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FIMBank - Azrow withdraws legal action
Azrow will not institute judicial proceedings against FIMBank with respect to stand-by letter of credit.
5 July 2012, 12:00am
Azrow International Trading Limited has "irrevocably and unconditionally" withdrawn a judicial case it initiated in 2011 against FIMBank, according to a company statement issued by FIMBank.
Azrow, the Maltese company, was allowed by a court to carry on with its legal battle for €20.4 million from FIMbank, as promised in a letter of credit, after an appeals court threw out the bank's claim that it was bound to the company by other agreements.
The letter of credit is between Azrow International Trading Company and Fimbank.
Azrow claimed the payment of a €20 million irrevocable stand-by Letter of credit issued by National Commercial Bank, Libya was confirmed by FIMBank.
"Azrow has bound itself not to institute whether now or in the future any other judicial proceedings against FIMBank with respect to the stand-by letter of credit, the facility agreement entered into between Azrow and FIMBank, or any matter connected to or otherwise related to either the Stand-by Letter of credit or the facility agreement," FIMBank said.
The agreement does not contemplate any payment or compensation in favour of Azrow.
The bank had argued in the First Hall of the Civil Court that its relations with the company was regulated by separate agreements such as a facility letter and a pledge of bank account agreement.
This court, however, ruled that the beneficiary of an irrevocable standby letter of credit was entitled to take legal action against the confirming bank for payment under the letter of credit.
The payment was independent of any financial agreement the company might have with the bank. FIMBank appealed this decision.
The background to the case is a business deal struck by Azrow in 2010 to take charge of the construction of a motor vehicle recycling plant in Libya.
The other party undertook to pay it through a letter of credit for the full value of the project, €29 million.
The letter of credit was issued by the National Commercial Bank of Libya and received and confirmed in Malta by FIMBank.
The first claims made by Azrow against the letter of credit were honoured by FIMBank.
However, FIMBank then told Azrow that the Libyan bank had claimed some default in their internal procedures.
FIMBank therefore stopped honouring the letter of credit and, as a result, Azrow took legal action.
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