Trade

Conflict of laws - letter of guarantee - place of payment - wherever demand for payment madeBritten Norman Ltd (In Liquidation) v State Ownership Fund of Romania and Another: ChD (Peter Leaver QC sitting as a deputy High Court judge): 6 July 2000

In support of arbitration proceedings the claimants had brought for damages for alleged misrepresentation arising out of the purchase of the first defendants' shares in a Romanian company, the claimants applied for and obtained, in August 1999, a freezing order requiring the second defendant bank to open an interest-bearing account in the name of the first defendant, and in the event of a demand being made by the first defendant under a performance guarantee dated 7 January 1998 in the sum of $1,141,150, further requiring the second defendants to pay the sum demanded under the guarantee into the said account.

The first defendant applied to the court for the freezing order to be discharged.Geraldine Andrews (instructed by Edwin Coe) for the claimants; Andrew Baker (instructed by Linklaters & Alliance) for the first defendant; the second defendant did not appear and was not represented.Held, discharging the freezing order, that it was plain from the terms of the letter of guarantee, that no place of payment was specified; that the obligation of a debtor to seek out his creditor had little to do with the place of payment under a document such as a letter of guarantee; that the first defendants' request that payment be made into a stipulated account at a Romanian bank was an administrative request rather than a term of the contract; that the second defendants' potential liability only crystallised into an actual liability when the demand for payment, in conformity with the terms of the letter of guarantee, was made; that liability, absent any contractual term as to the place of payment, was to make payment at the place where the demand was made and where the liability crystallised; and that consequently the place of payment under the letter of guarantee was England.