BNP Paribas v Bandung Shipping: Wrongful Cargo Discharge & Letters of Indemnity

In BNP Paribas v Bandung Shipping Pte Ltd, the High Court of Singapore addressed BNP Paribas' claim against Bandung Shipping for wrongful discharge of cargo (edible palm oil and RBD palm oelin) at Kandla, India, without presentation of the bills of lading. The cargo was released against letters of indemnity provided by Lanyard Foods Limited, who failed to pay for the cargo, leading to Shweta International Pte Ltd's default on its credit line from BNP Paribas. The court found in favor of BNP Paribas, holding Bandung Shipping liable for breach of contract and conversion.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for BNP Paribas with costs and damages to be assessed by the Registrar.

1.3 Case Type

Admiralty

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

BNP Paribas sued Bandung Shipping for wrongful cargo discharge against letters of indemnity. The court addressed title to sue and consent to delivery.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
BNP ParibasPlaintiffCorporationJudgment for PlaintiffWonPeter Gabriel, Murali Pany
Bandung Shipping Pte LtdDefendantCorporationJudgment Against DefendantLostKenneth Tan S.C., Wang Wei Chi
Shweta International Pte LtdThird PartyCorporationDefault Judgment EnteredDefault
Lanyard Foods LimitedThird PartyCorporationDefault Judgment EnteredDefault

3. Judges

Judge NameTitleDelivered Judgment
Belinda Ang Saw EanJudgeYes

4. Counsels

Counsel NameOrganization
Peter GabrielGabriel Peter & Partners
Murali PanyGabriel Peter & Partners
Kenneth Tan S.C.Kenneth Tan Partnership
Wang Wei ChiKenneth Tan Partnership

4. Facts

  1. BNP Paribas financed Shweta International's purchase of edible oils.
  2. Bandung Shipping issued bills of lading for the carriage of the cargo.
  3. The bills of lading were made out to order and endorsed in blank to BNP Paribas.
  4. Bandung Shipping discharged the cargo at Kandla without presentation of the bills of lading.
  5. The cargo was released against letters of indemnity provided by Lanyard Foods Limited.
  6. Lanyard Foods Limited did not pay for the cargo.
  7. Shweta International defaulted on its credit line from BNP Paribas.

5. Formal Citations

  1. BNP Paribas v Bandung Shipping Pte Ltd, Suit 476/2001, [2003] SGHC 111

6. Timeline

DateEvent
Shweta International Pte Ltd incorporated in Singapore
BNP Paribas granted a US$ 10 million credit line to Shweta International Pte Ltd
Shweta voyage chartered the vessel “Victoria Cob”
Shweta voyage chartered the vessel “Victoria Cob”
Bill of lading PGG/IND-01 dated
Bill of lading PGG/IND-05 dated
Bill of lading PGG/IND-10 dated
Bills of lading SIN(BEL)/KNL nos. 9 to 12, 19, 20, 27 to 28 all dated
Relevant voyage charterparty between Bandung and Shweta dated
Pan Century Edible Oils Sdn Bhd was the person with immediate right to possession of the cargo on
Bill of lading PGG/IND-04 dated
Bills of lading PGG/IND/03 both dated
BNP financed Shweta’s purchase on
Bills of lading SIN(BTM)/KAN nos. 1 to 26, 29 to 30 all dated
“Victoria Cob” arrived in Kandla
Discharge commenced
Discharge completed
Murtaza Trading Company (Singapore) Pte Ltd was the person with the right to immediate possession of the cargo on
Low learned that the cargo shipped on board “Vincita’ had been delivered at Batam to Shweta against the latter’s letter of indemnity
Shweta indorsed in blank and delivered the Batam bills of lading to BNP
Low visited India with her colleague on field investigations
BNP recalled all bills of lading from the collecting banks
Bandung entered default judgment against the 1st and 2nd Third Party
Judgment Date

