Singapore Court Dismisses Appeal in Circular Oil Trade Case

Banque de Commerce et de Placements S.A. (BCP) of Switzerland has lost its appeal of a High Court of Singapore ruling in favour of China Aviation Oil (Singapore) Corp. Ltd. (CAO) in a case involving a chain of back-to-back sales of gasoil cargo and presentation of a letter of indemnity (LOI) in lieu of original bills of lading.

BCP (Issuer) had issued a USD 20.5 million LC in favour of CAO (Beneficiary), backing Zenrock Commodities’ (Applicant) purchase of gasoil. For a full account of the facts and the High Court of Singapore’s decision, see DCW summary of Banque De Commerce Et De Placements S.A. v. China Aviation Oil (Singapore) Corp. [2024].

Before the Singapore Court of Appeal, the claim was limited to deceit and centered on the premise that the representation in Beneficiary’s LOI was false and was made without an honest belief in the truth of that representation.[[1]]

As to whether the representation was false, Issuer contended it should be read to warrant the existence, authenticity, and validity of the B/Ls that had been endorsed at the time when the Beneficiary’s LOI was presented. Beneficiary maintained that the trial court judge had correctly interpreted the representation by reference to the transaction’s underlying context and the terms of the related documents, including the LOI. The appellate court determined that Issuer failed to prove that Beneficiary had no intention to endorse the B/Ls; rather, the court stated “there is every reason why [Beneficiary] would endorse the bills upon receipt.”   

As to whether the representation was fraudulently made, Issuer argued there must be literal interpretation of the representation’s meaning and that Beneficiary was “at the very least reckless as to the truth of the Representation because there was a ‘clear and present danger’ that the B/Ls would not have been endorsed to the order of [Issuer].” Beneficiary responded that it had genuinely and reasonably believed in the truth of the representation and had taken various steps to ascertain the truth of statements contained in the LOI. The appellate court that even if it had accepted Issuer’s interpretation and found the representation to be false, Issuer’s appeal would still fail for the lack of a finding of fraud. The court found that the evidence demonstrated that Beneficiary had an honest belief in the truth of the representation, in the manner that it subjectively understood it.  

[[1]]: Banque De Commerce Et De Placements S.A. v. China Aviation Oil (Singapore) Corp., [2025] SGCA 33 [Singapore], 7 July 2025.