It is well-recognised that demand guarantees and other financial instruments of a like nature have assumed an extremely important status in modern commerce. Hence, 'the importance of allowing banks to honour their obligations under irrevocable credits without judicial interference' has been emphasised in the Loomcraft case: 'In Intraco Ltd v Notis Shipping Corporation (The Bhoja Trader) [1981] 2 Lloyd's Rep 256 (CA) Donaldson LJ, after upholding the refusal of the Court below to interfere with the seller's right to call upon a bank to make payment under its guarantee where fraud was not involved, observed at 257: letters of credit and bank guarantees given in circumstances “Irrevocable such as that they are equivalent to an irrevocable letter of credit have been said to be the lifeblood of commerce. Thrombosis will occur if, unless fraud is involved, the Courts intervene and thereby disturb the mercantile practice of treating rights thereunder as being equivalent to cash in hand." Lord Denning MR in Power Curber International Ltd v National Bank of Kuwait SAK [1981] 3 All ER 607 (CA) at 613b sounded a similar warning: "No foreign seller would supply goods to that country on letters of credit because he could no longer be confident of being paid. No trader would accept a letter of credit issued by a bank of that country if it might be ordered by its courts not to pay.”' The Bank does not allege that the City has fraudulently in any way. It is therefore not necessary to decide the fraud exception or to determine the scope of its application. In the absence of supporting allegations, it is also not necessary to decide whether there are not further exceptions to the principle of autonomy, such as 'restrictions in the underlying contract' about the circumstances under which a
It is well-recognised that demand guarantees and other financial instruments of a like nature have assumed an extremely important status in modern commerce. Hence, 'the importance of allowing banks to honour their obligations under irrevocable credits without judicial interference' has been emphasised in the Loomcraft case: 'In Intraco Ltd v Notis Shipping Corporation (The Bhoja Trader) [1981] 2 Lloyd's Rep 256 (CA) Donaldson LJ, after upholding the refusal of the Court below to interfere with the seller's right to call upon a bank to make payment under its guarantee where fraud was not involved, observed at 257: “Irrevocable letters of credit and bank guarantees given in circumstances such as that they are equivalent to an irrevocable letter of credit have been said to be the lifeblood of commerce. Thrombosis will occur if, unless fraud is involved, the Courts intervene and thereby disturb the mercantile practice of treating rights thereunder as being equivalent to cash in hand." Lord Denning MR in Power Curber International Ltd v National Bank of Kuwait SAK [1981] 3 All ER 607 (CA) at 613b sounded a similar warning: "No foreign seller would supply goods to that country on letters of credit because he could no longer be confident of being paid. No trader would accept a letter of credit issued by a bank of that country if it might be ordered by its courts not to pay.”' The Bank does not allege that the City has fraudulently in any way. It is therefore not necessary to decide the fraud exception or to determine the scope of its application. In the absence of supporting allegations, it is also not necessary to decide whether there are not further exceptions to the principle of autonomy, such as 'restrictions in the underlying contract' about the circumstances under which a