The law applicable to documentary letters of credit in India: A riddle wrapped in an enigma?

Abstract

Despite significantly fostering international trade in India, letters of credit and the determination of applicable law in cross-border disputes arising from the same have received negligible attention from lawmakers. The Indian Supreme Court, too, has failed to use its power to mould the law despite regularly being confronted with disputes on this subject. This paper demystifies India’s conflict of law rules on the law governing disputes on letters of credit by examining relevant judicial trends. It highlights rampant references to the lex fori – and explores reasons why it is considered the “proper law” by being the country possessing the closest and most real contractual connection. It anticipates a “ripple effect” prompting parties to evade Indian courts through choice-of-court agreements preferring a foreign forum or to avoid business with Indian traders insisting on such payment mechanisms. Accordingly, it identifies the need for coherent rules and suggests some solutions that Indian lawmakers should consider.

Keywords:

• letters of credit
• documentary credits
• Indian private international law
• proper law of contract
• applicable law
• the Uniform Customs and Practice for Documentary Credits

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See in this respect the remarks of the English judges in RD Harbottle (Mercantile) Ltd v National Westminster Bank Ltd, [1978] QB 146, 155; Power Curber International Ltd v National Bank of Kuwait SAK, [1981] 2 Lloyd’s Rep. 394, 400; and Intraco Ltd v Notis Shipping Corporation of Liberia; The Broja Trader, [1981] 2 Lloyd’s Rep 256 at 257.

2 A Markstein, “The Law Governing Letters of Credit” (2010) 16 Auckland University Law Review 138.

3 PT Teoh, “Letters of Credit: A Conflict of Laws Perspective” (1990) 2 Singapore Academy of Law Journal 51.

4 Ibid.

5 Ibid.

6 See, World Trade Organisation [WTO], “Trade Finance”, available at: https://www.wto.org/english/thewto_e/coher_e/tr_finance_e.htm accessed on 8 August 2022.

7 See in this respect, PR Newswire, “Letter of Credit Confirmation Market Size is Projected to Reach USD 4.99 Billion by 2027 at CAGR 3.18%”, available at https://www.prnewswire.com/in/news-releases/letter-of-credit-confirmation-market-size-is-projected-to-reach-usd-4-99-billion-by-2027-at-cagr-3-18-valuates-reports-805738500.html accessed on 8 August 2022.

8 See for instance, the decisions of the Supreme Court in M/S Tarapore & Co, Madras v M/s VO Tractors Export Moscow & Anr, 1969 (I) SCC 233 [headnote]; United Commercial Bank v Bank of India & Ors 1981 AIR 1426; UP Cooperative Federation Ltd v Singh Consultants & Engineers (P) Ltd [1988] 1 SCC 174 [51] [UPCF], which highlight the significance of letters of credit in international trade in India.

9 See Section C below.

10 Government of India, Ministry of Commerce and Industry, India’s Foreign Trade, March 2022, https://commerce.gov.in/trade-statistics/latest-trade-figures/ accessed on 1 May 2022. [hereinafter, India’s Foreign Trade].

11 See, India Brand Equity foundation [IBEF], Foreign Trade Policy of India (last updated March 2022), available at https://www.ibef.org/economy/trade-and-external-sector accessed on 1 May 2022, which estimates India’s GDP to be worth USD 3.12 trillion as of 2022.

12 See, R King, Gutterridge and Megrah’s Law of Bankers’ Commercial Credits, (Europa Publications, 8th edn, 2001), 11.

13 The first version of the UCP was formulated in 1933. Since then, the instrument has been revised on six occasions: in 1951 (UCP 151), 1962 (UCP 222), 1974 (UCP 290), 1983 (UCP 400), 1993 (UCP 500) and most recently in 2007 (UCP 600).

14 See, Trade Finance Global, “UCP 600 and Letters of Credit” Trade Finance Global 2022 Guide, available at: https://www.tradefinanceglobal.com/letters-of-credit/ucp-600/ accessed on 8 August 2022.

15 See in this respect, the decisions of the Supreme Court of India in Tarapore, supra n 8, paras 3–4 and 24; United Commercial Bank, supra n 8, para 32; and Federal Bank Ltd v VM Jog Engineering Ltd & Ors, (2001) 1 SCC 663 para 37.

