A.I. Credit Corp. v. Government of Jamaica
United States District Court for the Southern District of New York
666 F. Supp. 629 (1987)
- Written by Steven Pacht, JD
Facts
Continental Illinois Bank and Trust Company (Continental) owned debt issued by the Government of Jamaica (Jamaica) (defendant). In August 1984, Continental assigned approximately $10 million of its Jamaica debt to A.I. Credit Corporation (AI) (plaintiff). The assignment was subject to Jamaica’s 1984 rescheduling agreement (1984 agreement) with foreign creditors. The 1984 agreement provided that (1) the amounts payable to each bank were separate and independent debts, (2) each bank was entitled to protect and enforce its rights arising out of the 1984 agreement, and (3) it would be unnecessary for any other bank to join a suit. The 1984 agreement further provided that the agreement’s agent, the Bank of Nova Scotia (agent) (1) had no functions, responsibilities, duties, obligations, or liabilities that were not expressly stated in the agreement and (2) was not required to initiate any suit, action, or proceeding arising out of or relating to the agreement. In 1985 and 1987, Jamaica—which was unable to make principal payments required by the 1984 agreement—entered into new debt-rescheduling agreements with most of its foreign creditors. However, AI refused to sign the 1985 and 1987 agreements. Instead, AI sued Jamaica, claiming, among other things, that Jamaica defaulted on six scheduled principal payments that were due under the 1984 agreement. AI subsequently moved for summary judgment on this claim. Jamaica responded that (1) AI did not have standing because the 1984 agreement prohibited individual creditors from suing Jamaica for payment without the participation of all the other lenders and (2) only the agent was authorized to sue Jamaica for breach of the 1984 agreement. Specifically, Jamaica contended that there were genuine issues of fact to be pursued through discovery and submitted for trial regarding (1) the intent of the 1984 agreement’s signatories and (2) banking industry custom and practice regarding whether individual lenders could enforce the 1984 agreement without acting in concert with other lenders. Jamaica also averred that granting summary judgment to AI could have a devasting financial impact on Jamaica due to the default provisions of Jamaica’s 1985 and 1987 agreements.
Rule of Law
Issue
Holding and Reasoning (Sand, J.)
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