Summary
In Cantrade Privatbank, however, the Thai court enjoined the issuing bank after it had already accepted the documents that immediately triggered its obligation to pay.
Summary of this case from Banco Amazonas, S.A. v. BNP Paribas (Suisse), S.A.Opinion
December 1, 1998
Appeal from the Supreme Court, New York County (Charles Ramos, J.).
We agree with the IAS Court's determination not to give effect to a Thai court order enjoining payment by defendant issuing bank to plaintiff advising bank under the subject letter of credit agreement, since reimbursement under the agreement was to take place in New York ( see, Zeevi Sons v. Grindlays Bank [Uganda], 37 N.Y.2d 220, 226, cert denied 423 U.S. 866; Canadian Imperial Bank of Commerce v. Pamukbank Tas, 166 Misc.2d 647, 651-652), and enforcement of the injunction would run contrary to New York's strong public policy in favor of enforcing letter of credit agreements according to their terms ( First Commercial Bank v. Gotham Originals, 64 N.Y.2d 287, 298). The cases relied on by defendant Bangkok Bank for the proposition that performance under the letter of credit was to occur in Thailand, thus mandating the application of Thai law, are distinguishable both because the plaintiffs in those cases were the seller/beneficiaries accused of fraud under the underlying sales contracts, and because the issuing banks had not yet accepted the documents presented at the time the orders enjoining payment under the letters of credit were issued ( see, RSB Mfg. Corp. v. Bank of Baroda, 15 B.R. 650; Chuidian v. Philippine Natl. Bank, 976 F.2d 561). By contrast, plaintiff Cantrade in its capacity as an advising bank was a party only to the separate letter of credit contract, and its right to reimbursement became fixed when Bangkok Bank accepted the documents and authorized Cantrade to reimburse itself at Bangkok's New York branch ( see, First Commercial Bank v. Gotham Originals, supra, 64 N.Y.2d, at 296).
Nor did the IAS Court improvidently exercise its discretion by denying the cross motion insofar as it sought dismissal of the action on forum non conveniens grounds. As noted, the letter of credit called for reimbursement in New York and New York public policy favors enforcement of the letter of credit agreement. In addition, the Thai court action concerns the underlying sales contract, not the letter of credit, and plaintiff was not a party to the sales contract ( compare, World Point Trading PTE. v. Credito Italiano, 225 A.D.2d 153 [dismissing action on forum non conveniens grounds where the party seeking recovery was also a beneficiary under, and accused of fraud in connection with, the underlying sales contract that was the subject of the action in the foreign jurisdiction], with Canadian Imperial Bank of Commerce v. Pamukbank Tas, supra, 166 Misc.2d, at 653 [where the court refused to dismiss on forum non conveniens grounds an action by a confirming bank to recover under letter of credit]).
Finally, the IAS Court properly granted Cantrade summary judgment in lieu of complaint as to liability since the letter of credit and Bangkok Bank's October 4, 1996 SWIFT message constitute writings that "'formally and explicitly acknowledge an indebtedness'" on the part of defendant and, thus, establish Cantrade's prima facie case for accelerated judgment under CPLR 3213 ( Weissman v. Sinorm Deli, 88 N.Y.2d 437, 444). Bangkok Bank's argument that factual issues remain regarding Cantrade's good faith is unavailing since Cantrade was not a party to the underlying sales contract in which fraud is alleged, and because defendant has not produced competent evidence to demonstrate that Cantrade was part of a fraudulent scheme concerning the documents accepted by defendant ( see, First Commercial Bank v. Gotham Originals, supra, 64 N.Y.2d, at 297; see also, Bank of China v. Chung Tai Enter. [U.S.A.], 202 A.D.2d 306). However, since it remains unclear to what extent the funds expended by Cantrade were recovered by it from the seller/beneficiary's designees, the court correctly ordered discovery as to the amount of damages. In this regard, we note that documentary evidence of Cantrade's payment, presently absent from the record, will be needed to establish damages.
Concur — Milonas, J. P., Ellerin, Rubin and Mazzarelli, JJ.