Banking and Finance Litigation

We have extensive experience litigating disputes involving banks and a broad range of financing devices including letters of credit, syndicated loan agreements, trust indentures, aircraft and equipment leases and interest rate swaps.

Baker & McKenzie lawyers have earned an international reputation for their expertise with respect to commercial and standby letters of credit as counsel to bank and nonbank parties and as expert witnesses. Our lawyers have actively participated in the drafting of Revised Article 5 of the Uniform Commercial Code and the United Nations Convention on Independent Guarantees and Stand-by Letters of Credit and co-author the annual survey of developments in letter of credit law for The Business Lawyer. Firm lawyers also have extensive experience litigating large lender-liability cases.

Recent representative matters include the following:

• In the first published opinion on the scope and interpretation of the master Interest Rate & Currency Exchange Agreement of the International Swaps and Derivatives Association, the firm successfully enforced an interest rate swap option contract exercised by the firm's French bank client.
• In a challenge brought under the federal Trust Indenture Act of 1939, the firm successfully defended the reorganization of a foreign issuer of $100 million in notes issued pursuant to trust indentures based on the American Bar Foundation Model Debenture Indenture Provisions.
• In the first case applying revised UCC section 5-109 to an injunction against honor of a letter of credit, we successfully represented the beneficiary in vacating an injunction and in recovering the full amount of a $7,120,000 letter of credit, payment of which had been enjoined in the state court and subsequently in the federal bankruptcy court.
• When the applicant for a letter of credit issued by a Tunisian bank sued our client, a New York bank that had confirmed the letter of credit, for wrongfully honoring the credit and paying $1 million to the beneficiary, we successfully defended and had the complaint dismissed. We successfully argued that the applicant had no legal relationship with and therefore no standing to sue the confirming bank.
• We represented an Illinois bank in litigation resulting from a massive check-kite fraud raising issues under the Expedited Funds Availability Act, Federal Reserve Board Regulation CC and Article 4 of the Uniform Commercial Code. The litigation culminated in a decision from the court of appeals highly favorable to our client holding that Regulation CC preempts the check return deadlines of Article 4 of the Uniform Commercial Code in a check-kiting scenario.
• We represented three Australian banks in a case decided by the Illinois Supreme Court holding unconstitutional the Illinois nonreciprocal license fee imposed upon foreign branch banks from countries, such as Australia, that do not provide reciprocal licensing authority to Illinois state or national banks.
• Representing a bankers' association, the firm filed an amicus brief in the United States Supreme Court concerning the bankruptcy law effect of standby letters of credit held by beneficiary-sellers receiving payments directly from applicant-buyers.
• In an action seeking in excess of $21 million for the breach of an aircraft lease, the firm won the reversal on appeal of an order dismissing the complaint based on Colorado River abstention in favor of related proceedings in pending Greece, and the rejection on appeal of a forum non conveniens defense. Litigation on the merits is still pending.
• Firm attorneys defended American international merchant bank in a suit to enforce a guarantee ("aval") of promissory notes issued by Mexican borrowers in favor of a Mexican bank. Issues included validity of notes under Mexican law and the relationship between proceedings in New York and proceedings in bankruptcy in Mexico.
• We successfully defended a German bank against an action brought in New York by American purchasers of certificates of deposit issued by a Swiss bank in which the German bank had a shareholder interest. The district court's dismissal of the lawsuit was affirmed by the Second Circuit Court of Appeals.
• The firm represented two American banks in defense of a lawsuit brought by a failed Venezuelan cruise line arising out of the issuance of Venezuelan government securities. Issues included complex questions of personal jurisdiction in New York and Venezuelan legal issues. Our clients recovered over ninety percent of the amount of the loans extended by them.