{ "id": 4181473, "name": "SPEEDWAY MOTORSPORTS INTERNATIONAL LTD., Plaintiff v. BRONWEN ENERGY TRADING, LTD., BRONWEN ENERGY TRADING UK, LTD., DR. PATRICK DENYEFA NDIOMU, BNP PARIBAS (SUISSE) SA, BNP PARIBAS S.A., SWIFT AVIATION GROUP, INC., SWIFT AIR, LLC, SWIFT AVIATION GROUP, LLC, AND SWIFT TRANSPORTATION CO., INC., Defendants", "name_abbreviation": "Speedway Motorsports International Ltd. v. Bronwen Energy Trading, Ltd.", "decision_date": "2011-02-15", "docket_number": "No. COA09-558", "first_page": "564", "last_page": "575", "citations": [ { "type": "official", "cite": "209 N.C. App. 564" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "574 S.E.2d 31", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2002, "pin_cites": [ { "page": "33", "parenthetical": "\"North Carolina case law establishes firmly that an appeal from a motion to dismiss for improper venue based upon a jurisdiction or venue selection clause dispute deprives the appellant of a substantial right that would be lost.\" (internal quotation marks omitted)" } ], "opinion_index": 0 }, { "cite": "154 N.C. App. 639", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9251482 ], "year": 2002, "pin_cites": [ { "page": "641", "parenthetical": "\"North Carolina case law establishes firmly that an appeal from a motion to dismiss for improper venue based upon a jurisdiction or venue selection clause dispute deprives the appellant of a substantial right that would be lost.\" (internal quotation marks omitted)" } ], "opinion_index": 0, "case_paths": [ "/nc-app/154/0639-01" ] }, { "cite": "581 F. Supp. 1131", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3648081 ], "year": 1984, "pin_cites": [ { "page": "1138", "parenthetical": "noting that purpose of \"independence principal\" is \"to preserve the usefulness of the letter of credit as a means of facilitating commercial dealings\"" } ], "opinion_index": 0, "case_paths": [ "/f-supp/581/1131-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 25-5-103", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 4, "year": 2009, "pin_cites": [ { "page": "(d)" }, { "page": "(d)" } ], "opinion_index": 0 }, { "cite": "730 F.2d 19", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 15922 ], "year": 1984, "pin_cites": [ { "page": "24" } ], "opinion_index": 0, "case_paths": [ "/f2d/730/0019-01" ] }, { "cite": "281 S.E.2d 401", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "303 N.C. 550", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574881, 8574862, 8574895 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/nc/303/0550-02", "/nc/303/0550-01", "/nc/303/0550-03" ] }, { "cite": "278 S.E.2d 558", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1981, "pin_cites": [ { "page": "560" }, { "page": "560-61" }, { "page": "561" }, { "page": "561", "parenthetical": "emphasis added" }, { "page": "561" } ], "opinion_index": 0 }, { "cite": "52 N.C. App. 284", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 12170163 ], "weight": 3, "year": 1981, "pin_cites": [ { "page": "286" }, { "page": "286-87" }, { "page": "288" } ], "opinion_index": 0, "case_paths": [ "/nc-app/52/0284-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 25-5-102", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "37 Geo. Wash. Int'l L. Rev. 51", "category": "journals:journal", "reporter": "Geo. Wash. Int'l L. Rev.", "weight": 2, "year": 2005, "pin_cites": [ { "page": "65", "parenthetical": "\"The term 'guarantee' is ubiquitous in international commerce and banking. It refers to an instrument that is functionally equivalent to a standby letter of credit.\" (internal quotation marks omitted)" }, { "parenthetical": "emphasis added" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 984, "char_count": 29651, "ocr_confidence": 0.748, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.13739295225320086 }, "sha256": "09cf56bbd5853de3cd0e0052406985e6b4c029bdb26217ce63416a4bba73aba4", "simhash": "1:69cafe2d5c520df6", "word_count": 4746 }, "last_updated": "2023-07-14T17:06:47.704823+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges ROBERT C. HUNTER and CALABRIA concur." ], "parties": [ "SPEEDWAY MOTORSPORTS INTERNATIONAL LTD., Plaintiff v. BRONWEN ENERGY TRADING, LTD., BRONWEN ENERGY TRADING UK, LTD., DR. PATRICK DENYEFA NDIOMU, BNP PARIBAS (SUISSE) SA, BNP PARIBAS S.A., SWIFT AVIATION GROUP, INC., SWIFT AIR, LLC, SWIFT AVIATION GROUP, LLC, AND SWIFT TRANSPORTATION CO., INC., Defendants" ], "opinions": [ { "text": "GEER, Judge.