Yuchai Dongte Special Purpose Automobile Co Ltd v Suisse Credit Capital (2009) Ltd – QBD (Comm Ct)  EWHC 2580 (Comm)
The claimant Yuchai Dongte, a Chinese manufacturer, sought payment pursuant to a letter of credit (LC) which it said had been issued by the defendant on 10 March 2014. The defendant provided financial services and was a member of the SWIFT network - a global platform for secure financial messaging using common standards and forms, but it was not a bank.
The claimant had sold some goods under a previous LC which was replaced by the present one. The bank involved in the first LC, Suisse Bank Offshore Limited (SBOL), agreed with the defendant to send a SWIFT message in respect of the second LC, which it did on a MT700 form, which included the disclaimer "no our responsibility for payment". Documents were presented under the letter of credit to SBOL. The defendant refused to pay owing to discrepancies in the documents, although it later waived them but did not make any payment.
The defendant denied liability on the basis that it was not the issuing bank liable to make payment in the event of non-payment by the nominated bank. Alternatively it argued that the terms of the LC are such that the normal liability of an issuing bank in the UCP600 is excluded. It also argued that the claimant was estopped by convention from claiming that the defendant had issued the letter of credit.
The issues before the Court were:
(a) whether the defendant financial services firm was the issuing bank of a LC which it communicated through Swift (and thereby liable on the credit pursuant to the incorporated provisions of UCP 600);
(b) if it was the issuing bank, was its liability to make payment excluded on the true construction of the LC, and
(c) was there an estoppel by convention to the effect that the defendant was not the issuing bank?
The Court found in favour of the claimant on each of the issues, determining points of principle as to the interpretation and effect of UCP 600 in documentary credits.
This decision highlights that extrinsic evidence can be relevant to a LC. The documentation relating to the LC formed part of a continuous course of dealing. The defendant, by issuing and sending the LC by MT700, had indicated that it was the issuer. It is irrelevant that the defendant might not have understood that it was undertaking an issuer's obligations when sending the LC by MT700.
The decision is also an important reminder that the Court is entitled to draw adverse inferences from the want of disclosure when a decision was made not to call a key witness and when key documents had not been disclosed.