This case involves questions arising out of the enforcement of an award by attaching to a letter of credit.
The Claimant, a Swiss domiciled company, won an award for a sum of money at arbitration arising out of contracts for its purchase of crude oil from the Defendant. The letters of credit in question were issued by the London branch of a French Bank, ostensibly in favour of the Defendant by a party (Shell) to whom the Defendant was also selling crude oil; the Claimant sought to intercept payments due under the letters of credit in satisfaction of the sum due under the award. The Claimant was successful in the High Court in securing a third-party debt order and the appointment of a receiver for the funds owed to the Defendant under the letters of credit. The Defendant applied to have these orders set aside, and the High Court granted that application. In the meantime, the Bank which issued the letters of credit (Crédit Agricole SA) had paid the sums in question into court. The Claimant appealed that decision (to set aside the enforcement orders) to the Court of Appeal, but the appeal was dismissed. The Claimant then appealed again, this time to the Supreme Court. The appeal was (in a 3-2 majority decision ) allowed, and so the Claimant prevailed.
Lord Clarke, delivering the main majority judgment, made some general comments about the enforcement environment, which underpinned the majority approach to the interpretation of the letters of credit:
“Successful international commerce depends on the enforcement of contracts, the enforcement of arbitration awards and the enforcement of judgements. Both the international plane through the [New York Convention] and the UNCITRAL Model Law and Arbitration Rules, and the domestic plane, through the Arbitration Act 1996, evince a clear policy to ensure the efficient recognition and enforcement of arbitration awards.”