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©The Star (Used by permission)
by M.Mageswari

PUTRAJAYA: A special court here has ordered Yang Di-Pertuan Besar of Negri Sembilan Tuanku Ja’afar Tuanku Abdul Rahman to pay nearly US$1mil (RM3.5mil) to Standard Chartered Bank Malaysia Bhd to honour his commitment in a letter of credit over a business deal.

Chief Justice Abdul Hamid Mohamad, who sat with Chief Judge of Malaya Justice Alauddin Mohd Sheriff, Chief Judge of Sabah and Sarawak Justice Richard Malanjum and Federal Court judges Justices Ariffin Zakaria and Zulkefli Ahmad Makinudin, unanimously allowed the bank’s suit against the former King.

The court was set up to hear cases involving royalty - this is its first trial involving royalty which was disposed of on Wednesday.

The suit arose after Tuanku Ja’afar had on Feb 12, 1999 established through the bank a Standby Letter of Credit (SBLC) valued at US$1mil made in favour of the Connecticut Bank of Commerce (CBC) in the United States for credit facilities to be extended to a US company called Texas Encore LLC (TEC).

The bank had required Tuanku Ja’afar to execute a security for the SBLC in the form of a letter of set-off over a fixed deposit in the sum of RM4.18mil in its Seremban branch.

Tuanku Ja’afar had obtained an injunction on Dec 29, 1999 restraining CBC from making a call on the SBLC and restraining the bank from uplifting the fixed deposit under the letter of set-off.

On Wednesday, the Bench granted the bank’s application to withdraw the required amount from Tuanku Ja’afar’s fixed deposit account.

The five-men panel also dismissed with costs a counter-suit filed by the former King seeking for a declaration that the bank was not entitled in law to uplift his fixed deposit in settlement of any liability arising from the said SBLC.

Justice Abdul Hamid read out the 32-page judgment over the two suits on his last day sitting on the Bench as the top judge of the country.

He said: “By merely looking at the documents alone, there is not the slightest doubt that the Standby Letter of Credit in question is an irrevocable one.

“SBLC is an irrevocable SBLC from its effective date on Feb 11, 1999.

“An irrevocable SBLC cannot be revoked unilaterally by the customer,” he said.

Justice Abdul Hamid further said that an irrevocable SBLC could only be revoked or rescinded with the consent of the beneficiary.

“Neither should the issuing bank (Standard Chartered) be held liable simply because it assisted Tuanku Ja’afar to convey his intention or decision to rescind the irrevocable SBLC to the beneficiary, CBC, something it did out of respect for his status while repeatedly stressing its position that consent of the beneficiary was necessary to rescind the irrevocable SBLC,” he said.

“Under the circumstances, we hold that the irrevocable SBLC was not legally revoked or rescinded,” he said.

He added that the Bench “sees no merit in Tuanku Ja’afar relying on the injunction order in both suits”.

“The learned counsel has argued that the loan was never released to TEC in November/December 1999 for US$1mil and therefore the certification of indebtedness dated Dec 22, 1999 and Dec 23, 1999 were false documents intended to defraud the paying bank.

“However, this submission runs counter to Tuanku Ja’afar’s pleaded case in the statement of claim. It is trite law that parties are bound by their pleadings. Thus, the learned counsel cannot now be heard to submit otherwise,” he said.

The bank had claimed that pursuant to the terms of the irrevocable SBLC facility and the Documentary Credit Application, it was entitled to be reimbursed by the defendant the sum of US$999,772.44.

However, Tuanku Ja’afar in his statement of defence and in his suit claimed that after the establishment of the irrevocable SBLC, TEC had not notified him for some months of any progress of the TEC plant.

The former King said he grew apprehensive of the lack of progress on the TEC project and in a letter dated April 16, 1999, written to the bank, he asked for the irrevocable SBLC to be suspended.

The bank’s lead counsel Robert Lazar said the ruling meant that Standard Chartered’s Seremban branch could now withdraw the said amount from the former King’s fixed deposit account.

Later, Justice Abdul Hamid recorded his appreciation to his four fellow judges for their contributions in the preparation of the judgment and called photographers to snap their photographs and those of the lawyers inside the courtroom.

“I thank you all for your assistance and may God bless you all.

“We will allow pictures to be taken as it will go to archives. Fifty years later, (all) can see how young we look, “ he said to the laughter at the courtroom.

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