Sanctions Clauses In Documentary Credit Transactions: A Cautionary Tale

In Kuvera Resources Pte Ltd v JPMorgan Chase Bank, N.A. [2023] SGCA 28, the Singapore Court of Appeal held that a confirming bank was not entitled to deny payment to the beneficiary of two letters of credit (LCs) on the ground that its confirmations of the LCs included a contractual clause (Sanctions Clause) which extinguished the confirming bank's liability as the underlying commercial transaction was allegedly caught by the sanctions laws of the United States of America.

This update takes a look at the Court of Appeal's decision, which overturned the decision of the General Division of the High Court of Singapore permitting the bank to deny payment by reason of the Sanctions Clause.