\nDefendant BNP Paribas S.A. (\u201cBNPP France\u201d) moved to dismiss claims asserted against it by plaintiff Speedway Motorsports International Ltd. (\u201cSMIL\u201d) on the grounds that SMIL was bound by a forum selection clause requiring that all litigation take place in Geneva, Switzerland. BNPP France appeals from the trial court\u2019s denial of that motion. BNPP France concedes that no agreement exists between it and SMIL containing a forum selection clause, but contends that it should be deemed a third party beneficiary of a contract containing the Geneva forum selection clause.\nBecause this commercial dispute arises out of letter of credit transactions, we are bound by the well-established principle that contracts related to a letter of credit transaction are independent. We cannot accept BNPP France\u2019s invitation that we view two contracts as \u201cintertwined\u201d despite the controlling law that they are \u201cindependent.\u201d We, therefore, affirm the trial court\u2019s denial of BNPP France\u2019s motion to dismiss.\nFacts\nIn 2006, SMIL, which is \u201cin the business of petroleum products transactions,\u201d opened an account with BNP Paribas (Suisse) SA (\u201cBNPP Suisse\u201d) to conduct that business. This case arises out of SMIL\u2019s use of its BNPP Suisse account in connection with a series of contracts pursuant to which SMIL agreed to guarantee lines of credit issued to finance petroleum purchases by other parties during 2007.\nIn early 2007, defendants Swift Aviation Group, Inc., Swift Air, LLC, Swift Aviation Group, LLC, and Swift Transportation Co., Inc. (collectively \u201cSwift\u201d) were attempting to negotiate a long-term supply contract with Kuwait Petroleum Corporation (\u201cKPC\u201d) pursuant to which Swift would purchase petroleum products from KPC. KPC was not, however, willing to enter into a long-term business relationship with Swift until Swift had proven its ability to successfully execute shorter-term spot contracts.\nUpon the advice of BNPP France, Swift engaged defendants Bronwen Energy Trading, Ltd. and Bronwen Energy 'Hading UK, Ltd. (collectively \u201cBronwen\u201d) to assist Swift in executing the spot contracts with KPC. SMIL, which is headquartered in Charlotte, North Carolina, agreed to provide Bronwen with the financial assistance needed to obtain letters of credit for the purchase of the oil under the spot contracts.\nOn 12 July 2007, Bronwen and SMIL entered into an agreement relating to the delivery of 80,000 metric tons of Jet A-l (\u201cthe First Oil Contract\u201d). Under the First Oil Contract, SMIL agreed to provide BNPP France with a guarantee of $12,750,000.00 to allow Bronwen to secure from BNPP France one or more letters of credit to effectuate the purchase of the Jet A-l from KPC. SMIL and Bronwen also agreed: \u201cThe funded amount guaranteed will be maintained in SMIL\u2019s account with [BNPP Suisse]. SMIL will execute such document(s) as reasonably required by [BNPP France] to effectuate the guarantee of the funded amount.\u201d\nTo fulfill its obligations under the First Oil Contract, SMIL executed a guarantee (\u201cthe Corporate Guarantee\u201d) to BNPP France later that day. The next day, 13 July 2007, SMIL\u2019s president, William R. Brooks, also emailed the Corporate Guarantee to BNPP Suisse. BNPP France rejected as insufficient SMIL\u2019s Corporate Guarantee on 13 July 2007 and requested that SMIL instead issue instructions to BNPP Suisse to deliver a first demand guarantee to BNPP France.\nAccordingly, later that day, 13 July 2007, SMIL sent instructions (\u201cthe First Instructions\u201d) to BNPP Suisse to issue a first demand guarantee of $11,750,000.00 in favor of BNPP France with respect to the fulfillment of the First Oil Contract. The First Instructions stated: \u201c[Bronwen] has a financing facility for principal amount of $100,000,000 USD which has been granted by [BNPP France] pursuant to an agreement dated dated [sic] 13 December 2006 (the \u2018Credit Facility\u2019). SMIL has a business relationship with [Bronwen] pursuant to a separate agreement, a true and correct copy of which is attached hereto as Exhibit A, and which is incorporated herein by reference. The Guarantee is to be issued solely with respect to any amounts drawn by [Bronwen] pursuant to the Credit Facility in [Bronwen\u2019s] fulfillment of Exhibit A. SMIL will maintain a sufficient amount in its account with [BNPP Suisse] to satisfy the Guarantee.