Dubai: A foreign bank branch will have to pay €700,000 plus an appropriate amount of compensation to a local company for its malpractice in processing the plaintiff’s letter of credit.
The case was recently resolved by the Expertise and Dispute Settlement Department of the Dubai Ruler’s Court.
The company lodged the case at Dubai Courts which was later referred to the department to arrive at an amicable settlement.
The department examined the banking documents and the letter of credit for €700,000, which was issued by the bank to the company.
In its compensation claim, the complainant said it had to pay the value of the letter of credit to the bank due to a malpractice in processing it in compliance with local rules and international banking standards.
Hashem Salem Al Qiwani, director of the department, said: “We always receive cases involving banks wherein bank clients are mostly the defendants. But in this case, the company, which is the bank’s client, is the claimant.”
The claimant requested that the bank should pay the value of the letter of credit along with an amount of money in compensation for the damages and losses it incurred.
It explained in its claim that it delivered goods valued at €700,000 and submitted the letter of credit to the bank to review it and ensure its conformity with the conditions for such credit payments. The document remained pending for six months with the bank which did not notify the company or send the letter to the bank abroad, which originally issued the letter.
The department assigned a legal expert to examine the dossier of the plaintiff’s documents, including the letter of credit and all procedures taken by the defendant {the bank}.
According to the findings of the expert, the bank failed to notify the company about the authenticity of the documents and kept the letter of credit in its drawers.
