This appeal raised an important issue as to the position which arises when an issuing bank that has rejected documents presented under a letter of credit gives notice that it is returning the documents to the presenter. In one of the first reported cases on the construction of UCP 600, the Court of Appeal held (upholding the judgment of Hamblen J) that when an issuing bank gives such notice it is, on the proper construction of Article 16 of UCP 600, under an obligation to return the documents promptly. If it does not, the bank is precluded from claiming that the documents do not comply with the credit and will then be bound to honour the credit notwithstanding the discrepancies.
The case is significant in the extent to which the Court was willing to adopt a purposive interpretation of UCP 600 to accord with its underlying aims and purposes and to reflect international banking practice and the expectations of international banks and traders.
Timothy Young Q.C. and Malcolm Jarvis appeared on behalf of the Respondents, Fortis Bank and Stemcor UK Limited.