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Bankers Trust Co v State Bank of India

Queen's Bench Division (Commercial Court)
31 July 1990

Case Analysis

Where Reported [1991] 1 Lloyd's Rep. 587; Times, September 4, 1990; Independent,
September 12, 1990; Independent, August 14, 1990; Financial
Times, August 8, 1990

Case Digest Subject: Civil procedure Other related subjects: Civil evidence
Keywords: Delay; Letters of credit; Waiver
Summary: Letter of credit; "reasonable time" to accept or reject
because of discrepancies; permissibility or relevance of consultation
with applicant for credit
Abstract: On September 9, 1988 the sellers of steel from India
presented documents to SBI allegedly complying with the terms of a
letter of credit issued by BT on the buyer's application. On
September 14 BT paid USD 10.335 million to SBI. BT received the
original documents (almost 1,000 sheets) on September 21. A check
revealed discrepancies. On September 26 BT notified the buyers
who inspected the documents and on September 28 they notified BT
of further mistakes. BT rechecked until September 30 and on that
date sent SBI a rejection telex listing the mistakes. SBI denied the
mistakes and refused a refund. The letter of credit was subject to the
1983 UCP, which under Art.16(c) allowed the issuing bank a
"reasonable" time to check the documents. The question was
whether BT had exceeded "reasonable" within Art.16(c).
Held, that SBI did not have to make a refund to BT. Having
examined evidence of the time limit imposed by the major British
clearing banks the court stated that three days was a reasonable
time for examination of documents by the issuing bank. However,
the court was not prepared to specify a time limit for all cases as
each was decided upon its own circumstances. The issuing bank
could consult with the credit applicant but extra time could not be
made available merely for the applicant to find further discrepancies.
In this case BT's consultation with the buyers could not be objected
to per se but the time that they took brought the examination
process outside the reasonableness provision in Art.16. BT's telex of
September 30 did not comply with Art.16(d) since it did not specify
the discrepancies, which was an essential requirement.
Judge: Hirst, J.

Appellate History
Queen's Bench Division (Commercial Court)
Bankers Trust Co v State Bank of India
[1991] 1 Lloyd's Rep. 587; Times, September 4, 1990;
Independent, September 12, 1990; Independent, August 14,
1990; Financial Times, August 8, 1990

Affirmed by

Court of Appeal (Civil Division)

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Bankers Trust Co v State Bank of India

[1991] 2 Lloyd's Rep. 443; Times, June 25, 1991; Independent,
August 14, 1991; Financial Times, June 28, 1991

All Cases Cited Cooperative Centrale Raiffeisen-Boerenleenbank BA v

Sumitomo Bank (The Royan, The Abukirk, The Bretagne, The
Auvergne)
[1988] 2 Lloyd's Rep. 250; [1988] 2 F.T.L.R. 27; [1988] Fin. L.R.
207; CA (Civ Div)
Cooperative Centrale Raiffeisen-Boerenleenbank BA v
Sumitomo Bank (The Royan, The Abukirk, The Bretagne, The
Auvergne)
[1987] 1 Lloyd's Rep. 345; [1987] 1 F.T.L.R. 233; [1987] Fin. L.R.
275; QBD (Comm)
Antaios Compania Naviera SA v Salen Rederierna AB (The
Antaios)
[1985] A.C. 191; [1984] 3 W.L.R. 592; [1984] 3 All E.R. 229; [1984] 2
Lloyd's Rep. 235; (1984) 81 L.S.G. 2776; (1984) 128 S.J. 564; HL
Miramar Maritime Corp v Holborn Oil Trading (The Miramar)
[1984] A.C. 676; [1984] 3 W.L.R. 1; [1984] 2 All E.R. 326; [1984] 2
Lloyd's Rep. 129; (1984) 81 L.S.G. 2000; (1984) 128 S.J. 414; HL
Banque de l'Indochine et de Suez SA v JH Rayner (Mincing
Lane) Ltd
[1983] Q.B. 711; [1983] 2 W.L.R. 841; [1983] 1 All E.R. 1137; [1983]
1 Lloyd's Rep. 228; (1983) 127 S.J. 361; CA (Civ Div)
United City Merchants (Investments) Ltd v Royal Bank of
Canada (The American Accord)
[1983] 1 A.C. 168; [1982] 2 W.L.R. 1039; [1982] 2 All E.R. 720;
[1982] 2 Lloyd's Rep. 1; [1982] Com. L.R. 142; HL
Gian Singh & Co Ltd v Banque de l'Indochine
[1974] 1 W.L.R. 1234; [1974] 2 All E.R. 754; [1974] 2 Lloyd's Rep. 1;
[1974] 1 W.W.R. 1234; (1974) 118 S.J. 644; PC (Sing)
Commercial Banking Co of Sydney v Jalsard Pty
[1973] A.C. 279; [1972] 3 W.L.R. 566; [1972] 2 Lloyd's Rep. 529;
(1972) 116 S.J. 695; PC (Aus)
Hansson v Hamel & Horley Ltd
[1922] 2 A.C. 36; (1922) 10 Ll. L. Rep. 507; HL

All Cases Citing Mentioned by

Fortis Bank SA/NV v Indian Overseas Bank
[2011] EWCA Civ 58; Official Transcript; CA (Civ Div)
Mentioned by
Fortis Bank SA/NV v Indian Overseas Bank
[2010] EWHC 84 (Comm); [2010] Bus. L.R. 835; [2010] 2 All E.R.
(Comm) 28; [2010] 2 Lloyd's Rep. 641; [2010] 1 C.L.C. 16; (2010)
 Page3

160 N.L.J. 179; Official Transcript; QBD (Comm)

Mentioned by
Seaconsar (Far East) Ltd v Bank Markazi Jomhouri Islami Iran
(Documentary Credits)
[1999] 1 Lloyd's Rep. 36; [1998] C.L.C. 1543; CA (Civ Div)
Mentioned by
Seaconsar (Far East) Ltd v Bank Markazi Jomhouri Islami Iran
(Documentary Credits)
[1997] 2 Lloyd's Rep. 89; [1997] C.L.C. 611; QBD (Comm)

Journal Articles "Reasonable time" includes time for consultation.

Delay; Letters of credit; Waiver.
B.J.I.B. & F.L. 1991, 6(8), 417
Banking.
Delay; Letters of credit; Waiver.
C. & F.L. 1990, 3(4), 31-32
Documentary credits.
Delay; Letters of credit; Waiver.
Int. Bank. L. 1990, 9(5), 314
A reasonable time to inspect documents: an update.
Delay; Letters of credit; Waiver.
Int. Bank. L. 1990, 9(7), 357-358
Documentary credits.
Delay; Letters of credit; Waiver.
J.I.B.L. 1990, 5(10), N230
Documents triggering payment obligations.
Banks; Letters of credit; Payments; Performance bonds; Waiver.
J.I.B.L. 1990, 5(9), 387-388
Letters of credit: time limits for rejection.
Delay; Letters of credit; Waiver.
P.L.C. 1990, 1(4), 40

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