Attaching debt due under letter of credit


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In Taurus Petroleum v State Oil Marketing Co [2015] EWCA Civ 835, the Court of Appeal rejected an appeal striking out a third party debt order made to enforce an arbitration award against State Oil.

The London branch of a French bank had issued letters of credit which contained a promise to make payment in favour of State Oil to a specific account in New York.  Whilst on the face of it that was a payment to be made by an English debtor which should be capable of being attached by way of enforcement, there was authority in Power Curber International v National Bank of Kuwait [1981] 1 WLR 1233 which established that a debt due under a letter of credit was situated where payment was to be made.  Accordingly, the court was being asked to attach a debt in New York, which it regarded as being beyond its jurisdiction.

Paul Howcroft, Partner, Fladgate LLP (phowcroft@fladgate.com)

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