NIBL Winning A Legal Battle

Winning a Bank Guarantee case in Italian Court against an Italian company CMC, Nepal Investment Bank Ltd, (NIBL) proves itself as a professional Nepalese bank with international standard

June 10, 2020, 2:23 p.m. Published in Magazine Issue: VOL. 13 No. 18, June 19, 2020 ( Asadh 5, 2077) Publisher: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

In the last 18 years, Nepal Investment Bank Ltd (NIBL), formerly a multinational Nepal Indo-Suez Bank has made enormous progress achieving successes one after another in banking sectors in Nepal and abroad.

NIBL adds a feather in the cap this week when it won the legal battle to recoup Rs.2.044 billion against Italian firm cooprtive Muratori e Cementisti di Ravenna (CMC). Following the hearing, the Italian High Court ruled in NIBL favor in a case involving CMC’s performance guarantee to Tanahu Hydropower Ltd.

As the NIBL is under the chairmanship of Prithvi Bahadur Pande, a highly professional banker with high social standee, the bank hired highly competitive and qualified lawyers from Nepal and Italy to contest the case.

As it had lost the case earlier when a single bench of a lower Italian court had ruled against NIBL, the bank carefully choose the well-qualified team to move the high court.

With a strong legal team, NIBL argued that the lower court’s decision was unilateral and was passed without considering the bank’s argument.

Along with hiring a competent law firm from Italy, the bank hires senior advocate Dr. Gandhi Pandit, a well known corporate lawyer and graduate of reputed Colombia University, from Nepal.

Senior advocate Dr. Pandit who pleaded the case for the bank with Italian lawyer was able to turn the case in the favor of NIBL. It took sixteen months. Senior advocate Dr. Pandit said that NIBL will receive the bank guarantee amount from Intesa Sanpaolo Bank within a week.

“We had urged the Italian high court to refer to the international law related to bank guarantee as per the Uniform Rule for Demand Guarantee 7582,” said Dr. Gandhi. “The law refers to a set of guidelines first adopted by the International Chamber of Commerce in 1991 that set forth generally agreed-upon rules governing securing payments and meeting performance guarantees in contracts among global trading partners.”

He added that it would help guide similar cases that had been pending for long. Although NIBL has fought the case for the country, it stood alone in this whole period without any support from the government. It was a lonely battle.

From Italy, advocate Antinio Fractecelli pleaded to represent Tanahu Hydropower Company and advocate Enrico Castellano pleaded on behalf of Nepal Investment Bank Ltd.

Development Of Case

The dispute began when the contractor company, CMC, had stopped working according to its contract with Tanahu Hydro Limited after it filed for bankruptcy in Italy. This forced Tanahu Hydropower Ltd to claim the guarantee amount from NIBL in March last year which NIBL paid.

On September 2018 Intesa Sanpaolo SPA, Bologna, Italy had issued counter guarantees to NIBL for the amount of NPR 851,416,127 and Euro 8,749,239 (Total amount NPR. 2.10 billion) in favor of Tanahu Hydropower Limited on account of their client CooperativaMuratori and Cementisti (CMC) - C.M.C. di Ravenna Societa. However, in February 2019 NIBL received a claim from Tanahu Hydropower Ltd. stating that their contractor, CMC had breached its obligations under the contract.

As NIBL lodged the claim to Intesa Sanpaolo SPA for the Bank guarantee amount, Istesa Sanpaolo declined to pay the amount citing the court order from Tribunale Di Bologna, Italy.

NIBL, however, settled the claim immediately of Tanahu Hydro Power Ltd. as it was bound to pay as per the conditions of the guarantee. In the subsequent hearings, the court had refused to revoke the order that prevented Intesa Sanpaolo SPA to pay the counter guarantees to NIBL.

After a lengthy court case, on 9 June 2020, a full-bench of Tribunale Di Bologna has revoked its previous decree that had prevented Intesa, San Paolo to pay the bank guarantee amount to NIBL. Thus, the quashing of a previous court order enables NIBL to effectively receive the bank guarantee amount from the Italian bank.

Although the role played by Tanahu Hydropower Ltd is not visible at large scale, it has backed the NIBL to bring back the money to Nepal. To provide the necessary support to the case, Tanahu Hydropower Limited had sent a high-level team led by Managing Director Pradeep Kumar Thike and other officials to Italy during the hearing.

Silver Lining

Wining the case in Italian court, NIBL has shown to the international banking sector that NBIL now has capable and competent teams that can stand at the international level. This is also a silver lining for other Nepalese banks that are also facing similar kinds of disputes on the bank guarantee.

NIBL When Credit Agricole Indosuez, a subsidiary of one of the largest banking group in the global banking business, decided to leave Nepal and sale its share of Nepal-Indosuez, the difficult thing for French Management was to select a professional Nepali group who could maintain professional efficiency, credibility and prestige of the bank.

Having proven professional quality working in executive-level at Nepal Rastra Bank, Rastrya Banijya Bank and Himalayan Bank, French group entrusted Prithvi Bahadur Pande led Nepalese companies compromising of bankers, professionals, industrialists and businessman to take over its 50 percent share as a professional and highly qualified Nepali group in 2002.

Establishing as a leading professional bank in Nepal maintaining its international stature, the current chairperson of Nepal Investment Bank Limited Pande proves the capacities and skills of Nepali bankers as per the international standard.

Managed by a team of experienced bankers and professionals having proven track record, NIBL establishes itself as a Nepali Bank which has been offering international standard banking service in Nepal.

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