Deutsche Bank AG, London Branch v CIMB Bank Berhad

Under article 7(c) of UCP 600, an issuing bank’s obligation to reimburse a nominated or confirming bank arises when that bank has in fact honoured a complying presentation and forwarded the documents. A statement that payment has been made is not conclusive. The obligation is distinct from the issuing bank’s obligation to pay the beneficiary and cannot be equated with liability under a first demand bond. A defendant may therefore seek information about the confirming bank’s payment, but only to the extent strictly necessary to understand the claimant’s case. Requests that amount to a fishing expedition or tactical delay should not be ordered.

Deutsche Bank, acting as confirming bank, claimed reimbursement from CIMB Bank, the issuing bank, under ten letters of credit governed by UCP 600. Deutsche Bank had sent messages stating that it had paid the beneficiary and sought reimbursement. CIMB disputed payment and served a request for further information concerning how payment had been made.

The central issue was whether an issuing bank must accept a confirming bank’s statement of payment, or whether the confirming bank must establish that it actually honoured the complying presentations. The court also had to determine the proper limits of the request for further information.

1. Payment required. The court held that article 7(c), read with the definition of “honour” in article 2 of UCP 600, requires the confirming bank to have actually made payment under the credit. The provision does not say that reimbursement follows merely because the nominated bank states that it has honoured the presentation. ([2017] EWHC 1264 (Comm), paras 23–28, 36–39)
2. No first-demand analogy. The autonomy of the issuing bank’s undertaking to the beneficiary does not determine the separate reimbursement relationship between the issuing and confirming banks. Article 13 concerns reimbursement through a separate reimbursing bank and does not alter article 7(c) where no such bank is involved. The reimbursement obligation is therefore not equivalent to liability under a first demand bond. ([2017] EWHC 1264 (Comm), paras 29–33, 38–39)
3. Authorities. The reasoning was supported by United City Merchants, Credit Agricole Indosuez and Fortis Bank, which treated actual honouring or payment as relevant to reimbursement. The court applied the approach in Fortis Bank that what matters is the fact of honouring or negotiating a complying presentation. ([2017] EWHC 1264 (Comm), paras 35–38)
4. Further information. Since Deutsche Bank had pleaded a detailed case as to payment, CIMB was entitled to seek further information in the usual way. The request had to remain strictly necessary to understand Deutsche Bank’s case and could not be used to investigate payment arrangements generally in the hope of finding a defence. The parties were expected to agree the order and further directions. ([2017] EWHC 1264 (Comm), paras 40–43)

Not stated in the judgment.