The most speedy method available for the enforcement of a documentary credit is the issuing of a summons for summary judgment under R.S.C., Ord. 14. The recent decision of the Court of Appeal in Forestal Mimosa Ltd. v. Oriental Credit Ltd.1 defines the principle that is to guide a court which is asked by the defendant bank to grant it leave to defend. Another question discussed in the case is the approach to the construction of the Uniform Customs and Practice for Documentary Credits (1983 Revision).2 Is the Code to be read as an integral part of the letter of credit which incorporates it or is the document to be construed, in the first instance, as self-sufficient on the basis of its express terms with the Code being invoked only insofar as these terms are not at variance with it? Another recent decision of the Court of Appeal, Esal (Commodities) Ltd. v. Oriental Credit Ltd.,3 considers the effect of the purported incorporation of the Code in a performance bond. Both cases clarify some difficult points.

In Forestal Mimosa, the plaintiffs, who had sold some chemical materials used for tanning to Pakistani purchasers, were the beneficiaries of five letters of credit furnished by the buyers to effect payment of the price. Each letter of credit was issued by the D. Bank and was confirmed by the defendant bank in London. Bills of exchange were to be drawn on the buyers. Under prevailing practice the letters of credit should, accordingly, have included an engagement by the two banks to negotiate these bills without recourse. Instead, the banks engaged that “drafts accepted 4 within the terms of this credit will be duly honoured on maturity”.

When the documents were tendered, the defendant bank, acting on the D. Bank’s instructions, refused to accept the documents under the letter of credit, alleging certain discrepancies in the set. When the plaintiffs applied for summary judgment, Bingham, J., gave the defendant bank unconditional leave to defend, as he thought that its bank’s defence, concerning the construction of the letter of credit, was arguable. The Court of Appeal disagreed.

The first issue taken up by the Court of Appeal was the definition of the circumstances in which leave to defend ought to be granted. It was clear that leave to defend would be given if a defendant was able to show that he had an arguable defence. But what was the meaning of “arguable”? Could an issue of law be so regarded because it had been fairly and sensibly argued before the Court of Appeal or because it found favour with the trial judge? Sir John Megaw, who delivered the judgment of the Court of Appeal, thought that it was necessary to take a “broader