Queen’s Bench Division

Published April 9, 2008

Grosvenor Casinos Ltd v National Bank of Abu Dhabi

Banking rules relating to international cheque collections created no privity of contract between the principal and the collecting bank.

Mr Justice Flaux so held in the Commercial Court of the Queen’s Bench Division on March 17, 2008, when dismissing a claim by Grosvenor Casinos Ltd for, inter alia, breach of a contract said to have been made directly between Grosvenor Casinos and the defendant, National Bank of Abu Dhabi, by virtue of the relevant cheque collection being undertaken pursuant to the Uniform Rules for Collections (1995 Revision, International Chamber of Commerce Publication No 522).

HIS LORDSHIP said that he had reached the firm conclusion that the uniform rules did not create privity of contract between the principal and the collecting bank.

Collection of cheques and other documents was conducted between banks, specifically between the remitting bank and the collecting bank, in a highly structured and formalised manner and the rules were intended to reflect and support that approach and, so far as possible, achieve uniformity of collection practice across international boundaries.

The setting out in article 3 of the “parties to a collection” was intended to do no more than ensure that all those parties were bound by the rules and foster uniformity of collection practice.

The article was not intended to create a contractual relationship between parties who would not otherwise be in such a relationship pursuant to the relevant local law, here English law.

The rules were intended to govern existing contractual relationships, not create such relationships where they did not otherwise exist. There was nothing in the other articles which led to a contrary conclusion.

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