Fortis Bank v. Indian Overseas Bank [2010] EWHC 84 (Comm)

In one of the first reported cases of the English High Court on the construction of UCP 600, Mr. Justice Hamblen held that the preclusion provided for in Article 16(f) of UCP 600 applies to conduct of an issuing bank subsequent to its service of a notice rejecting documents under a letter of credit. Indian Overseas Bank had served notices rejecting documents presented by Fortis Bank and Stemcor UK Limited stating that it was returning the documents to them. When the issuing bank then failed to return the documents promptly, it was contended that the issuing bank was precluded from claiming that the documents were discrepant. Hamblen J accepted that argument, rejecting the issuing bank's submission that the preclusion provided for in Article 16(f) of UCP 600 did not apply to actions taken (or not taken) after service of a rejection notice. In confirming well established banking practice, Hamblen J adopted a purposive construction of UCP 600 and was willing to reach the same result by implying a term into UCP 600.