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Trafigura Beheer V. Kookmin Bank Notes

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This is an extract of our Trafigura Beheer V. Kookmin Bank document, which we sell as part of our Conflict of Laws BCL Notes collection written by the top tier of Oxford students.

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TRAFIGURA BEHEER V. KOOKMIN BANK FACTS This dispute arises out of the provision of a letter of credit ('L/C') by the defendant ('Kookmin'), a Korean bank, as the issuing bank, in favour of the claimant, a Dutch company, ('Trafigura'), which sold a cargo of decant oil to a Korean company, Huron Co Ltd ('Huron'). When the cargo arrived at the discharge port in South Korea it was discharged without production of the bills of lading and the cargo was later released to Huron. Trafigura received payment under the letter of credit through an advising bank in London, ANZ Bank. The buyers, Huron, became insolvent and Kookmin has not been reimbursed by Huron for the purchase price of the cargo that was financed by the L/C. Kookmin has brought proceedings in Korea against Trafigura; the shippers of the cargo (Pertamina PT); the owners of the ship that carried the cargo from Indonesia to Korea and the managers of the vessel, in an attempt to recover its loss. In those proceedings Kookmin alleges (broadly speaking) that Trafigura, as beneficiary under the L/C, has acted in breach of various obligations it is said to owe to Kookmin, as the issuing bank of the L/C. Kookmin also asserts that Trafigura has acted fraudulently towards Kookmin. Kookmin alleges that Trafigura is therefore liable to Kookmin under Article 750 of the Korean Civil Code to pay damages to Kookmin which are equal to the amount of payment under the L/C, which was US$5,920,000. QUESTIONS

1. Are the issues raised by Kookmin concerning the 'security claim' to be regarded as 'issues relating to tort', for the purposes of section 9(1) of PILA, such that the rules set out in Part III of PILA must be applied to decide on which applicable law is to be used to determine the issues arising on the 'security claim'?

2. If those rules must be applied, then, in which country did the most significant element or elements of the events constituting the tort in question (i.e. those constituting the 'security claim') occur, for the purposes of section 11(2)(c) of PILA?

3. Are there any factors which connect the tort constituting the 'security claim' with a country different to that identified as a result of the exercise carried out under (2) above? If so, is the significance of those factors such that it makes it substantially more appropriate for the law of that other country to be the applicable law to determine the issues relating to the 'security claim', within section 12(1) of PILA?

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