Montrod Ltd v. Grunkötter Fleischvertriebs GmbH

Grunkötter Fleischvertriebs GmbH (GK) (defendant) was a German company that contracted to sell frozen pork to the Russian company Ballaris. Ballaris was aligned with Montrod Ltd (Montrod) (plaintiff). Montrod requested Fibi Bank to obtain a letter of credit from Standard Chartered Bank (SCB). SCB issued a letter of credit for the price of the frozen pork agreed to be sold by GK. GK was the named beneficiary of the letter of credit, and Montrod was named as the applicant. The letter of credit called for the presentation of certificates of inspection signed by Montrod. The credit was expressed to be subject to the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publications 500 (UCP 500). Subsequently, GK presented SCB with documents, including an inspection certificate indicating it was signed by Montrod. On their face, the documents complied with the terms of credit. SCB paid the credit. Montrod had asserted that the inspection certificate was fraudulent and that it was signed without the authority of Montrod. Montrod commenced proceedings in high court against GK, Fibi, and SCB to obtain an injunction or order to prevent them from paying according to the terms of the letter of credit. The trial judge found that although the document was not signed without Montrod’s authority, GK was not fraudulent and was entitled to payment by SCB, SCB was entitled to payment from Fibi, and Fibi was entitled to reimbursement by Montrod. Montrod appealed, arguing that because Montrod had given notice before payment was made that the inspection certificate was not signed by Montrod, the certificate was a nullity or a nonconforming document.