\u201d Exhibit A was a copy of the First Oil Contract executed the day before on 12 July 2007.\nAfter SMIL sent the First Instructions to BNPP Suisse, but still on 13 July 2007, SMIL and Bronwen entered into an amended oil contract (\u201cAmended Oil Contract\u201d), which, by its terms, \u201csupersede^]\u201d the First Oil Contract executed the previous day. The Amended Oil Contract reduced to $11,750,000.00 the amount guaranteed by SMIL to BNPP France for Bronwen\u2019s benefit. Like the First Oil Contract, it provided that the guaranteed amount would be maintained in SMIL\u2019s account with BNPP Suisse.\nThree days later, on 16 July 2007, BNPP Suisse acknowledged receipt of the First Instructions, but it informed SMIL that it \u201cneed[ed] a request with the actual wording of the guarantee\u201d BNPP Suisse was to issue to BNPP France, as opposed to the more general wording of the First Instructions. BNPP Suisse included a draft of a first demand guarantee for SMIL\u2019s review. In addition to referencing the purchase by Bronwen of 80,000 metric tons of Jet A-l, as governed by the First Oil Contract and the Amended Oil Contract, the draft also referred to a purchase of 60,000 metric tons of Gasoil from KPC. The last line of the first demand guarantee stated: \u201cThis guarantee is subject to Swiss Law, place of jurisdiction is Geneva.\u201d\nLater that day, SMIL emailed BNPP Suisse a revised version of the first demand guarantee. The revised version was substantially similar to BNPP Suisse\u2019s draft. It confirmed that SMIL agreed to be responsible for Bronwen\u2019s repayment of the $11,750,000.00 credit issued to KPC, pursuant to the Amended Oil Contract, and it included the Geneva forum selection clause. It deleted the reference to the 60,000 metric tons of Gasoil that was not part of the Amended Oil Contract. SMIL\u2019s president, Mr. Brooks, signed the document after adding the following sentence: \u201cAll claims are to be sent to my attention at [Mr. Brooks\u2019 email address], and by fax to [Charlotte, North Carolina fax number].\u201d SMIL also noted in its email attaching the revised \u201cguarantee form\u201d that it had also attached \u201ca superseding agreement [the Amended Oil Contract] between [SMIL] and [Bronwen] that is to be used in substitution for the Exhibit A [SMIL] originally sent to [BNPP Suisse].\u201d\nOn appeal, the parties do not agree on the purpose or effect of the 16 July 2007 draft of the first demand guarantee sent by Mr. Brooks to BNPP Suisse. BNPP Suisse refers to the document as an actual guarantee by SMIL in favor of BNPP Suisse. SMIL insists that this draft of the first demand guarantee was merely an \u201cApproval Document\u201d that was approving the form of the first demand guarantee BNPP Suisse was going to send to BNPP France. SMIL contends that this Approval Document, which contained the Geneva forum selection clause, was not intended to supersede the First Instructions. In SMIL\u2019s second amended complaint, however, SMIL referred to the 16 July 2007 document as the \u201cSupplemental Guarantee.\u201d For purposes of this opinion, we will adopt SMIL\u2019s description of this document and refer to it as the \u201cSupplemental Guarantee.\u201d\nMeanwhile, also on 16 July 2007 (but apparently before BNPP Suisse received SMIL\u2019s response with the Supplemental Guarantee), BNPP Suisse went ahead and issued a first demand guarantee to BNPP France by which BNPP Suisse promised that it would be responsible for Bronwen\u2019s repayment of the letters of credit to BNPP France. The first demand guarantee referenced both the 80,000 metric tons of Jet A-l and the 60,000 metric tons of Gasoil, and it contained the Geneva forum selection clause.\nSubsequently, on 19 July 2007, Bronwen and SMIL entered into a second oil contract (\u201cthe Second Oil Contract\u201d). Under the Second Oil Contract, SMIL agreed to provide a first demand guarantee to BNPP France for an additional $4,000,000.00 to allow Bronwen to secure letters of credit to effectuate the purchase of 68,000 metric tons of Gasoil. Like the First and Amended Oil Contracts, it provided that the guaranteed amount would be maintained in SMIL\u2019s account with BNPP Suisse.