16 See for instance, Art 5 of the Uniform Commercial Code, which is generally applicable to all contracts on the sale of goods before American Courts.

17 See for instance, the decisions of the English courts in Offshore International SA v Banco Central SA, [1976] 2 Lloyd’s Rep (QB) 402; and Bank of Baroda v Vysya Bank Ltd, [1994] 2 Lloyd’s Rep (QB) 87, which continue to be considered in disputes between the issuing bank and the corresponding bank.

18 See for instance, the decisions of the Supreme Court in National Thermal Power Corporation v Singer Corporation, [1992] 3 SCC 551; and the High Court of Rajasthan in Kotah Transport Ltd v Jhalawar Transport Services Ltd, [2011] 3 TAC 552, which referred to the English dicta in Vita Food Products Incorporated v Unus Shipping Company, [1939] AC 277; and Phillips v Eyre, [1870] LR 6 QB, while shaping the Indian choice of law rules on the applicable law in contractual and non-contractual matters, respectively. Also, see the decision of Modi Entertainment Network and Another v. W.S.G. Cricket PTE Ltd, [2003] 4 SCC 341, which referred to the decision of Donohue v Armco Inc, [2002] 1 All ER 749 (HL) to formulate the rules concerning the regulation of choice of court agreements in India.

19 See the discussion in Section C.2(b) in this respect.

20 See, Arts 2 and 7 of the UCP 600. Also see, C Murray et al, Schmitthoff’s Export Trade: The Law and Practice of International Trade (Sweet and Maxwell, 11th edn, 2007), 185.

21 Ibid, Arts 17 to 28. Also see, DR Stack, “The Conflicts of Law in International Letters of Credit” (1983) 24 Virginia Journal of International Law 171, 173.

22 Schmitthoff, supra n 20, 218–219 [11-025]-[11-026].

23 Ibid, 219 [11-026].

24 WG Schultze, “The UCP 600: A New Law Applicable to Documentary Letters of Credit” (2009) 21 South African Mercantile Law Journal 228, 233.

25 Schmitthoff supra n 20 219–220 [11-026].

26 Ibid.

27 Ibid.

28 Ibid.

29 CH Yong, “International Trends in Documentary Transactions” (1993) 14 Singapore Law Review 171, 186.

30 Art 4(a) of the UCP 600.

31 Ibid, Art 5.

32 Ibid.

33 See, Art 5 of the UCP 600. Also see, Schmitthoff, supra n 20, 185; and Gutterridge and Megrah, supra n 12, 14–15.

34 Art 5 of the UCP.

35 RJ Gewolb, “The Law Applicable to International Letters of Credit” (1996) 11 Villanova Law Review 742, 746.

36 Schmitthoff, supra n 20, 220–224 [11-027]-[11-031].

37 Ibid, 220 [11-027].

38 Ibid.

39 Gewolb, supra n 35, 746.

40 Arts 2 and 12 of the UCP 600.

41 Ibid, Art 13.

42 Ibid, Art 12.

43 Ibid, Art 2.

44 Ibid.

45 Ibid.

46 Ibid.

47 Gutterridge and Megrah, supra n 12, 12.

48 Ibid, 293.

49 Ibid.

50 See, Gutterridge and Megrah, supra n 12, 293.

51 See in this respect, s 2(4)(c)(i) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015; and s 2(1)(f) of the Arbitration and Conciliation Act 1996.

52 See, RA Schülze and G Fontane, Documentary Credit Law Throughout the World (ICC Publishing SA, 2001), 139 for a list of countries which do not have a comprehensive law on the subject.

53 Act No. 10 of 1949.

54 See s 6(1)(a) of the BRA which provides in the relevant part:

(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely: (a) … the granting and issuing of letters of credit … 

55 See in this respect, the decision of the Indian Supreme Court in Federal Bank, supra n 15, para 37.

56 See in this respect, s 28(1) of the ACA.

57 See for instance, the decisions in Tarapore, supra n 8; United Commercial Bank v Hanuman Synthetics Ltd & Ors AIR 1985 Cal 96; Millennium Wires (P) Ltd & Anr v Allahabad Bank & Anr (2013) DLT 640; Credit Agricole, CIB v JVL Agro Industries Ltd & Ors 2014 SCC OnLine Del 7456: [2015] 148 DRJ 413; Malayan Banking Berhad v Allahabad Bank 2017 SCC OnLine Del 6784 [Malayan Banking]; and Allahabad Bank v Malayan Banking Ltd 2019 SCC OnLine Del 11447 [Allahabad Bank], which illustrate the popularity of the UCP in international letters of credit.

