The High Court has refused First Modular Gas Systems Limited’s second application to stop payment of US$1.65 million to Bosai Energy Technology Corporation under a letter of credit, finding that the evidence did not establish the clear, obvious or established fraud required for an injunction.
Mr Justice Rory Mulcahy delivered the judgment on 12 January 2024 in plenary proceedings against Citibank Europe plc, Bosai and Access Bank plc. Access was not represented. The application concerned a letter of credit issued by Access in February 2022, with Citibank as confirming bank. First Modular, a Nigerian company, had contracted with Canadian company Ennovate Consultants Incorporated to supply and install a gas plant in Nigeria. Bosai, a Chinese company, was subcontracted to supply the plant.
Bosai sought payment after presenting documents that included a bill of lading said to show shipment of the goods to Nigeria. First Modular alleged the claim was a sham and that the goods had not been dispatched. It relied on a report commissioned from Chinese law firm Goodwell Law Firm Shanghai after an earlier injunction application was dismissed in September 2023. The report said an Astline representative denied Astline issued the bill of lading and that checks with ship owner Pacific International Lines did not find the bill or matching container numbers. It also said the shipment could not be verified through Chinese customs.
The judge considered the report hearsay, including its reliance on conversations with third parties, and gave it reduced weight. No explanation was offered for not obtaining an affidavit from its author. The judge nevertheless found the report lent support to First Modular’s allegation and said the evidence raised concern that someone may have acted fraudulently. Bosai denied fraud and relied on an affidavit describing goods being loaded for transport; the judge also noted that Bosai had not provided documentary support for aspects of its account.
The court held that suspicion of fraud was insufficient to restrain payment under a letter of credit. The added evidence, considered alongside the earlier evidence, did not meet the demanding threshold. The judge therefore refused the injunction.
The defendants also argued that the second application was barred as an abuse of process under the rule in Henderson v Henderson. The judge said the new evidence could and should have been brought in the first application, but did not finally resolve that objection because the fraud threshold had not been met. He said that, in the circumstances, more compelling evidence would have been needed to justify allowing the second application to proceed. The matter was listed for 19 January 2024 for final orders and any directions on the remaining proceedings.