## Facts

- A German textile manufacturer sold PVC-coated fabrics to a UAE buyer under terms requiring payment by letter of credit 90 days after the bill of lading date.
- An English trade finance company sent an MT700 SWIFT message issuing an expressly irrevocable letter of credit for €200,707.50 in the seller’s favor, incorporating UCP 600.
- The seller presented documents under the letter of credit through its bank; the issuer refused payment, asserting a discrepancy because documents were not “signed by all sides of LC.”
- The buyer later accepted the documents despite alleged discrepancies and authorized release of shipping documents; the goods were released.
- The seller and buyer agreed payment deferrals; the issuer was aware of and acknowledged the deferrals, but payment was not made.
- The seller served a statutory demand and then filed a winding-up petition, alleging the issuer’s inability to pay the letter-of-credit debt.
- The issuer opposed the petition, claiming a genuine dispute on substantial grounds, including that (i) its parent/affiliate was the true issuer and (ii) internal “Credit Norms” governed the letter of credit.

## Issues

1. Whether the respondent company was the issuing bank under the letter of credit or whether issuance (and liability) belonged to its parent/affiliate.
2. Whether the beneficiary’s presentation complied with the letter of credit and UCP 600, including the meaning of the term “signed by all sides of LC.”
3. Whether the respondent’s internal “Credit Norms” were incorporated into the letter of credit and, if so, whether they altered or displaced UCP 600.
4. Whether, in the winding-up context, the respondent showed the petition debt was genuinely disputed on substantial grounds so as to bar a winding-up order.

## Decision

- The court held the respondent was the issuer of the irrevocable letter of credit and was liable for payment upon a compliant presentation.
- The court construed “signed by all sides of LC” in a commercially coherent manner and found the beneficiary’s documents compliant; the asserted discrepancy did not justify refusal.
- The court held the respondent’s internal “Credit Norms” were not incorporated into the letter of credit and did not relieve the respondent of liability under UCP 600.
- The court found no genuine and substantial dispute as to the existence or amount of the debt.
- The winding-up petition succeeded, subject to the usual insolvency-law discretion applicable to the making of an order.

## Legal Principles

- In a winding-up petition, the court will not make a winding-up order if the petition debt is genuinely disputed on substantial grounds; a debtor must show a real, good-faith dispute with substance.
- An irrevocable letter of credit governed by UCP 600 is a bank’s independent undertaking to pay against a compliant documentary presentation; contractual terms should not be construed to make payment dependent on the issuer’s unilateral acts inconsistent with irrevocability.
- A purported incorporation of internal policies that would materially alter the UCP 600 framework requires clear and explicit incorporation and adequate notice to the beneficiary; absent that, UCP 600 governs and internal norms do not qualify the obligation.

## Conclusion

The court treated the letter of credit as an independent, irrevocable payment undertaking under UCP 600, rejected strained interpretations and unincorporated internal policies advanced to avoid payment, found the debt not genuinely disputed on substantial grounds, and allowed the creditor’s winding-up petition to proceed on the basis of an undisputed petition debt.


Heytex Bramsche GmbH v. Unity Trade Capital Ltd., [2022] EWHC 2488 (Ch) (Eng.)