UK case law
Banque Saudi Fransi v Lear Siegler Services Inc
[2006] EWCA CIV 1130 · Court of Appeal (Civil Division) · 2006
The verbatim text of this UK judgment. Sourced directly from The National Archives Find Case Law. Not an AI summary, not a paraphrase — every word below is the original ruling, under Crown copyright and the Open Government Licence v3.0.
Full judgment
1. LADY JUSTICE ARDEN: For the reasons given in the draft in writing, I would dismiss this appeal.
2. LORD JUSTICE PILL: I agree with Arden LJ’s judgment. In my view, the test in CPR 24.2 applies in this context as in any other. I see no justification for ignoring the words of the rule in this context. It follows that I agree with Arden LJ in her conclusion in the last sentence of paragraph 18.
3. However, the context is that stated by Lord Denning MR as cited in paragraph 11 of the judgment of Arden LJ: “‘The only exception is when there is clear fraud of which the bank has notice.’” What has to be established in the present situation at the first stage is a real prospect that fraud by the beneficiary can be proved. That means that there must be a real prospect of proving that the beneficiary could not honestly have believed in the validity of its demands on the performance bond; Ackner LJ in United Trading as cited by Arden LJ at paragraph 13 of her judgment.
4. In the present context, that task is a difficult one. It is a high hurdle, as the authorities in my judgment recognise. There are no admissions by the beneficiary, though admissions are not the only way in which fraud can be proved, as Ackner LJ acknowledges in the same judgment.
5. Read as a whole, I do not consider that the judgment of Mance LJ, as he then was, cited by Arden LJ at paragraph 15 of her judgment, takes a different view of the test to be applied in the present situation; that is the situation as between the bank and its customer, but in any event I agree with Arden LJ’s view of the test..
6. The appellant’s case of fraud depends upon the contents of Mr Young’s statement. I agree with Arden LJ, for the reasons she gives, that the contents fall well short of what would be required to demonstrate a real prospect of establishing fraud. I also agree with Arden LJ, at paragraph 28, that it would be pure speculation to hold that there was a real prospect of success on the ground that further disclosure may occur.
7. It follows that, for the reasons given by Arden LJ, I agree that this appeal should be dismissed. Order: Appeal dismissed.