Royal Bank Letter of Credit Litigation

Ogilvy Renault acted as counsel for Royal bank of Canada in a litigation resulting from the issuance of a letter of credit of $170,000.00 for Blasser Brothers. While the amount involved was small, the file raised a number of important principles regarding documentary credits. These principles include the following: 1) whether the expiry date is a term or condition and therefore whether presentation after that date is an irregularity that must be raised within seven days or less (art.13(b) of ICC publication 500), 2) whether a confirming bank, that also acts as advising bank, acts as agent for the applicant (Art.18(a) of ICC publication 500), 3) whether the applicant my raise, against the negotiating/confirming bank, irregularities in the documents when the issuing bank does not raise them 4) whether the applicant can sue the confirming bank directly on this basis. On August 29, 2002, the Court of Appeal dismissed the appeal in favour of the Royal Bank of Canada on all these points.

Christine A. Carron of Ogilvy Renault represented Royal Bank of Canada. Blasser Brothers Inc., S.A. was represented by Eric Ménard and Serge Guérette of Fasken Martineau DuMoulin and Canadian Commercial Coporation was represented by Francisco Couto of Côté Marcoux & Joyal.