Causation in Misdelivery Cases: The “Maersk Katalin”

The original bill of lading (OBL) represents the cornerstone of security for international trade finance transactions. Lenders seek the OBL because it gives them a right to possession of the cargo; and if not possession of the cargo, a claim for misdelivery against shipowners who release the cargo without presentation of the OBL. A series of recent court decisions[[1]] from Singapore and UK beginning in 2022 however has signalled a weakening of misdelivery claims, with shipowners successfully resisting such claims (in summary judgment applications or on merits). These decisions have put the spotlight on the defence of causation of the loss, and in particular whether holders of OBLs (like banks) would have allowed discharge without presentation of OBLs. This examination of the lender’s conduct in turn brings into focus the multiple layers of security in the trade finance structure and the lender’s knowledge of cargo discharge without OBLs. The “Maersk Katalin”,[[2]] provided an occasion for the Singapore High Court to analyse the issue of causation at trial. There is much for both shipowners and lenders to learn from this case when dealing with an action for misdelivery.