7. Legal Issues

  1. Wrongful Discharge of Cargo
    • Outcome: The court found Bandung Shipping liable for wrongful discharge of cargo.
    • Category: Substantive
    • Sub-Issues:
      • Delivery without presentation of bills of lading
      • Delivery against letters of indemnity
  2. Title to Sue
    • Outcome: The court found that BNP Paribas had title to sue as the lawful holder of the bills of lading.
    • Category: Procedural
    • Sub-Issues:
      • Holder of bill of lading
      • Pledgee rights
  3. Consent to Delivery
    • Outcome: The court found that BNP Paribas did not consent to the delivery of cargo against letters of indemnity.
    • Category: Substantive
    • Sub-Issues:
      • Authority under Trust Receipt
      • Implied consent

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract
  • Conversion

10. Practice Areas

  • Admiralty
  • Shipping
  • Commercial Litigation
  • Banking

11. Industries

  • Shipping
  • Banking
  • Commodities Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Sze Hai Tong Bank v Rambler Cycle Co LtdPrivy CouncilYes[1959] AC 576United KingdomCited for the principle that a shipowner is liable to the holder of a bill of lading if goods are surrendered to a person other than the holder.
The HoudaCourt of AppealYes[1994] 2 Lloyd’s Rep 541United KingdomCited for the principle that delivery without production of the bill of lading constitutes a breach of contract.
The Sormovskiy 3068High CourtYes[1994] 2 Lloyd’s Rep 266United KingdomCited for the principle that a shipowner must not deliver goods otherwise than against presentation of an original bill of lading.
The Future ExpressNot specifiedYes[1992] 1 Lloyd’s Rep 252Not specifiedCited for the principle that the contract of carriage continues and the bill of lading remains effective until the goods are delivered to the person entitled under the bill of lading.
North Western Bank Ltd v John Poynter Son and MacdonaldsHouse of LordsYes[1895] AC 56United KingdomCited for the principle that the release of original bills of lading under Trust Receipts does not put an end to the pledge.
Re David Allester, LimitedNot specifiedYes[1922] 2 CH 211United KingdomCited for the principle that the release of original bills of lading under Trust Receipts does not put an end to the pledge.
Official Assignee of Madras v Mercantile Bank of India LtdPrivy CouncilYes[1935] AC 53United KingdomCited for the principle that the release of original bills of lading under Trust Receipts does not put an end to the pledge.
The CherryCourt of AppealYes[2003] 1 SLR 471SingaporeCited for the principle that to succeed in conversion, BNP must be able to show its entitlement to possession or delivery as at the time of the conversion.
The Stone GeminiNot specifiedYes[1999] 2 Lloyd’s Rep 255Not specifiedCited for the principle that a letter of indemnity is not an authority by the holder of the bearer bill of lading for the shipowner to deliver the cargo to whoever produces a letter of indemnity.
The Nordic FreedomNot specifiedYes[2001] 1 SLR 232SingaporeCited for the principle that a clause allowing discharge against a letter of indemnity does not provide a defense to wrongful discharge.
The AtlasNot specifiedNo[1996] 1 Lloyd’s Law Rep 642United KingdomReferred to the practice of issuing switch bills of lading as fraught with danger.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Sales of Goods Act (Cap 393)Singapore
Bills of Lading Act (Cap.384)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Bills of Lading
  • Letters of Indemnity
  • Wrongful Discharge
  • Trust Receipt
  • Pledgee
  • Switch Bills
  • Batam Bills
  • Holder of Bill of Lading
  • Voyage Charterparty
  • D/P Collection

15.2 Keywords

  • bills of lading
  • wrongful discharge
  • letter of indemnity
  • shipping
  • admiralty
  • singapore
  • bnp paribas
  • bandung shipping
  • title to sue
  • conversion

16. Subjects

  • Admiralty
  • Shipping
  • Banking
  • International Trade
  • Bills of Lading

17. Areas of Law

  • Admiralty Law
  • Shipping Law
  • Contract Law
  • Bills of Lading