Enforcing A Bank's Right Under A Pledged Bill Of Lading

The "Yue You 902" and another matter [2019] SGHC 106

In this case, the Singapore High Court ("Court") allowed Overseas-Chinese Banking Corporation Limited ("Bank") to enforce its pledge over original bills of lading in its possession as security over a trust receipt loan. The Court clarified the law in relation to the rights of a trade finance bank over pledged original bills of lading, especially in the case where the trade finance bank only became the lawful holder of the original bills of lading after the cargo was discharged without the production of the original bills of lading.

Facts

The Bank was given a pledge over 14 original bills of lading ("BLs") to secure a trust receipt loan granted to the buyer ("Buyer") for the purchase price of the cargo. The cargo was discharged by the defendant shipowner ("Defendant") against a letter of indemnity provided by its contractual charterer without production of the BLs. The Buyer defaulted on the trust receipt loan and the Bank demanded delivery of the cargo from the Defendant as lawful holders of the BLs. As the cargo was already discharged, the Bank claimed against the Defendant for breach of contract of...