Bank

The Commercial Court ruled on a dispute between the claimant bank (Deutsche, the confirming bank), and the defendant bank (CIMB—the issuing bank), concerning Deutsche’s claim for reimbursement of sums it had allegedly paid to a company (as beneficiary), under letters of credit issued by CIMB.

Deutsche had argued that the issuing bank, under a letter of credit, had to accept, on its face, a statement by the confirming bank that it had paid the beneficiary under letters of credit, and that CIMB had no right to request further information in respect of that payment.

The court held that, on the true construction of Art 7(c) of the Uniform Customs & Practice for Documentary Credits (UCP 600), read with the definition of ‘honour’ in Art 2 of UCP 600, an issuing bank’s undertaking to reimburse a confirming bank arose where the confirming bank had honoured a complying presentation by making payment under the credit.

It further held that, in circumstances where