\nOn 23 July 2007, pursuant to the Second Oil Contract, SMIL sent BNPP Suisse new instructions (\u201cthe Second Instructions\u201d) directing BNPP Suisse to increase the amount of the first demand guarantee in favor of BNPP France by $4,000,000.00, bringing the total amount to $15,750,000.00. The Second Instructions stated: \u201cSMIL has new business with [Bronwen] pursuant to a separate agreement [the Second Oil Contract], a true and correct copy of which is attached hereto as Exhibit A, and which is incorporated herein by reference. The additional $4,000,000 of the Guarantee is to be issued solely with respect to any amounts drawn by [Bronwen] pursuant to the Credit Facility in [Bronwen\u2019s] fulfillment of Exhibit A.\u201d\nApproximately two weeks later, on 7 September 2007, Bronwen and SMIL entered into yet another contract (\u201cthe Third Oil Contract\u201d). Under the Third Oil Contract, SMIL agreed to provide a first demand guarantee to BNPP France in the amount of $12,000,000.00 to allow Bronwen to secure letters of credit to effectuate the purchase of three shipments of 65,000 metric tons of Gasoil each. Like the previous Oil Contracts, the Third Oil Contract provided that the guaranteed amount would be maintained in SMIL\u2019s account with BNPP Suisse.\nThe same day, SMIL sent BNPP Suisse instructions (\u201cthe Third Instructions\u201d) directing BNPP Suisse to reduce the amount of the first demand guarantee to $12,000,000.00. The Third Instructions stated: \u201cSMIL has new business with [Bronwen] pursuant to a separate agreement [the Third Oil Contract], a true and correct copy of which is attached hereto as Exhibit A, and which is incorporated herein by reference. The $12,000,000 Guarantee is to be issued solely with respect to any amounts drawn by [Bronwen] pursuant to the Credit Facility in [Bronwen\u2019s] fulfillment of Exhibit A.\u201d\nA week later, on 14 September 2007, SMIL sent BNPP Suisse \u201cupdated\u201d instructions (\u201cthe Fourth Instructions\u201d). The Fourth Instructions reiterated the $12,000,000.00 amount of the first demand guarantee and stated: \u201cThis Guarantee will cover all current business SMIL has with [Bronwen] pursuant to separate agreements [the Amended, Second, and Third Oil Contracts], true and correct copies of which are attached hereto as Exhibit A, and which are incorporated herein by reference. The $12,000,000 Guarantee is to be issued solely with respect to any amounts drawn by [Bronwen] pursuant to the Credit Facility in [Bronwen\u2019s] fulfillment of the contracts attached as Exhibit A.\u201d\nIn early November 2007, BNPP France determined that losses related to the Oil Contracts exceeded $17,000,000.00. BNPP France notified Bronwen and SMIL that BNPP France believed it had a right to draw on SMIL\u2019s account at BNPP Suisse to cover its losses. SMIL disputed this claim, reminding BNPP France that the first demand guarantee only covered letters of credit issued to effectuate purchase of oil under the Oil Contracts and insisting that Bronwen\u2019s debt was not related to the purchase price of oil under the pertinent Oil Contracts. Because BNPP France nonetheless maintained that it had a right to draw on the first demand guarantee, SMIL announced on 6 November 2007 that it was terminating the first demand guarantee. The next day, however, BNPP Suisse notified SMIL that it had received a demand from BNPP France. Despite SMIL\u2019s protest, BNPP Suisse paid BNPP France $12,000,000.00 on 9 November 2007 and immediately debited SMIL\u2019s account for that amount.\nSMIL filed a complaint on 22 April 2008, an amended complaint on 29 May 2008, and a second amended complaint on 25 September 2008, asserting claims for, inter alia, breach of contract against Bronwen and Swift; wrongful honor against BNPP Suisse; fraud and negligent misrepresentation against BNPP France; breach of demand guarantee and conversion against BNPP Suisse and BNPP France; equitable subrogation to BNPP France\u2019s claims against Bronwen and Swift; and unfair and deceptive trade practices against all defendants. SMIL also asserted that it was entitled to an accounting from all defendants.