Korea Exchange Bank v Standard Chartered Bank: Letter of Credit Discrepancies and UCP 500 Interpretation
In Korea Exchange Bank v Standard Chartered Bank, the High Court of Singapore heard an appeal by Korea Exchange Bank against a summary judgment granted to Standard Chartered Bank. The case concerned the wrongful rejection of documents presented under two letters of credit. The primary legal issue was whether the appellant could rely on discrepancies stated in a notice of refusal to resist payment to the negotiating bank, and the interpretation of the Uniform Customs and Practice for Documentary Credits 1993 (UCP 500). The court dismissed the appeal, finding that the documents were not discrepant and that the appellant was precluded from claiming non-compliance with the terms of the letters of credit.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed with costs.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment reserved.
1.5 Jurisdiction
Singapore
1.6 Description
Korea Exchange Bank appeals summary judgment, arguing wrongful rejection of documents under letters of credit. The court examines discrepancies and the application of UCP 500.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Korea Exchange Bank | Appellant, Defendant | Corporation | Appeal dismissed | Lost | Chew Kei-Jin |
| Standard Chartered Bank | Respondent, Plaintiff | Corporation | Judgment for Plaintiff | Won | Toh Kian Sing, Ian Teo |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chew Kei-Jin | Tan Rajah and Cheah |
| Toh Kian Sing | Rajah and Tann |
| Ian Teo | Rajah and Tann |
4. Facts
- Korea Exchange Bank issued two letters of credit for Petaco Petroleum Inc to purchase gas oil from Trafigura Beheer BV Amsterdam.
- The letters of credit were subject to the Uniform Customs and Practice for Documentary Credits 1993 (UCP 500).
- Standard Chartered Bank acted as the negotiating and confirming bank for the letters of credit.
- Trafigura presented documents to Standard Chartered Bank, which negotiated and gave value against the documents.
- Standard Chartered Bank presented the documents to Korea Exchange Bank for reimbursement.
- Korea Exchange Bank rejected the documents, citing discrepancies, including that the amount was overdrawn.
- Standard Chartered Bank re-presented the documents, but Korea Exchange Bank did not issue a second notice of refusal.
5. Formal Citations
- Korea Exchange Bank v Standard Chartered Bank, Suit 162/2004, RA 307/2004, [2005] SGHC 220
6. Timeline
| Date | Event |
|---|---|
| Standard Chartered Bank delivered the Tendered Documents to Korea Exchange Bank. | |
| Korea Exchange Bank sent a notice of refusal in respect of each LC, rejecting the Tendered Documents. | |
| Standard Chartered Bank replied, refuting all the discrepancies alleged. | |
| Standard Chartered Bank re-presented the Tendered Documents to Korea Exchange Bank. | |
| Judgment reserved. |
7. Legal Issues
- Discrepancies in Letter of Credit Documents
- Outcome: The court held that the Tendered Documents were not discrepant and that the appellant was not entitled to reject them.
- Category: Substantive
- Sub-Issues:
- Amount Overdrawn
- Validity of Notice of Refusal
- Related Cases:
- [1992] 2 SLR 64
- [1992] 2 SLR 943
- [1997] 2 SLR 805
- Interpretation of UCP 500
- Outcome: The court held that effect should be given to the express clauses in the LCs rather than to Article 13(c) of UCP 500.
- Category: Substantive
- Sub-Issues:
- Application of Article 13(c)
- Primacy of Express Terms
- Related Cases:
- [1997] 3 SLR 770
- [1986] 1 WLR 631
- [2000] 1 Lloyd’s Rep 123
- Obligation to Issue a Second Notice of Refusal
- Outcome: The court held that even if the Tendered Documents were discrepant, the appellant was precluded by Article 14(e) from claiming that the said documents were not in compliance with the terms and conditions of the LCs, having failed to give notice of refusal of the Tendered Documents on the re-presentation thereof.
- Category: Procedural
- Related Cases:
- [1986] 1 Lloyd’s Rep 65
8. Remedies Sought
- Reimbursement
- Monetary Damages
- Interest
- Costs
9. Cause of Actions
- Wrongful Rejection of Documents
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Banking
- Documentary Credits
11. Industries
- Banking
- Oil and Gas
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| United Bank Ltd v Banque Nationale de Paris | Singapore courts | Yes | [1992] 2 SLR 64 | Singapore | Accepted the principle that a notice of refusal must identify all discrepancies. |
| Amixco Asia (Pte) Ltd v Bank Bumiputra Malaysia Bhd | Singapore courts | Yes | [1992] 2 SLR 943 | Singapore | Accepted the principle that a notice of refusal must identify all discrepancies. |
| Kumagai-Zenecon Construction Pte Ltd v Arab Bank plc | Singapore High Court | Yes | [1997] 2 SLR 805 | Singapore | Permissible for a later communication to clarify what was already identified as a discrepancy in the original notice of refusal. |
| Chamber Colliery Company, Ltd v Twyerould | N/A | Yes | [1915] 1 Ch 268 | England | Cited for the rule that a deed ought to be read as a whole to ascertain the true meaning of its several clauses. |
| Howe v Botwood | N/A | Yes | [1913] 2 KB 387 | England | Cited for the principle that a contract should be construed as a whole to make it consistent in both its parts. |
| Credit Agricole Indosuez v Muslim Commercial Bank Ltd | N/A | Yes | [2000] 1 Lloyd’s Rep 275 | N/A | Cited for the principle that a confirming bank is entitled to take a reasonable construction of an ambiguous term in a letter of credit. |
| Kumagai-Zenecon Construction Pte Ltd v Arab Bank plc | Singapore Court of Appeal | Yes | [1997] 3 SLR 770 | Singapore | Upheld the High Court's decision that the express terms of a contract can override terms incorporated by reference if inconsistent. |
| Forestal Mimosa Ltd v Oriental Credit Ltd | English Court of Appeal | Yes | [1986] 1 WLR 631 | England | Discussed the application of Uniform Customs and the effect of express provisions in a documentary credit. |
| Credit Agricole Indosuez v Generale Bank and Seco Steel Trading Inc and Considar Inc | N/A | Yes | [2000] 1 Lloyd’s Rep 123 | England | An attempt to invoke Article 13(c) failed. |
| Floating Dock Ltd v The Hongkong & Shanghai Banking Corporation | N/A | Yes | [1986] 1 Lloyd’s Rep 65 | N/A | Failure of an issuing bank, in its second notice of refusal, to cite a valid discrepancy which it had properly cited in its first notice of refusal precluded the bank from relying on such discrepancy. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Uniform Customs and Practice for Documentary Credits 1993 (International Chamber of Commerce Publication No 500) | International |
15. Key Terms and Keywords
15.1 Key Terms
- Letter of Credit
- UCP 500
- Discrepancy
- Negotiating Bank
- Issuing Bank
- Notice of Refusal
- Documentary Credit
- Beneficiary
- Reimbursement
- Automatic Fluctuation Clause
15.2 Keywords
- letter of credit
- UCP 500
- discrepancies
- banking
- international trade
- Korea Exchange Bank
- Standard Chartered Bank
16. Subjects
- Banking
- International Trade
- Documentary Credits
17. Areas of Law
- Banking Law
- Contract Law
- Letter of Credit Law
- International Trade Law