In the recent decision of Winson Oil Trading Pte Ltd v Oversea-Chinese Banking Corporation and Standard Chartered Bank (Singapore) Limited  SGHC 220 (“Winson v OCBC & SCB”), the Singapore High Court allowed the banks’ defences to non-payment on letters of credit on grounds of fraud; the claim against Standard Chartered Bank (Singapore) Limited was for around US$30.4m. This is the first decision following from the collapse of Hin Leong Trading Pte Ltd and Zenrock Commodities Trading Pte Ltd in which a bank has successfully relied on the fraud exception to resist payment under a letter of credit.
The Singapore High Court found that the plaintiff trader, Winson Oil Trading Pte Ltd (“Winson”), made false representations in its letters of indemnity (“LOIs”). This included representations as to (i) the existence and validity of the bills of lading, and (ii) the cargoes having been shipped onboard the respective vessels. The Singapore High Court found that the fraud exception was satisfied in this case as Winson had made the false representations fraudulently, i.e. without belief in their truth (which includes recklessness, in the sense of being indifferent as to their truth).
The case was heard before the Honourable Justice Andre Maniam (“Maniam J”), and Shook Lin & Bok LLP represented Standard Chartered Bank (Singapore) Limited (“SCB”).
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For further information, please contact:
Sarjit Singh Gill, SC, Partner, ShookLin & Bok