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Supreme Court of Canada enforces fraud exception to block Eurobank call on Canadian counter‑guarantee in Greek defence offsets dispute, prioritising Quebec fraud findings over Greek judgments

Published on: 09 April 2024

Published by a Law360 reporter
Legal News
Article summary

Supreme Court of Canada dismisses Eurobank appeal

On 5 April 2024, the Canadian Supreme Court, by a 7–2 majority, turned down Eurobank Ergasias SA’s appeal in its case against Bombardier. The majority found in favour of Montreal‑based Bombardier and the National Bank of Canada, concluding that the bank had to withhold payment to Eurobank, the beneficiary of the letter of credit, owing to fraudulent conduct by the Hellenic Ministry of National Defence.

The Court stated that the fraud exception governed the Greek bank’s demand for payment under the Canadian letter of counter‑guarantee. As Eurobank, as beneficiary, was aware of and participated in HMOD’s fraud, that misconduct was attributable to the bank itself.

In dissent, two justices would have allowed the appeal, set aside the appellate rulings, and dismissed Bombardier’s action.

The dispute stems from 1998, when Bombardier entered into a procurement contract with the Hellenic Ministry of Defence for the sale of ten firefighting aeroplanes, according to the Court...

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