outcome
Appeal dismissed
Legal Topics
Letters of Credit, Assignment of Rights, Fraud Exception, Deferred Payment Instruments
Banking Law Commercial Law Letters of Credit Assignment of Rights Fraud Exception Deferred Payment Instruments

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Parties

Santander

Claimant

Banque Paribas (Paribas)

Third Defendant

Bayfern Limited (Bayfern)

Beneficiary/assignor

Procedural Posture

Appeal / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether Paribas was entitled to refuse payment to Santander due to established fraud by Bayfern prior to maturity under a deferred payment letter of credit.
  2. 2 Whether Santander's claim was as assignee of Bayfern or as confirming bank for reimbursement under the UCP.
  3. 3 Whether defences available against Bayfern (the assignor) are available against Santander (the assignee).

Ratio Decidendi

Santander's claim was as assignee of Bayfern's rights under the letter of credit. Since fraud by Bayfern was established prior to maturity, Paribas was entitled to raise the same defence against Santander as it would have had against Bayfern. The court declined to create an exception for deferred payment letters of credit in the absence of express contractual or UCP provisions protecting assignees. Santander was not entitled to reimbursement from Paribas, as it acted outside its mandate by discounting before maturity.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed.