Sinom Shanghai Import & Export Co Ltd v. Exfin (India) Mineral Ore Co Pvt Ltd
Read the full judgment text of CACV 208/2006 on BabelCite. This 高等法院上訴法庭 judgment was delivered on 21 June 2006 before Hon Rogers VP.
Civil procedure — interlocutory injunction — stay application — letter of credit — fraud — Mareva injunction — international commercial transactions — The plaintiff sought to stay discharge of an interlocutory injunction restraining payment under a letter of credit issued for iron ore shipment from India to Shanghai. The plaintiff alleged fraud and sought injunction to prevent defendant access to proceeds. The court found no fraud in presentation and negotiation of the letter of credit documents. The claim for injunction restraining defendant’s use of proceeds was refused due to insufficient grounds and because such injunction would improperly interfere with overseas bank transactions. The stay of the discharge of injunction was refused to preserve the integrity of international letters of credit, vital for Hong Kong's financial services and trade. The court commended the reasoning of the recorder below but declined to grant a stay pending appeal.
Legal issues: Fraud in presentation and negotiation of letter of credit · Granting injunction to restrain defendant from handling letter of credit proceeds · Whether to grant stay of discharge of interlocutory injunction
Outcome: Application for stay of discharge of injunction refused.
Cited by 1 case
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cacv 208/2006 in the high court of the hong kong special administrative region court of appeal civil appeal no. 208 of 2006 (on appeal from HCCT NO. 45 of 2006) ______________________ BETWEEN
Before: Hon Rogers VP in Chambers Date of Hearing: 21 June 2006 Date of Decision: 21 June 2006 ______________________ D E C I S I O N ______________________ Hon Rogers VP: 1.This is an application for a stay. The stay is a stay of the discharge of an interlocutory injunction, which has been granted. It was granted ex-parte, it came before the learned recorder, Mr Recorder K Kwok SC, and he gave a very detailed judgment. I have to say it is in my view an admirable judgment, it is fully reasoned and it sets out everything fully. 2.The short point on this case is this, that there was a letter of credit issued at the request of a buyer in Shanghai in favour of a supplier of iron ore in India. The relevant documents for the purposes of this case were duly presented by the defendant buyer in India to its bank but a difficulty arose whilst the shipment of iron ore was in progress and an injunction over part of that cargo has been granted by a court in Shanghai. It is no part of this court’s function to deal with the rights or wrongs of that. 3.What however the plaintiff contends is, first of all, that there was fraud which would entitle it to an injunction to prevent the letter of credit being paid; and secondly that, even if that arguments fails, it is entitled to an injunction to prevent the defendant from dealing with the proceeds of the letter of credit. It goes on to say, in effect, that that injunction can bind the money in the hands of the bank in Shanghai. So I have before me today the plaintiff who asks for a stay of the lifting of that injunction, the defendant and the bank. 4.In my view the argument as to fraud fails. It failed before the ex-parte judge, it failed before the recorder below, and in my view it fails now. If the plaintiff wishes to pursue it, it is at best an adventurous argument, which in my view is, as far as I can see, not correct. There was no fraud in the presentation and negotiation of the letter of credit. The defendant may not now be able to deliver all the goods but that is a contractual matter between the plaintiff and the defendant and that disability did not exist at the time the documents were presented. 5.The argument as to restricting the defendant from using the proceeds of sale, has problems, first of all, because it is in effect a specific type of Mareva injunction and I see no grounds for granting it. Very little has been put in the papers about the defendant and I see very little reason for granting such an injunction and in my view it should go for that reason. But then it is said that the proceeds are still with the bank in Shanghai and that if such a limited type of injunction is granted against the defendant that will bind the bank. 6.There I see the rub of the argument, because that would indirectly bring about an injunction, which would be said to bind the bank, and that is the very thing which should not happen on international letters of credit. It seems to me that the authorities are very clear and are as set out in the recorder’s judgment, there is no need for me on this occasion to repeat them. But the importance of not interfering with commercial letters of credit is, in my view, undoubted. It is particularly important in Hong Kong which survives on financial services and international trade and if a court in Hong Kong is to be asked to grant an injunction which is going to bind a bank in Shanghai in respect of a payment in favour of an entity in India, it seems to me to be particularly undesirable, if that is going to be the effect of this injunction. 7.I have no doubt, therefore, that on this occasion I should not accede to this application to stay the discharge of the injunction. In paying tribute to the recorder below, the only matter with which I would disagree was that he granted a stay pending the application to this court. That is something I would not have done. But I have no doubt he did that in deference to this court and therefore no criticism falls on him in that regard.
Mr John Kerr, instructed by Messrs Ince & Co., for the Plaintiff/Appellant Mr Clifford Smith SC, instructed by Messrs Stephenson, Harwood & Lo, for the Defendant/Respondent Mr Dennis Yu, instructed by Messrs Dibb Lupton Alsop, for the Intervener |
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