Fladgate client, Swotbooks.com Limited, has obtained a successful judgment against Royal Bank of Scotland PLC, with the court declaring that the bank was not entitled to pay out under a standby letter of credit which it issued to a German wholesaler.
The Mercantile Court held that documents presented by the wholesaler did not comply with the terms of the letter of credit. The security account, from which the payment was made, had to be reimbursed by the bank.
The case concentrated on the meaning and nature of transport documents and invoices, and is likely to have wider effect in international trade finance.
According to Fladgate litigation partner Paul Howcroft, who had conduct of the claim:
“We warned the bank at the time that they were not entitled to pay, but they formed their own view, which the judge has confirmed was wrong. As a result of the payment, our client went into liquidation, and we were then instructed by the liquidator to put matters right. It is rare for a big bank to lose this sort of claim, as they use highly experienced and specialist staff to deal with documentary credits.”
Fladgate’s dispute resolution team contains a strong and experienced group specialising in banking. Its clients include clearing banks, other UK banks and a number of overseas banks with branches or representative offices in London. The team also acts for the firm’s other commercial clients in relation to banking disputes and forms part of Fladgate’s broader banking practice.