The English High Court has applied an objective standard of reasonableness in determining whether a party to a series of finance transactions had reasonably withheld its consent to the early termination of such transactions.
The English Court of Appeal has recently overturned a first instance decision that the correct interpretation of a bank's undertaking in a document was that it constituted a guarantee rather than a demand bond.
Described as the "life-blood of international commerce", irrevocable payment obligations undertaken by banks through the issue of performance bonds appear potentially less immune from interference by the courts following the Technology and Construction Court's ruling in Simon Carves Ltd v Ensus UK Limited.
Fortis Bank S.A./N.V. and Stemcor UK Limited v Indian Overseas Bank is one of the first cases to consider the language of the current edition of the Uniform Customs and Practice for Documentary Credits ("UCP 600") relating to the right of reimbursement owed by an Issuing Bank to a Nominated Bank or Confirming Bank in respect of a negotiated or honoured credit.