\nBNPP France moved to dismiss SMIL\u2019s claims against BNPP France on the grounds that (1) the court lacked personal jurisdiction over BNPP France, (2) SMIL\u2019s claims arose out of an express guarantee that any claims must be litigated in Geneva, Switzerland, and (3) SMIL had failed to state a claim against BNPP France. Before the trial court decided BNPP France\u2019s motion, SMIL moved to amend its complaint. The court granted SMIL\u2019s motion, and SMIL filed its second amended complaint on 25 September 2008. BNPP France subsequently filed a revised motion to dismiss, dropping its challenge to personal jurisdiction, but maintaining that the suit must be litigated in Geneva, Switzerland and that SMIL had failed to state a claim against BNPP France.\nOn 21 January 2009, the Business Court entered an order granting in part and denying in part BNPP France\u2019s motion to dismiss. The order contained no findings of fact but decreed that the court:\n1. DENIES the Motion to Dismiss based on the purported existence of mandatory forum selection provisions in two contract documents requiring trial of the parties\u2019 dispute in Geneva, Switzerland, as the Court (without deciding whether, in fact, the provisions are mandatory) concludes that these parties are not bound by these provisions;\n2. GRANTS the Motion to Dismiss for failure to state a claim as to [SMIL\u2019s] Fourth Claim for Relief alleging breach of contract, as the Court finds as a matter of law that [SMIL] has failed to allege the existence and breach of any contract between [SMIL] and [BNPP France]; and\n3. DENIES the Motion to Dismiss for failure to state a claim as to the remaining claims alleged by [SMIL].\nBNPP France appealed the order to this Court.\nDiscussion\nOn appeal, BNPP France contends only that the trial court erred in concluding that SMIL is not bound by the Geneva forum selection clause contained in the Supplemental Guarantee. Although SMIL vigorously argues that the Supplemental Guarantee was not a guarantee from SMIL to BNPP Suisse but rather was simply approving the form of the guarantee to be issued by BNPP Suisse to BNPP France, we assume, without deciding, for purposes of this appeal, that this document was a binding guarantee provided by SMIL to BNPP Suisse.\nThe Supplemental Guarantee was emailed by Mr. Brooks to BNPP Suisse in Geneva. It initially stated: \u201cThis is to confirm you [sic] that we hereby irrevocably guarantee and agree to be answerable and responsible towards you for the due repayment by [Bronwen] of the Credit Facilities limited to the issuance of one or several documentary credits for the purchase from Kuwait Petroleum Corporation (\u201cKPC\u201d) of 80\u2019000 metric tons +/- 10 pet of Jet A-l (Contract reference S/MD/K/080/07) you have granted or will grant to them in your books . . . .\u201d The Supplemental Guarantee was limited to $11,750,000.00 and further provided that payment of any amount claimed up to that limit would be made \u201cin accordance with your instructions without any objection or entering into an argument and without any previous notice of dishonour or any other notice, upon receipt by us of your first demand by duly authenticated swift message certifying that the amount you are claiming from us on the strength of our present guarantee is due to you by [Bronwen] as a result of their failure to repay you said sum within the time fixed by you.\u201d\nThe Supplemental Guarantee stated that it would remain valid until 5:00 p.m. on 15 September 2007 and that \u201cin the event of no claim being received by us hereunder on or prior to 15 September 2007, our present undertaking will be of right null and void after that date.\u201d All claims were to be sent to \u201cmy attention\u201d at an email address belonging to Mr. Brooks, SMIL\u2019s president, and by fax to a Charlotte, North Carolina fax number. The Supplemental Guarantee closed with a final provision: \u201cThis guarantee is subject to Swiss Law, place of jurisdiction is Geneva[.]\u201d It was then signed by Mr. Brooks.\nThere is no dispute that the' Supplemental Guarantee, if a binding agreement, was an agreement between SMIL and BNPP Suisse. BNPP France chose to reject SMIL\u2019s Corporate Guarantee made directly to BNPP France and insisted, instead, that SMIL arrange for BNPP Suisse to issue a first demand guarantee to BNPP France. BNPP France explains in its brief: \u201cSMIL executed a guarantee to [BNPP] Suisse, which, in turn, issued a guarantee to BNPP France. The Guarantees contain identical forum selection and choice of law provisions that state clearly and unequivocally: \u2018THIS GUARANTEE IS SUBJECT TO SWISS LAW, PLACE OF JURISDICTION IS GENEVA.