58 See, ibid. The decisions are some seminal cases in which the courts relied on the UCP while adjudicating disputes on international letters of credit.

59 See, Federal Bank, supra n 15, para 37.

60 Section 28(1)(b)(i) of the ACA.

61 See, S Khanderia, “Practice does not Make Perfect: Rethinking the Doctrine of ‘The Proper Law of the Contract’ – A Case for the Indian Courts” (2020) 16 Journal of Private International Law 423, 433, 434, referring to NTPC, supra n 18; and Kumarina Investment Ltd. v Digital Media Convergence Ltd & Anr, 2010 TDSAT 73 para 18.

62 Kumarina, ibid, para 18, referring to the European choice of law rules as stipulated in the Regulation (EC) No 593/2008 of the European Parliament and the Council on the Law Applicable to Contractual Obligations [Rome I Regulation].

63 See, the decisions of Tarapore, supra n 8; United Commercial Bank, supra n 8; and Federal Bank, supra n 15.

64 Ibid.

65 See Art 141 of the Constitution of India 1950, which states that “[t]he law declared by the Supreme Court shall be binding on all courts within the territory of India”.

66 See for instance, the decisions of the Supreme Court in Tarapore, supra n 8; and the Delhi High Court in Tata Motors Ltd v JSC VTB Bank 2016 SCC OnLine Del 2111: (2016) 230 DLT 693; Malayan Banking, supra n 57; Allahabad Bank, supra n 57; and Credit Agricole, supra n 57.

67 See, for instance, the decisions of the Supreme Court in Tarapore supra n 8; and United Commercial Bank, supra n 8, which reversed the decisions of the High Court on the ground that they were inconsistent with the provisions of the UCP 222 (revision 1963) and 400 (revision 1983) respectively.

68 See text accompanying note 24.

69 See text accompanying note 24.

70 See in this respect, the decision of the Supreme Court in PASL Wind Solutions (P) Ltd v GE Power Conversion India (P) Ltd, [2021] 7 SCC 1, paras 79–82.

71 See, the decisions of the Supreme Court in United Commercial Bank, supra n 8; and Federal Bank, supra n 15.

72 United Commercial Bank, supra n 8.

73 The decision is silent on the version of the UCP that the parties chose to operate their letter of credit.

74 United Commercial Bank, supra n 8, 780.

75 Ibid.

76 Ibid, paras 2–27.

77 Ibid.

78 Ibid, para 37.

79 Ibid.

80 Ibid.

81 See in this respect, the decision of the Gujarat High Court in Gallant Metal Ltd v Smart Timing Steel Ltd, 2019 SCC Online Guj 2004. Also see the decision of the Delhi High Court in Standard Chartered Bank (China) Ltd Shenzhen Branch v State Bank of Patiala & Ors, (2014) 2 High Court Cases (Del) 40 in which the parties did not incorporate the UCP into the terms of their credit. The court did not expressly refer to the provisions of the instrument in reaching its decision. However, in denying the applicant an injunction to prevent the issuing bank from paying the beneficiary in Hong Kong, it is evident that the court implicitly applied the UCP to adjudicate the dispute.

82 Gallant, ibid.

83 Ibid.

84 Ibid, para 50.

85 United Commercial Bank, supra n 8.

86 Federal Bank, supra n 15.

87 Gallant, supra n 80, paras 83 and 105.

88 For a detailed discussion, see, Gewolb, supra n 35, 750.

89 For a detailed discussion on the determination of “fraud”, see Schmitthoff, supra n 20, 237; Teoh, supra n 3, 56–58; and H Alavi, “Exceptions to the Principle of Autonomy in Documentary Letters of Credit: A Comparative View” (2016) Annual Problems of Economics and Law 123, 125–129. See also W Wong, “A Principled Conflict of Laws Characterisation of Fraud in Letters of Credit” (2023) 19 Journal of Private International Law 383.

