A legal battle over the payment of a €20 million irrevocable stand-by letter of credit issued by the Libyan National Commercial Bank has been resolved, according to Fimbank plc.

It said Azrow International Trading Ltd had “irrevocably and unconditionally” withdrawn the judicial case it had initiated in 2011 against Fimbank.

Fimbank, which had confirmed the stand-by letter of credit, said that in an agreement signed on June 27 Azrow also bound itself not to institute any other judicial proceedings against it on the matter.

Fimbank specified the agreement did not contemplate any payment or compensation in favour of Azrow.

The only undertakings binding the parties, it explained, consisted of the irrevocable withdrawals of the judicial case by Azrow and the appeal to the preliminary judgement issued by the Maltese courts on the part of Fimbank.

Notwithstanding that the Court of Appeal ruled on the preliminary pleas raised by the bank and confirmed Azrow’s capability to proceed with its case, Fimbank welcomed the agreement to withdraw judicial action.

It had always maintained that its position in rejecting the claim was a strong one “and, despite the fact that the substance and merits of its arguments had not yet started being considered in the proceedings, it greets this outcome, which closes the book on this litigation”.

The issue started when Azrow struck a business deal in 2010 to take charge of the construction of a motor vehicle recycling plant based in Libya.

The other party involved in the venture had committed itself to pay it through a letter of credit, which had been issued by the National Commercial Bank of Libya and confirmed in Malta by Fimbank.

At one point Fimbank informed Azrow that the Libyan bank had claimed some default in their internal procedures and Fimbank stopped honouring the letter of credit.

This led Azrow to take the legal action that has now been resolved.