Read the full judgment text of CACV 000276/1998 on BabelCite. This Court of Appeal judgment was delivered on 20 August 1999 before Mortimer V-P, Godfrey JA, Rogers JA.
Letter of credit – negotiating bank – holder for value – fraud exception – autonomy of documentary credit – injunction against non-party – costs against non-party – Bank of China (BOC) presented documents under a letter of credit issued by Jian Sing Bank (JSB) in favour of the defendant seller. JSB accepted the documents and BOC discounted the draft and paid the defendant. The plaintiff buyer later alleged fraud and short shipment. The plaintiff obtained an injunction restraining BOC from demanding payment. The court of appeal discharged the injunction, holding that BOC was a holder for value entitled to payment in its own right, not as agent; that the fraud exception did not apply because BOC was unaware of the fraud and not tainted; and that an injunction cannot be granted against a non-party against whom no cause of action is asserted. The court also ordered the plaintiff and JSB to bear the costs.
Legal issues: Status of BOC as holder for value under letter of credit · Fraud exception to autonomy of documentary credit · Injunction against non-party
Outcome: Appeal allowed; injunction against BOC discharged.
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