The ICC Banking Commission conducted its final meeting of 2024 virtually via Teams on 20-21 November. Four separate portions of the event open to Banking Commission members and ICC National Committee representatives took place.
In Crédit Agricole Corporate & Investment Bank, Singapore Branch v. PPT Energy Trading Co Ltd [2022] SGHC(I) 1, the Singapore International Commercial Court (SICC) denied an LC issuer’s claims for an injunction, declaration, and reimbursement of USD 23,662,732 paid under the LC and determined that the Beneficiary is entitled to retain the funds.
In April 2020, Credit Agricole issued an LC in favor of PPT Energy on behalf of Zenrock Commodities Trading Pte Ltd. for Zenrock’s purchase of crude oil from PPT which would be on-sold to Total Oil Trading SA. The LC required presentation of original bills of lading and other shipping documents relating to the cargo, but in absence of the documents, PPT could instead provide its signed invoice and its signed Letter of Indemnity (LOI) to Credit Agricole. An LOI was subsequently sent to Credit Agricole, but the bank suspected fraud after receiving an email from Total Oil stating that Zenrock appeared to have assigned the proceeds of sale of the crude oil twice over to different banks. Thereafter, Credit Agricole neither paid nor sent a notice of refusal and obtained an interim injunction from the High Court prior to the payment due date.
It emerged that Zenrock had engaged in a series of “round-tripping” contracts involving four other trading parties for the purchase, on-selling, and reselling of the cargo. Ultimately, Zenrock assigned the Total Oil receivable twice, firstly to ING Bank NV with regard to an LC the bank had opened for Zenrock, and secondly to Credit Agricole.
After the interim injunction Credit Agricole had obtained was discharged in November 2020, payment was made to PPT under the LC issued by Credit Agricole against PPT’s provision of a bank guarantee issued in favour of Credit Agricole by Bank of China, Singapore Branch. SICC decided that Credit Agricole’s claims for an injunction, declaration and an order for reimbursement of the sum paid under the LC to PPT all failed and that PPT is entitled to retain that sum and is likely to recover interest for being kept out of the sum between 5 June 2020 and 18 November 2020.
The case is the first ever decided by the SICC that focused on a letter of credit dispute since the SICC’s launch in January 2015. The case will be summarized in a future DCW issue, accompanied by in-depth analysis of its implications for the LC community.
