North Carolina Court Of Appeals: Bright Stars and Letters of Credit

North Carolina Court Of Appeals: Bright Stars and Letters of Credit

The Court of Appeals on Tuesday of last week, in Speedway Motorsports Int'l Ltd. v. Bronwen Energy Trading, Ltd., [lexis.com subscribers may access the enhanced version of this opinion] unwound a year old decision by the Business Court. In that decision, Judge Diaz had ruled that a Defendant bank which had issued a letter of credit was bound to litigate in Switzerland a crossclaim involving the letter of credit. The judge dismissed the claims against the Bank, relying on a choice of forum clause specifying that litigation would take place in Geneva.  The forum selection clause was contained in a secondary guarantee of amounts drawn on the letter of credit, a guarantee to which the Bank was not a party.

The Business Court had found the third party claims to be closely related to the letter of credit transactions that were at issue and therefore subject to the Swiss forum selection clause.  Judge Diaz based his decision partly on cases where a non-signatory to an arbitration agreement was held to be obligated to arbitrate.

Read this article in its entirety on North Carolina Business Litigation Report, a blog for lawyers focusing on issues of North Carolina business law and the day-to-day practice of business litigation in North Carolina courts.

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