90 See, NTPC, supra n 18, para 14. For a detailed discussion on the doctrine, see, S Jolly and S Khanderia, Indian Private International Law – Asia: Private International Law Series (Hart/Bloomsbury Publications, 2021).

91 NTPC, ibid.

92 Ibid.

93 See, s 28(1)(b)(i) of the ACA.

94 See, the decisions of the Supreme Court in NTPC, supra n 18, para 25; and Yograj Infrastructure Ltd v Ssang Yong Engineering & Construction Co. Ltd, [2011] 9 SCC 735, para 51.

95 Section 28(1)(b)(iii) of the ACA.

96 NTPC supra n 18, paras 21, 24 and 26; Sumitomo Heavy Industries Ltd v ONGC Ltd & Ors, [1998] 1 SCC 305, para 10; Union of India v Hardy Exploration & Production (India) Inc., [2019] 13 SCC 472, para 7 [Hardy Exploration]; and Enercon (India) Ltd. & Ors v Enercon GmbH & Anr, [2014] 5 SCC 1.

97 Enercon, ibid.

98 NTPC, supra n 18, para 14; and s 28(1)(b)(i) of the ACA.

99 See, the obiter of the Telecom Dispute Settlement and Appellate Tribunal, New Delhi (the Tribunal) in Kumarina, supra n 61, para 27, referring to the Rome I Regulation.

100 See, NTPC, supra n 18, para 14; and s 28(1)(b)(i) of the ACA.

101 NTPC, supra n 18.

102 UNIDROIT, “UNIDROIT Principles on International Commercial Contracts, 2016” www.unidroit.org/english/principles/contracts/principles2016/principles2016-e.pdf accessed on 12 January 2022 (PICC).

103 Kumarina, supra n 61, para 27.

104 Section 28(1)(b)(i) of the ACA.

105 PASL, supra n 70, paras 79–82.

106 Ibid.

107 See Arts 3.2.5 and 3.2.8 of the PICC.

108 Ibid, Chapter 4.

109 Ibid, Chapter 3. But see Art 3.1.1, which clarifies that the PICC does not govern questions regarding the capacity of the parties to conclude the contract.

110 Note that the observations in Kumarina, supra n 61, were merely in the form of an obiter.

111 See S Khanderia, “Termination for Breach: The Prospects of the UNIDROIT Principles of International Commercial Contracts to Interpret and Supplement Indian Law of Contract” (2023) Uniform Law Review 1, 28, https://doi.org/10.1093/ulr/unad002.

112 Ibid.

113 See Art 3 of the 2015 Hague Principles on Choice of Law in International Commercial Contracts. The text of the instrument is available at https://www.hcch.net/en/instruments/conventions/full-text/?cid=135.

114 NTPC, supra n 18, para 14.

115 State Aided Bank of Travancore v Dhrit Ram AIR 1943 PC 6, para 2.

116 NTPC, supra n 18, paras 21 and 23; Yograj, supra n 94, para 51.

117 See the decision of the Supreme Court in Delhi Cloth and General Mills Co Ltd v Harnam Singh, AIR 1955 SC 590, para 49; and the decision of the Calcutta High Court in Rabindra N Maitra v Life Insurance Corporation of India, AIR 1964 Cal 141, paras 19 and 20.

118 See, for instance, the decisions of the Supreme Court in British India Steam Navigation Co Ltd v Shanmughavilas Cashew Industries, [1990] 3 SCC 481, para 17; Modi Entertainment Network and Another v WSG Cricket Pte Ltd, [2003] 4 SCC 341, para 16; and the decisions of the High Courts of Bombay and Delhi in Traxpo Enterprises Pvt. Ltd. v Kolmar Group AG, (2016) 6 Bom CR 312, para 10; U. Can Migrate Consultants Pvt. Ltd. v Canadian Connections Groups Ltd., 2007 SCC OnLine Del 1390, para 8.

119 NTPC, supra n 18, para 15.

120 See Jolly and Khanderia, supra n 90, 219 referring to JD Falconbridge, Selected Essays in the Conflict of Laws (Canada Law Book Co, 2nd edn, 1954), 351.

121 See Section D below.

122 See, for example, Plenum No. 24 of 9 July 2019 on Application of the International Private Law norms by the Russian courts [Ruling 24 of 2019] para 27 indicating the factors relevant to ascertain the implied choice of the parties in international disputes on contractual obligations before Russian courts.

