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In The “STI Orchard”, an in rem admiralty action, the High Court of Singapore denied a financing bank’s motion for summary judgment and granted the vessel owner unconditional leave to defend.
The case, The “STI Orchard”, [2022] SGHCR 6 [Singapore], arises from the collapse of oil trading giant Hin Leong Trading (Pte) Ltd (Hin Leong) and is one of many pending actions by a financing bank seeking to rely on the security apparently afforded to it by bills of lading in its possession. In The “STI Orchard”, Oversea-Chinese Banking Corporation Limited (OCBC) financed Hin Leong’s purchase of cargo shipped on board vessel owner’s “STI Orchard” under a set of three bills of lading dated 28 February 2020. After Hin Leong defaulted on its obligation to reimburse, OCBC sued STI Orchard Shipping Company Limited (Vessel Owner) for delivery of the cargo to Hin Leong without presentation of the B/Ls. Intervener, Winson Oil Trading Pte Ltd (Winson Oil), voyage-chartered “STI Orchard” and was also named in the case.
In its application, OCBC sought summary judgment against Vessel Owner for USD 13,608,000, the invoice value of the cargo, or alternatively, for an interlocutory judgment to be entered against Vessel Owner with damages to the assessed.
In taking their position, Vessel Owner and Winson Oil had submitted to the Court that Vessel Owner should be granted unconditional leave to defend on three main grounds that demonstrate a fair probability of bona fide defences against OCBC’s claim:
“First, OCBC did not become the holder of the Bills of Lading in good faith; Second, the Bills of Lading were spent by the time they were indorsed to OCBC; Third, OCBC consented, authorised, or acquiesced to the delivery of the Cargo without presentation of the Bills of Lading.”
High Court of Singapore Judge Navin Anand, Assistant Registrar, found these assertions persuasive. In deciding to grant Vessel Owner unconditional leave to defend, Anand stated: “The issues in this case merit further investigation, the chief of which is whether the Bills of Lading were intended to be relied on as security for OCBC’s financing in the underlying transaction.”
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