Source: All England Reporter
Publisher Citation: [2011] All ER (D) 26 (Jun)
Neutral Citation: [2011] EWHC 1390 (Comm)
Court: Queen's Bench Division, Commercial Court
Judge: Field J
Representation Alain Choo-Choy QC (instructed by Weil Gotshal & Manges) for the claimant.
  Robin Dicker QC and Jeremy Goldring (instructed by Clifford Chance LLP) for the defendant.
Judgment Dates: 7 June 2011

Catchwords

Bank - Banker/client relationship - Letters of Credit - Set off - Defendant bank issuing letter of credit in favour of claimant - Parties being subject to master agreement - Master agreement providing for set off of mutual obligations - Claimant being in event of default with consequence that master agreement being terminated early - Claimant seeking to draw on letter of credit - Defendant seeking to set off sum owed for early termination against sums dueunder letter of credit - Whether defendant entitled to set off.

The Case

Bank Banker-client relationship. The Queen's Bench Division, Commercial Court in construing a letter of credit in the context of an ISDA master agreement found that as neither document precluded a right of set off, therefore the defendant bank's set-off in respect of the sum owed by the claimant reduced the sum owed to the claimant by a third party.

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