Resumen de The Governing Law(s) of a Letter of Credit: Taurus v SOMO revisited
The decision of the Supreme Court in Taurus v SOMO (“ Taurus ”) has been the subject of two Comments in the May 2018 edition of the Quarterly , by Dr CH Tham (focusing in particular on whether a third-party debt order can or should extend to a sum directed to be paid by the debtor to a third party) and Stephen Tricks (principally directed to the relationships between banks under a letter of credit). Both Comments identify some difficulties with the decision of the Supreme Court. This Comment addresses a further issue arising from Taurus . It is what (if anything) the Supreme Court decided about the governing law of the contracts contained in a letter of credit and in particular those contracts to which the issuing bank is a party. The point is of importance not only in relation to the factual situation in Taurus itself (concerning a letter of credit issued by the branch of a bank in London advised by an overseas bank to an overseas beneficiary) but also to what might be described as the mirror image of those facts: a letter of credit issued by the branch of a bank overseas through a nominated/confirming bank in London where an attachment or injunction is obtained from a court in the jurisdiction of the issuing bank which prevents or purports to prevent the issuing bank from making payment to the nominated bank or to the beneficiary. Traditionally, the English courts have taken a robust approach to such orders.