\u2019 \u201d\nBNPP France concedes that SMIL did not enter into any agreement directly with BNPP France that included a forum selection clause. BNPP France argues, however, that it was entitled to the benefit of the Geneva forum selection clause in the Supplemental Guarantee because the Supplemental Guarantee and the First Demand Guarantee from BNPP Suisse to BNPP France were \u201cinextricably intertwined, manifesting SMIL\u2019s intent and expectation to be bound by the Geneva forum selection clause contained in both Guarantees.\u201d\nUnderstanding the nature of demand guarantees is critical to a resolution of BNPP France\u2019s appeal. A \u201cguarantee\u201d by a bank \u2014 a term primarily used in international commerce and banking \u2014 is the functional equivalent of a standby letter of credit. See David J. Barru, How to Guarantee Contractor Performance on International Construction Projects: Comparing Surety Bonds with Bank Guarantees and Standby Letters of Credit, 37 Geo. Wash. Int\u2019l L. Rev. 51, 65 (2005) (\u201cThe term \u2018guarantee\u2019 is ubiquitous in international commerce and banking. It refers to an instrument that is functionally equivalent to a standby letter of credit.\u201d (internal quotation marks omitted)). As one commentator has explained, \u201c[t]here are a multitude of names that refer to these bank-issued undertakings, including bank guarantees, independent guarantees, independent bank guarantees, international bank guarantees, demand guarantees, international demand guarantees, simple demand guarantees, first-demand guarantees, performance guarantees, and, in Latin America, guarantia.\u201d Id. (emphasis added).\nBNPP Suisse\u2019s \u201cfirst demand guarantee\u201d to BNPP France was a bank guarantee to which we apply the law of letters of credit. See N.C. Gen. Stat. \u00a7 25-5-102 cmt. 6 (2009) (\u201c[C]ertain documents labelled [sic] \u2018guarantees\u2019 in accordance with European (and occasionally, American) practice are letters of credit.\u201d). See also Barru, supra, at 63 (\u201cCourts and commentators generally agree that the law of letters of credit applies to bank guarantees.\u201d).\nAs this Court acknowledged 30 years ago, letters of credit \u201chave been used for centuries to facilitate commercial transactions.\u201d Sunset Invs., Ltd. v. Sargent, 52 N.C. App. 284, 286, 278 S.E.2d 558, 560, disc. review denied, 303 N.C. 550, 281 S.E.2d 401 (1981). \u201cThe very object of a letter of credit is to provide a near foolproof method of placing money in its beneficiary\u2019s hands when he complies with the terms contained in the letter itself \u2014 when he presents, for example, a shipping document that the letter calls for or (as here) a simple written demand for payment. Parties to a contract may use a letter of credit in order to make certain that contractual disputes wend their way towards resolution with money in the beneficiary\u2019s pocket rather than in the pocket of the contracting party.\u201d Itek Corp. v. First Nat\u2019l Bank of Boston, 730 F.2d 19, 24 (1st Cir. 1984).\nThis Court has explained: \u201cA letter of credit is an engagement by a bank, a finance company or other issuer made at the request of its customer or some other person who seeks to secure an obligation to a third person which will arise in the future. The engagement is that if certain things are done, either by way of presentation of pieces of paper or simply by making a demand for payment of a draft or acceptance, payment or acceptance will take place.\u201d Sunset Invs., 52 N.C. App. at 286-87, 278 S.E.2d at 560-61. Typically, a letter of credit transaction involves three contracts: \u201c1) the contract between the issuer (bank) and the account party (customer) for the issuance of the credit; 2) the letter of credit itself, a contract between the issuer and the beneficiary; and 3) the underlying agreement between the beneficiary'and the account party.\u201d Id. at 287, 278 S.E.2d at 561.\nIn this case, the first contract was between BNPP Suisse and its customer/account-holder, SMIL. BNPP Suisse agreed to issue the letter of credit to BNPP France on behalf of SMIL. BNPP Suisse chose to ensure that it would be reimbursed by SMIL for any payment made to BNPP France on the letter of credit by obtaining the Supplemental Guarantee from SMIL. BNPP Suisse then entered a contract with BNPP France (the second contract) by issuing the demand guarantee (or letter of credit) to BNPP France, the beneficiary. BNPP France, in turn, issued a letter of credit to finance the Oil Contracts (the third contract) \u2014 an agreement conditioned on SMIL\u2019s securing that letter of credit by having BNPP Suisse issue the demand guarantee to BNPP France.