CHAN SHIU CHUNG AND ANOTHER v. EUROPEAN ASIAN BANK, AKTIENGESELLSCHAFT

CHAN SHIU CHUNG AND ANOTHER v. EUROPEAN ASIAN BANK, AKTIENGESELLSCHAFT

On construction of the entire documentary chain and the bank's own conduct and internal records, the court found Dai Han to be the beneficiary; amendments converting the bid bond into a performance bond did not render the guarantee revocable by EAB without notice; the claim submitted satisfied the documentary requirements of the guarantee (receipt/statement and identifying documents) and therefore EAB was liable to honour the guarantee.

Citation
CHAN SHIU CHUNG AND ANOTHER v. EUROPEAN ASIAN BANK, AKTIENGESELLSCHAFT
Parties
1st Plaintiff: Chan Shiu Chung; 2nd Plaintiff: Law Fai Lee; Defendant / Counterclaimant: European Asian Bank, Aktiengesellschaft; 3rd Defendant / Counterclaimant / Plaintiff: Korea Exchange Bank; Plaintiff (no. 7356) / Beneficiary Claimant: Dai Han Coal Corporation
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 January 1985
Case Number
HCA323/1982
Procedural Posture
Bank Guarantee / Contract Dispute / Judgment Delivered (trial)
Outcome
Judgment for claimants (Dai Han Coal Corporation and Korea Exchange Bank) against European Asian Bank, Aktiengesellschaft on guarantees; EAB held liable on Letter of Guarantee series No. 505354 and its amendments
Legal Topics
Beneficiary Construction of Guarantees, Revocability of Guarantees/performance Bonds, Conversion of Bid Bond to Performance Bond, Compliance With Documentary Requirements Under Guarantees, Force Majeure
Source Language
EN
Banking Law Contract Law International Trade Law Agency and Estoppel Beneficiary Construction of Guarantees Revocability of Guarantees/performance Bonds Conversion of Bid Bond to Performance Bond Compliance With Documentary Requirements Under Guarantees +1 more

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Parties

Chan Shiu Chung

1st Plaintiff

Law Fai Lee

2nd Plaintiff

European Asian Bank, Aktiengesellschaft

Defendant / Counterclaimant

Korea Exchange Bank

3rd Defendant / Counterclaimant / Plaintiff

Dai Han Coal Corporation

Plaintiff (no. 7356) / Beneficiary Claimant

Procedural Posture

Bank Guarantee / Contract Dispute / Judgment Delivered (trial)

Legal Issues

  1. 1 Who was the beneficiary of Letter of Guarantee No. 505354?
  2. 2 Whether EAB validly cancelled or could revoke the guarantee without notice to beneficiary
  3. 3 Whether claim presented complied with the documentary requirements of the guarantee (receipt/statement/original)

Ratio Decidendi

On construction of the entire documentary chain and the bank's own conduct and internal records, the court found Dai Han to be the beneficiary; amendments converting the bid bond into a performance bond did not render the guarantee revocable by EAB without notice; the claim submitted satisfied the documentary requirements of the guarantee (receipt/statement and identifying documents) and therefore EAB was liable to honour the guarantee.

Court Disposition

Judgment for claimants (Dai Han Coal Corporation and Korea Exchange Bank) against European Asian Bank, Aktiengesellschaft on guarantees; EAB held liable on Letter of Guarantee series No. 505354 and its amendments

Orders

  • Judgment entered against European Asian Bank, Aktiengesellschaft on the claims under Letter of Guarantee No. 505354 and its amendments (parts of Action No. 323 and Action No. 7356)
  • EAB to honour/pay claims under the guarantee series as adjudged (as per pleaded claim)