123 NTPC, supra n 18, para 14, referring to the decision of the Privy Council in Vita Food, supra n 18.

124 Ibid, 203, referring to The Hollandia, [1982] 1 All E.R. 1076, 1080; and Khanderia, supra n 61, 430.

125 Taprogge Gesellschaft MBH v IAEC India Ltd, AIR 1988 Bom 157, paras 21 and 26; and Kumarina, supra n 61, paras 72, 74, 77, 79, 80, 89, 107 and 124, referring to Sections 23, 27 and 28 of the Indian Contract Act, 1872 [ICA].

126 Khanderia, supra n 61, 430–432.

127 Taprogge, supra n 125, paras 21 and 26; and Kumarina, supra n 61, paras 72, 74, 77, 79, 80, 89, 107 and 124, referring to Sections 23, 27 and 28 of the Indian Contract Act, 1872 [ICA].

128 See the decisions of the Supreme Court in Harishanker Jain v. Sonia Gandhi (2001) 8 SCC 233; and Shin-Etsu Chemical Co. Ltd v. Aksh Optifibre Ltd, AIR 2005 SC 3766.

129 See the decision of the Delhi High Court in Transasia Private Capital Ltd v Gaurav Dhawan, 2023 SCC OnLine Del 1957, para 32.

130 Ibid.

131 Ibid.

132 See the discussion in Section C.3.c below

133 See, the decision of the Supreme Court in Svenska Handelsbanken v Indian Charge Chrome, AIR 1994 SC 626, paras 73 and 76, referring to the decision of the US court in Itek Corporation v First National Bank of Boston, 566 F. Supp. 1210 (D. Mass. 1983).

134 See, the decision of the Supreme Court in Svenska, ibid, paras 73 and 76.

135 Ibid, para 58; and Halliburton Offshore Services Inc v Vedanta Ltd & Anr, 2020 SCCOnLine Del 542, (20 April 2020), para 14.

136 Svenska, supra n 133.

137 Svenska, ibid.

138 Also see the decisions of the Supreme Court in Himadri Chemicals Industries Ltd v Coal Tar Refining Co (2007) 8 SCC 110; and UPCF, supra n 8, para 28, in which the Court clarified that the bank’s obligations under any irrevocable commitment such as a bank guarantee or a letter of credit would be governed by the same principles.

139 Svenska, supra n 133.

140 Ibid, paras 7 and 9.

141 Ibid, para 11.

142 Ibid, paras 18 and 22.

143 Ibid.

144 Ibid.

145 Ibid, paras 86 and 88, referring to Itek, supra n 133, 116.

146 Halliburton, supra n 135.

147 The case is silent on the country where the respondent was situated.

148 Halliburton, supra n 135, paras 4–6.

149 Ibid.

150 Svenska, supra n 133.

151 Halliburton, supra n 135, para 14.

152 Ibid. Also see, Halliburton, supra n 135, para 16.

153 2019 SCC OnLine SC 1638.

154 Ibid.

155 See, the decisions of the Supreme Court in UPCF, supra n 8, paras 21, 28, 30 and 34; and Svenska, supra n 133, para 9.

156 Ibid.

157 Halliburton, supra n 135.

158 Ibid, para 16.

159 Ibid.

160 See, the decision of the Delhi High Court in M/s Global Steel Philippines v State Trading Company of India (STC) & Ors, FAO (OS) No. 186/2009 & CM No. 6769/2009.

161 Standard Chartered, supra n 153.

162 See UPCF, supra n 8; and Svenska, supra n 133, para 9.

163 See Arts 4 and 5 of the UCP.

164 See the decision in Itek, supra n 133 as referred to by the Supreme Court in Svenska, supra n 133.

165 See, Art 51(c) of the Constitution of India, 1950.

166 Teoh, supra n 3, 59; and Stack, supra n 21, 198–199.

167 Teoh, ibid.

168 Ibid.

169 Ibid.

170 See, UPCF, supra n 8, paras 53–55, referring to the decision of the American court in Sztejn v Henry Scroder Banking Corporation, 31 NYS 2d 631.