\nAs this Court recognized in Sunset Invs., \u201cone bright star\u201d exists regarding letter of credit transactions: \u201c[T]he basic aspect of the successful use of letters of credit lies in recognizing at the threshold that every letter of credit involves separate and distinct contracts; and that the contract between the issuing bank and the beneficiary to pay money to the beneficiary upon demand (and documentation if called for) must be kept chaste [and] independent of the underlying contract between the purchaser of the letter and the beneficiary.\u201d Id. at 288, 278 S.E.2d at 561 (emphasis added). This \u201cbasic aspect,\u201d id., of letters of credit is known as the \u201cindependence principle.\u201d See also Barru, supra, at 77-78 (\u201cThe independence principle, also referred to as the \u2018autonomy principle\u2019 is at the core of letter of credit or bank guarantee law.\u201d).\nPhrased differently, this principle establishes that:\nthe letter of credit or bank guarantee is independent of the underlying contractual commitment \u2014 that is, the transaction that the credit is intended to secure \u2014 between the applicant and the beneficiary; the credit is also independent of the relationship between the bank and its customer, the applicant. The issuing bank is required to pay the beneficiary on proper demand, made in strict conformance with the terms of the guarantee or letter of credit, regardless of actual events surrounding the underlying contract between the beneficiary and the applicant. The bank must likewise pay on proper demand regardless of any dispute with its customer, the applicant, or concern that the customer may default on the underlying reimbursement agreement.\nBarru, supra, at 78 (emphasis added). This principle has also been included in the Uniform Commercial Code: \u201cRights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or non-performance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary.\u201d N.C. Gen. Stat. \u00a7 25-5-103(d) (2009).\nIn this case, by insisting that SMIL arrange with BNPP Suisse to have a demand guarantee \u2014 or letter of credit \u2014 issued from BNPP Suisse to BNPP France, BNPP France obtained \u201cthe certainty and speed of payment\u201d that letters of credit ensure. N.C. Gen. Stat. \u00a7 25-5-103 cmt. 1. BNPP France would be paid \u2014 and was paid \u2014 by BNPP Suisse regardless whether BNPP Suisse was reimbursed by SMIL or of the status of the Oil Contracts. See Barru, supra, at 78 (\u201cThe bank must likewise pay on proper demand regardless of any dispute with its customer, the applicant, or concern that the customer may default on the underlying reimbursement agreement.\u201d). BNPP France thus benefitted from the independence principle.\nNow, however, in order to take advantage of the forum selection clause in SMIL\u2019s contract with BNPP Suisse, BNPP France argues that the SMIL/BNPP Suisse contract and the BNPP Suisse/BNPP France contract are \u201cinextricably intertwined.\u201d We cannot reconcile the \u201cindependence principle\u201d with BNPP France\u2019s \u201cintertwining\u201d contract theory. These two contracts \u2014 because they are part of a letter of credit transaction- \u2014 -are \u201cseparate and distinct contracts.\u201d Sunset Invs., 52 N.C. App. at 288, 278 S.E.2d at 561. Any rights and obligations of BNPP Suisse to BNPP France\u2014 by virtue of the demand guarantee\u2014 \u201care independent of the existence\u201d of the contract or arrangement between SMIL and BNPP Suisse. N.C. Gen. Stat. \u00a7 25-5-103(d).\nThe cases cited by BNPP France as permitting a non-signatory to a contract to enforce a provision in that contract \u2014 a third-party beneficiary theory \u2014 do not involve the independence principle. BNPP France urged in oral argument that the independence principle is limited to prohibiting BNPP France from refusing to honor its letter of credit because of a dispute between SMIL and Bronwen/Swift. BNPP France has provided this Court with no authority \u2014 either in its brief or through a Memorandum of Additional Authority \u2014 supporting its contention that the contracts comprising a letter of credit transaction are independent for some purposes, but are not for other purposes. In the absence of such authority, we are unwilling to risk undermining letter of credit transactions.