COURT OF APPEAL CIVIL DIVISION

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COURT OF APPEAL (CIVIL DIVISION) Date 25
February 2000 B e f o r e LORD JUSTICE
MORRITT LORD JUSTICE WALLER and LORD JUSTICE
MUMMERY - - - - - - - - - - - - - - - - - - - -
- Banco Santander S A - and - BANQUE
PARIBAS
Vincent OBrien Hong Kong Banking Meeting
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Incurred Deferred Payment Undertaking US
20,315,796.30 due on 27th November
31Ddate and place of expiry 99/09/15
LONDON 41Aavailable with/by - swift addr
BANCO SANTANDER CENTRAL HISPANO LONDON BY
DEFERRED PAYMENT AT 180 DAYS AFTER
B/L 49confirmation instructions
confirm 78instructions to pay/acc/neg bk at
maturity. . . to cover Santander in accordance
with their instructions SUBJECT TO UCP500
USD 19,667,238.84 16th -value 17th June
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On 24th June Paribas informed Santander
AGREED THAT IN ABSENCE OF FRAUD (1) Santander
would have had no claim to be paid by Paribas
anything until 27th November (2) On 27th
November they would have been paid the sum of
US 20,315,796.30.
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Ultimately, the question to be asked is what
precisely the Issuing Bank has requested the
Confirming Bank to do, and what the Issuing Bank
has promised to do if the Confirming Bank does
what is requested of it.
In bringing this new type of instrument into
operation, it seems it has not been thought
necessary to make express provision in the UCP
to cover the situation
The answer, as it seems to me (LJ Waller), is
that the Issuing Bank has requested the
Confirming Bank to give its own undertaking to
pay on 27 th November 1999, in addition to that
of the Issuing Bank, and has promised to
reimburse the Confirming Bank when it pays on
that deferred payment undertaking i.e. pays
20,315,796.30 on 27th November.
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Ultimately, the question to be asked is what
precisely the Issuing Bank has requested the
Confirming Bank to do?, and what the Issuing
Bank has promised to do if the Confirming Bank
does what is requested of it.
Ultimately, the answer to be given is. When the
Issuing Bank authorises another bank to. ..
incur a deferred payment undertaking.against
documents which appear on their face to be in
compliance... the Issuing Bank are bound...to
reimburse the Nominated Bank which has
..incurred a deferred payment undertaking.
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Vincent OBrien