Preliminary injunction against standby letter of credit payment justified by irreparable harm, fraud, and public interest concerns.

A preliminary injunction was considered appropriate to restrain payment under standby letters of credit where the plaintiff showed irreparable harm, because any recovery after wrongful payment would depend on litigation and might be uncollectable. The balance of hardship favoured relief, as the plaintiff's loss from payment outweighed any harm to the issuing bank or to the commercial utility of letters of credit. The record also supported a prima facie case of fraud in the transaction under the governing commercial law, and the surrounding export-license suspension was treated as equivalent to constructive cancellation for force majeure purposes. Public interest favoured interim relief because it discouraged fraud and aligned with the Executive branch position reflected in the relevant Treasury regulations.

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Issues: Whether a preliminary injunction should be granted restraining payment on standby letters of credit on the grounds of irreparable harm, inadequate legal remedy, likelihood of success on the merits, and public interest.

Analysis: The plaintiff showed that payment on the letters of credit would expose it to harm not adequately compensable by money damages, because any recovery would depend on litigation against the Iranian side and could be uncollectable. The Court also found that the balance of injury favored relief, since the injury to the plaintiff from wrongful payment outweighed any harm to the issuing bank or the general commercial utility of letters of credit. On the merits, the record supported a prima facie case of fraud in the transaction under the governing commercial law, and the Court treated the export-license suspension in the surrounding circumstances as equivalent to constructive cancellation for force majeure purposes. The public interest was held to favor interim relief because it discouraged fraud and conformed to the Executive branch position reflected in the Treasury regulations governing standby letter of credit litigation.

Conclusion: The plaintiff established all requirements for preliminary relief, and the requested injunction was warranted.

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