\nAs the commentary to North Carolina\u2019s version of the Uniform Commercial Code warns, \u201cOnly staunch recognition of [the independence] principle by the issuers and the courts will give letters of credit the continuing vitality that arises from the certainty and speed of payment under letters of credit. To that end, it is important that the law not carry into letter of credit transactions rules that properly apply only to secondary guarantees or to other forms of engagement.\u201d N.C. Gen. Stat. \u00a7 25-5-103 cmt. 1 (emphasis added). See also Universal Marine Ins. Co. v. Beacon Ins. Co., 581 F. Supp. 1131, 1138 (W.D.N.C. 1984) (noting that purpose of \u201cindependence principal\u201d is \u201cto preserve the usefulness of the letter of credit as a means of facilitating commercial dealings\u201d).\nAccordingly, we reject BNPP France\u2019s contention that it may be a third party beneficiary of the Supplemental Guarantee\u2019s Geneva forum selection clause. We hold that the independence principle governing letters of credit dictates that the Supplemental Guarantee from SMIL to BNPP Suisse is separate and distinct from the demand guarantee from BNPP Suisse to BNPP France. BNPP France has, therefore, failed to demonstrate that SMIL is subject to any forum selection clause with respect to its claims against BNPP France. The trial court properly denied BNPP France\u2019s motion to dismiss based on that clause.\nAffirmed.\nJudges ROBERT C. HUNTER and CALABRIA concur.\n. Although this appeal is interlocutory, it is properly before the Court because it involves a substantial right that would be lost in the absence of an immediate appeal. See Cable Tel Servs., Inc. v. Overland Contracting, Inc., 154 N.C. App. 639, 641, 574 S.E.2d 31, 33 (2002) (\u201cNorth Carolina case law establishes firmly that an appeal from a motion to dismiss for improper venue based upon a jurisdiction or venue selection clause dispute deprives the appellant of a substantial right that would be lost.\u201d (internal quotation marks omitted)).\n. The parties disagree regarding the effect of the expiration date. We again assume, without deciding, that the Supplemental Guarantee remained in effect.", "type": "majority", "author": "GEER, Judge." } ], "attorneys": [ "Parker Poe Adams & Bernstein LLP, by Michael G. Adams and William L. Esser TV, for plaintiff-appellee.", "Bell, Davis & Pitt, P.A., by William K. Davis, Edward B. Davis, and Michael D. Phillips, for defendant-appellant BNP Paribas S.A." ], "corrections": "", "head_matter": "SPEEDWAY MOTORSPORTS INTERNATIONAL LTD., Plaintiff v. BRONWEN ENERGY TRADING, LTD., BRONWEN ENERGY TRADING UK, LTD., DR. PATRICK DENYEFA NDIOMU, BNP PARIBAS (SUISSE) SA, BNP PARIBAS S.A., SWIFT AVIATION GROUP, INC., SWIFT AIR, LLC, SWIFT AVIATION GROUP, LLC, AND SWIFT TRANSPORTATION CO., INC., Defendants\nNo. COA09-558\n(Filed 15 February 2011)\nJurisdiction\u2014 forum selection clause \u2014 letter of credit transactions independent\nThe trial court did not err by denying defendant French Bank\u2019s motion to dismiss plaintiffs claims based on a forum selection clause contained in a supplemental guarantee requiring that all litigation take place in Geneva, Switzerland. Defendant conceded that no agreement existed between the two parties containing a forum selection clause even though defendant contended that it should be deemed a third-party beneficiary. Contracts relating to a letter of credit transaction are independent, and thus, the supplemental agreement from plaintiff to defendant Swiss Bank was separate and distinct from the demand guarantee from defendant Swiss Bank to defendant French Bank.\nAppeal by defendant from order entered 21 January 2009 by Judge Albert Diaz in Mecklenburg County Superior Court. Heard in the Court of Appeals 28 October 2009.\nParker Poe Adams & Bernstein LLP, by Michael G. Adams and William L. Esser TV, for plaintiff-appellee.\nBell, Davis & Pitt, P.A., by William K. Davis, Edward B. Davis, and Michael D. Phillips, for defendant-appellant BNP Paribas S.A." }, "file_name": "0564-01", "first_page_order": 574, "last_page_order": 585 }