Hong Kong Case Law: Decisions & Judgments

Topic

Fraud exception to letters of credit

Legal area

Court

2 Jul 2002

PRIME DEAL (HK) ENTERPRISES LTD. v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD. AND ANOTHER

Citation

PRIME DEAL (HK) ENTERPRISES LTD. v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD. AND ANOTHER
Court

Court of First Instance
Case number

HCA2142/2002

The ex parte interlocutory injunction was discharged because the plaintiff failed to adduce clear and cogent evidence of fraud and there existed genuine disputes supported by contemporaneous documents that could justify the beneficiary's drawdowns under clause 3.2; material non-disclosure at the ex parte stage reinforced discharge; there was no basis for Mareva relief; and leave to serve out of jurisdiction was set aside because the licence contained an enforceable exclusive jurisdiction clause requiring proceedings to be determined in Rimini.
12 May 1999

LINNA TEXTILES MANUFACTURING LTD. v. THE HONGKONG AND SHANGHAI BANKING CORP.

Citation

LINNA TEXTILES MANUFACTURING LTD. v. THE HONGKONG AND SHANGHAI BANKING CORP.
Court

Court of First Instance
Case number

HCCL133/1997

The interim injunction was discharged because the Plaintiff failed to prove both the existence of clear fraud by the beneficiary and that the Defendant bank had notice of such fraud to the requisite standard; the Plaintiff had been inconsistent about the negotiating bank and had delayed prosecution; and damages were an adequate alternative remedy, so the balance of convenience and discretion favoured dismissal of the injunction.
7 Jul 1998

SUMMER COMMODITIES TRADING LTD. AND ANOTHER v. SEQULIA CONFECTIONERY CO. LTD. AND ANOTHER

Citation

SUMMER COMMODITIES TRADING LTD. AND ANOTHER v. SEQULIA CONFECTIONERY CO. LTD. AND ANOTHER
Court

Court of First Instance
Case number

HCA493/1998

The plaintiffs demonstrated a seriously arguable case that the fraud exception applied to prevent payment under the letter of credit; consequently the court refused to discharge the interlocutory injunction and dismissed the defendant's application to do so.
19 Mar 1981

PETEK MARKETING LTD v. MAGNATEK RESEARCH LTD AND OTHERS

Citation

PETEK MARKETING LTD v. MAGNATEK RESEARCH LTD AND OTHERS
Court

Court of First Instance
Case number

HCA164/1981

The court held that although courts can in principle make ancillary orders affecting proceeds of a negotiated letter of credit, such orders — particularly disclosure against a bank — require careful exercise of jurisdiction and are questionable in the absence of prima facie evidence of fraud or wrongdoing known to the bank. On the facts and by consent to modifications, the injunction and ancillary orders made on 12 January 1981 were dissolved as against the Indian Overseas Bank; security for costs of HK$50,000 was ordered to be paid into court within 14 days and proceedings against the bank w…

Hong Kong Case Law

PRIME DEAL (HK) ENTERPRISES LTD. v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD. AND ANOTHER

LINNA TEXTILES MANUFACTURING LTD. v. THE HONGKONG AND SHANGHAI BANKING CORP.

SUMMER COMMODITIES TRADING LTD. AND ANOTHER v. SEQULIA CONFECTIONERY CO. LTD. AND ANOTHER

PETEK MARKETING LTD v. MAGNATEK RESEARCH LTD AND OTHERS