171 Ibid.

172 Gallant, supra n 81, para 91.

173 UPCF, supra n 8, para 48.

174 Ibid.

175 Federal Bank, supra n 15, para 57

176 Millennium Wires (P) Ltd & Anr v Allahabad Bank & Anr (2013) DLT 640, para 29, referring to the decision of the Supreme Court in Himadri Chemicals Industries Ltd v Coal Tar Refining Co (2007) 8 SCC 110.

177 See text accompanying notes 126–127.

178 Gallant, supra n 81.

179 2019 SCC OnLine Del 11447.

180 See, Gallant, supra n 81.

181 See for instance, Malayan Banking Berhad v Indusind Bank Ltd 2016 SCC OnLine Bom 6962 [Malayan 2016]; Malayan Banking, supra n 57; and Allahabad Bank, supra n 57.

182 See, Millennium Wires (P) Ltd & Anr v Allahabad Bank & Anr (2013) DLT 640; and Allahabad Bank, supra n 57, referring to Arts 15 and 16 of the UCP 600.

183 See, Arts 15 and 16 of the UCP 600.

184 Supra n 57.

185 See, Malayan Banking, supra n 57.

186 See, Millennium Wires, supra n 182.

187 Ibid, paras 36–39.

188 Ibid.

189 Ibid, para 29, referring to the decision of the Supreme Court in Himadri, supra n 138.

190 Ibid, para 35.

191 See, State Trading Corporation of India v Millennium Wires (P) Ltd & Ors, ILR (2014) II Delhi 1045; Malayan Banking Berhard v IndusInd Bank Ltd, 2016 SCC OnLine Bom 6962 [MBB 2016]; Malayan Banking, supra n 57; and Allahabad Bank, supra n 57.

192 (2015) 14 SCC 375.

193 Ibid, para 6.

194 See text accompanying n 78.

195 For a discussion on the exception of “public policy” in the recognition and enforcement of foreign judgments in India, see S Khanderia, “The Prevalence of Jurisdiction in the Recognition and Enforcement of Foreign Civil and Commercial Judgments in India and South Africa: A Comparative Analysis” (2021) Oxford University Commonwealth Law Journal, 1, 21, https://doi.org/10.1080/14729342.2021.1934298 referring to s 13 of the Civil Procedure Code, 1908. For a discussion on the exception of “public policy” in the recognition and enforcement of foreign arbitral awards, see Explanation 1 to s 48 of the ACA.

196 The difference lies in the fact that, in the law of the recognition and enforcement of foreign decisions, the 'fraud' of the debtor (i.e. the person against whom the execution is sought) must be of an extrinsic nature. Thus, unlike disputes on letters of credit, the deception must be practised towards the court and not the other party to the dispute.

197 Ibid.

198 See text accompanying notes 130–131.

199 Global Steel, supra n 160.

200 Ibid.

201 Ibid, Headnote.

202 Ibid, paras 1–12.

203 Ibid.

204 Ibid.

205 Ibid.

206 Ibid.

207 Ibid, paras 62–63.

208 See Art 5 of the UCP, which merely obligates a bank to honour its obligations once it finds the documents strictly compliant with the terms of the credit.

209 Transasia, supra n 129, para 32.

210 NTPC, supra n 18, paras 21 and 23; Yograj, supra n 94, para 51.

211 Section 28(2) of the ACA.

212 NTPC, supra n 18, para 25; Shreejee Traco (I) Pvt Ltd v Paperline International Inc, [2003] 9 SCC 79, para 7; Indtel Technical Services Pvt Ltd v WS Atkins Rail Ltd, [2008] 10 SCC 308, paras 36 and 37; and Yograj, supra n 94, para 51.

213 Ibid.

214 NTPC, supra n 18, para 14.

215 See Delhi Cloth, supra n 117, para 36; and NTPC, supra n 18, paras 16 and 17.

216 Delhi Cloth, ibid.

217 NTPC, supra n 18, paras 16 and 17.

218 Global Steel, supra n 160.

219 Dhanrajamal Gobindram v Shamji Kalidas & Co, AIR 1961 SC 1285, para 28.

220 Ibid.

221 Ibid.

222 Ibid.

223 Rabindra, supra n 117, para 26.

224 See text accompanying notes 14 and 15.

225 See, Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 2019, which carry forward the provisions of the Regulation (EC) No 593/2008 of the European Parliament and the Council on the Law Applicable to Contractual Obligations (Rome I Regulation) and Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the Law Applicable to Non-Contractual Obligations, [2007] OJ L/199/40 [Rome II Regulation] post Brexit.

