CHINA NEW ERA INTERNATIONAL LTD v. BANK OF CHINA (HONG KONG) LTD AND ANOTHER

CHINA NEW ERA INTERNATIONAL LTD v. BANK OF CHINA (HONG KONG) LTD AND ANOTHER

FCB's presentation was invalid because FCB had paid the beneficiary against a non‑complying presentation (the 1st Cargo Receipt) and therefore did not forward to the issuing bank the same documents it had purchased upon a beneficiary's complying presentation as required by UCP 600 Art.7(c); alternatively, even if presentation timing were disregarded, the 3rd Cargo Receipt was non‑compliant because the chop did not match the specimen provided, so BOC had no obligation to reimburse FCB.

Citation
CHINA NEW ERA INTERNATIONAL LTD v. BANK OF CHINA (HONG KONG) LTD AND ANOTHER
Parties
Plaintiff (hca 1290/2008): China New Era International Limited; 1st Defendant: Bank of China (Hong Kong) Limited; 2nd Defendant: Flexus Computer Technology Inc.; Plaintiff (hccl 24/2008) and Intended Intervener (hca 1290/2008): First Commercial Bank, Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
14 December 2009
Case Number
HCA1290/2008
Procedural Posture
Commercial Action (letters of Credit) Consolidated HCA 1290/2008 and HCCL 24/2008 / Judgment at First Instance (court of First Instance)
Outcome
Judgment for China New Era International Limited against Bank of China (Hong Kong) Limited; New Era's claim succeeds; FCB's claim against BOC dismissed; BOC's counterclaim against New Era dismissed; costs and consequential orders reserved for hearing.
Legal Topics
UCP 600, Letter of Credit, Complying Presentation, Negotiation, Indemnity, Forgery/allegation of Fraud
Source Language
EN
Banking Law Commercial Law Civil Procedure UCP 600 Letter of Credit Complying Presentation Negotiation Indemnity +1 more

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Parties

China New Era International Limited

Plaintiff (hca 1290/2008)

Bank of China (Hong Kong) Limited

1st Defendant

Flexus Computer Technology Inc.

2nd Defendant

First Commercial Bank, Limited

Plaintiff (hccl 24/2008) and Intended Intervener (hca 1290/2008)

Procedural Posture

Commercial Action (letters of Credit) Consolidated HCA 1290/2008 and HCCL 24/2008 / Judgment at First Instance (court of First Instance)

Legal Issues

  1. 1 Whether a nominated bank is entitled to reimbursement under UCP 600 Art.7(c) where it paid the beneficiary against a non‑complying presentation and later presented a different set of documents to the issuing bank
  2. 2 Whether the 3rd Cargo Receipt was a compliant document under the L/C and UCP 600 (including issues under Arts.1,14(j) and 16)
  3. 3 Whether issuing bank (BOC) is obliged to reimburse nominated bank (FCB)

Ratio Decidendi

FCB's presentation was invalid because FCB had paid the beneficiary against a non‑complying presentation (the 1st Cargo Receipt) and therefore did not forward to the issuing bank the same documents it had purchased upon a beneficiary's complying presentation as required by UCP 600 Art.7(c); alternatively, even if presentation timing were disregarded, the 3rd Cargo Receipt was non‑compliant because the chop did not match the specimen provided, so BOC had no obligation to reimburse FCB.

Court Disposition

Judgment for China New Era International Limited against Bank of China (Hong Kong) Limited; New Era's claim succeeds; FCB's claim against BOC dismissed; BOC's counterclaim against New Era dismissed; costs and consequential orders reserved for hearing.

Orders

  • Bank of China (Hong Kong) Limited is not obliged to reimburse First Commercial Bank, Limited under the Letter of Credit
  • First Commercial Bank, Limited's claim for reimbursement against Bank of China (Hong Kong) Limited is dismissed