Verlinden BV v. Central Bank of Nigeria
United States District Court for the Southern District of New York
488 F. Supp. 1284 (1980)
- Written by David Bloom, JD
Facts
Verlinden B.V. (plaintiff) was a Dutch corporation. Central Bank of Nigeria (Central Bank) (defendant) was the central bank of the Federal Republic of Nigeria (Nigeria). Nigeria entered into a contract to buy cement from Verlinden and agreed to establish a credit in favor of Verlinden. The cement contract was governed by Dutch law and contained an arbitration clause that required any disputes to be resolved in France. Central Bank was not a party to the cement contract. Nigeria gave Verlinden an irrevocable letter of credit for the full price of the cement contract. The letter of credit required Central Bank to pay Verlinden open-ended late charges to be paid at a daily rate per vessel. After Nigeria’s ports became heavily trafficked by ships, Central Bank unilaterally amended all of its letters of credit and stopped paying late charges. Verlinden filed suit in United States federal court, claiming that Central Bank had breached its obligations under the letter of credit. Verlinden did not sue Nigeria, and none of Verlinden’s claims were based on the cement contract. Central Bank moved to dismiss the action.
Rule of Law
Issue
Holding and Reasoning (Weinfeld, J.)
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