This month, DCW unpacks the legal and practical shifts reshaping trade finance interpretation. Why are ICC Opinions becoming increasingly scarce?
Writing as a trade finance professional with a long background in the business, Dave Meynell offers his personal views on factors contributing to the sharp reduction in ICC Official Opinions issued over the past several years.
With the causation defence being increasingly engaged in misdelivery cases, there is a great deal for banks and shipowners to learn from The “Maersk Katalin” case.
Issuer sued beneficiary alleging sham transaction and breach of warranties; beneficiary and prior sellers lodged indemnification claims.
To support its purchase[[1]] of 260,000 barrels of gasoil (± 5%), Zenrock Commodities Trading Pte Ltd. (Buyer/Applicant) applied for and caused Banque de Commerce et de Placements S.A., (Issuer) based in Geneva, to issue a UCP600 letter of credit for USD 20.5 million in favour of China Aviation Oil (Singapore) Corp. (Seller/Beneficiary). The LC was confirmed by UBS Switzerland A.G. (Confirming Bank). In making its undertaking, Issuer believed Buyer/Applicant would on-sell the gasoil to PetroChina International (East China) Co. Ltd. (Second Buyer) and Buyer/Applicant would assign its expected proceeds from Second Buyer to Issuer. This “self-liquidating” transaction would cover Issuer’s financial exposure under the credit.
Apparently, the lead plaintiff, Banque de Commerce et de Placements S.A., DIFC Branch, (Issuer Dubai Office) had a back-to-back LC with Issuer, as Buyer/Applicant was Issuer Dubai Office’s customer.[[2]] The LC was available with Confirming Bank by deferred payment 45 days from B/L date and called for, among other documents, Seller/Beneficiary’s commercial invoice and original B/Ls.[[3]] In the event Original B/Ls (OBLs) and other documents were unavailable at the time of presentation, Seller/Beneficiary could present its invoice and letter of indemnity (LOI) in a form prescribed by LC field 47A(10).
With the causation defence being increasingly engaged in misdelivery cases, there is a great deal for banks and shipowners to learn from The “Maersk Katalin” case.
Four years after the Association of Banks in Singapore (ABS) roll out of a “Code of Best Practices – Commodity Financing”
Applicant appealed Singapore trial court decision granting partial injunction on performance bond.
Bench trial for negligent misrepresentation claim by beneficiary against advising bank.
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