Credit Agricole Indosuez v Chailease Finance Corporation

For Article 5(1) of the Brussels Convention, the relevant obligation is the contractual obligation forming the basis of the claim. Where the claim is for non-payment under a documentary credit, that obligation is the issuing bank’s obligation to pay, rather than its related obligation to examine documents. The place of payment may be determined by a contractual mechanism, including a beneficiary’s later instructions. Such a place is not disqualified as a place of performance merely because it was selected after the contract was made. Under a documentary credit, documents must comply on their face and must not be inconsistent with one another. A document stating an actual delivery date outside the contractual delivery window is not discrepant where the credit does not require the documents to show delivery within that window and the documents otherwise identify the goods consistently.

Chailease Finance Corporation claimed payment under an irrevocable stand-by letter of credit issued by Credit Agricole Indosuez. The credit required presentation of specified documents in Geneva and provided for payment according to Chailease’s instructions. Chailease ultimately instructed payment to its London account.

Credit Agricole challenged the jurisdiction of the English court under RSC Order 12 rule 8 and disputed summary judgment under RSC Order 14. It argued that the relevant obligation for Article 5(1) of the Brussels Convention was the examination of documents in Geneva, and that the documents were discrepant because they recorded delivery on 21 August 1998 rather than during 17–20 August. The central issues were the place of performance and documentary conformity.

1. Appeal dismissed. Credit Agricole’s challenge to jurisdiction and its challenge to summary judgment both failed.
2. Under Article 5(1), the obligation in question is the contractual obligation corresponding to the contractual right on which the claim is based. Chailease’s claim was based on refusal to pay. The relevant obligation was therefore payment under the credit, not the separate process of examining and taking up documents.
3. The documentary conditions in UCP 500 were conditions precedent to payment and imposed detailed duties concerning document examination. They did not displace the issuing bank’s undertaking to pay, nor did they make examination the obligation sued upon.
4. The place of performance was London. The credit was construed as allowing Chailease to nominate the place of payment in its presentation instructions. A place of performance may be determined through a contractual option or machinery operating after formation. Article 5(1) does not become inapplicable merely because the place crystallises later. The rule in MSG v Gravieres Rhenanes [1997] ECR 1-911 did not apply because London was an actual place where payment was to be made, rather than a merely artificial jurisdictional designation.
5. Documents presented under a documentary credit are subject to strict facial compliance and must not appear inconsistent with one another. Here, the credit required the actual delivery date to be stated but did not require the documents to show delivery within 17–20 August. The bill of sale and acceptance were individually compliant, and the stated date of 21 August did not make the description of the vessel inconsistent with the credit. Summary judgment was therefore appropriate.

• Court of Appeal (Civil Division): The appeal from the order of Mr Stephen Tomlinson QC, sitting as a deputy High Court Judge in the Commercial Court, was dismissed. The order dismissing the jurisdiction challenge and granting summary judgment was upheld.