Civil Court Vacates Injunction On Letter Of Credit

Mohsin Tayebaly & Co. is representing a Chinese exporter of solar panels and other commodities in a Civil Suit filed by a local importer in Karachi.

The matter arises out of a commercial dispute concerning the supply of solar modules and payment under an irrevocable Letter of Credit. The plaintiff had obtained an ad-interim injunction restraining payment under the Letter of Credit despite partial shipment having been effected.

Our team represented Changzhou Foreign Trade Corporation and successfully demonstrated before the Court that the injunction was not sustainable in law, particularly in light of the well-established principles of strict compliance and the autonomy of Letters of Credit governing international trade transactions.

By a detailed order dated March 07, 2026, the Court dismissed the plaintiff’s application under Order XXXIX Rules 1 & 2 CPC and vacated the ad-interim injunction, holding that no prima facie case of fraud or material discrepancy had been established and that disputes arising from the underlying contract could not justify restraining payment under a Letter of Credit.

Consequently, the transaction under the Letter of Credit was allowed to proceed in accordance with law.

The order reinforces the settled judicial position that courts must exercise restraint in interfering with documentary credit mechanisms that underpin international commercial and banking transactions.

Our team in this matter was led by Abdul Ahad Nadeem, Associate Partner, and included Zubair Hashmi, Associate.