226 See, Art 3(1) read along with Recital 11 to the Rome I Regulation.

227 Art 3 of Law on the Application of Law for Foreign-related Civil Legal Relationships [LAL].

228 Art 1210 of the Civil Code of the Russian Federation 2022.

229 Improvair (Cape) (Pty) Ltd v Établissements Neu, 1983 (2) SA 138 (C).

230 Cf s 187(2)(a) Restatement (Second) of Conflict of Laws 1971, which is followed by 23 US states. The provision limits the parties’ choice to a law that has some connection to their transaction.

231 For a detailed discussion on the practice of English courts in this respect, see, Markstein, supra n 2, 138 et seq.

232 See Section C above.

233 See, United City Merchants (Investment) Ltd v Royal Bank of Canada, [1982] 2 All ER 720, 725.

234 See, Re United Railways of Havana, etc. Warehouses Ltd, [1960] Ch. 52, 91.

235 Lawrence Collins and Ors (eds), Dicey and Morris on the Conflict of Laws Vol 2 (Stevens and Sons Ltd, 11th edn, 1987), 1193.

236 United City Merchants, supra n 233.

237 Ibid, para 725.

238 Ibid.

239 Ibid.

240 See, Power Curber International v National Bank of Kuwait, [1981] 3 All ER 607.

241 See, Offshore International SA v Banco Central SA, [1976] 3 All ER 749.

242 Ibid.

243 Gutteridge & Megrah, supra n 12, 297.

244 Ibid.

245 Ibid.

246 See Gutteridge & Megrah, supra n 12, 298, referring to Power Curber, supra n 240.

247 Ibid.

248 See, the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 (amended in 2020), which retains the provisions of the Rome I Regulation in UK law.

249 Convention on the Law Applicable to Contractual Obligations, 19 June 1980, 80/934/EEC [Rome Convention].

250 Regulation (EC) No 593/2008 of the European Parliament and the Council on the Law Applicable to Contractual Obligations (Rome I Regulation).

251 See Art 4 of the Rome Convention and the Rome I Regulation. In Rome I the rule may be the habitual residence of the service provider in Art 4(1)(b) but in this context that is the same as the habitual residence of the characteristic performer applicable under Art 4(2) of both Rome I and the Rome Convention.

252 Art 19(1) of the Rome I Regulation. If the contract was concluded in the course of the operations of a branch, agency or other establishment of the characteristically performing bank then the law of the place where the branch, agency or establishment is located applies, see Art 19(2) of Rome I.

253 See for instance, Bank of Baroda, supra n 17; Bank of Credit & Commerce Hong Kong Ltd (in liq) v Sonali Bank, [1995] Lloyd’s Rep 227 (QB); Sierra Leone Telecommunications Co Ltd v Barclays Bank plc, [1998] 2 All 820 (QB); and Kredietbank NV v Sinotani Pacific PTE Ltd (Agricultural Bank of China, Third Party) [1999] 3 SLR 288.

254 Art 4(5) of the Rome Convention; and Art 4(3) of the Rome I Regulation.

255 Art 4(5) of the Rome Convention.

256 Bank of Baroda, supra n 17, para 93.

257 R Fentiman, “Commercial Expectations and the Rome Convention” (2002) 61 Cambridge Law Journal 50, 51.

258 Bank of Baroda, supra n 17, para 93.

259 Ibid.

260 Ibid.

261 [2005] EWCA Civ 422, para 55.

262 Art 4(5) of the Rome I Regulation.

263 Federal Bank, supra n 15, para 60.

264 Ibid.

265 See, s 332(1) of the Restatement (Second), Conflict of Laws (Tenth Draft No. 6, 1960).

266 See, ss 1-105(1) of the UCC.

267 See text accompanying n 18.

268 See in this respect text accompanying notes 262–263 referring to the application of Art 4(3) of the Rome I Regulation to disputes on letters of credit.

269 See, Art 141 of the Constitution of India, 1950.

270 Most of the reported cases before the Indian courts on international contracts on contractual obligations have concerned disputes in which the parties have expressly chosen the proper law.

271 See, Rabindra, supra n 117, para 26.