Abani Trading v BNP Paribas: Letter of Credit Compliance & Bank's Duty of Care
In Abani Trading Pte Ltd v BNP Paribas, the Singapore High Court addressed two appeals arising from a District Judge's decision regarding a letter of credit. Abani Trading, the plaintiff, appealed the dismissal of its claim that BNP Paribas, the defendant bank, breached its duty of care in examining documents presented under the letter of credit. BNP Paribas appealed the award of costs on a standard basis instead of an indemnity basis. The High Court dismissed Abani's appeal, finding no breach of duty by BNP Paribas, and allowed BNP Paribas' appeal, awarding costs on an indemnity basis. The case concerned a dispute over a bill of lading and whether it complied with the terms of the letter of credit.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed in District Court Appeal No 19 of 2013 and appeal allowed in District Court Appeal No 24 of 2013.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on whether BNP Paribas breached its duty of care in examining documents under a letter of credit. Appeal dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Abani Trading Pte Ltd | Plaintiff, Appellant | Corporation | Claim Dismissed | Lost | Sureshan s/o T Kulasingam |
| BNP Paribas | Defendant, Respondent | Corporation | Costs awarded on an indemnity basis | Won | Toh Kian Sing, Jonathan Wong |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| George Wei | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Sureshan s/o T Kulasingam | Sureshan LLC |
| Toh Kian Sing | Rajah & Tann LLP |
| Jonathan Wong | Rajah & Tann LLP |
4. Facts
- Abani applied to BNP for a letter of credit to be issued in favor of Metal Market.
- The letter of credit was issued in the amount of US$80,665.
- The letter of credit was governed by the UCP 600.
- A bill of lading dated 30 December 2008 was issued by Caretta.
- BNP debited Abani’s account on 16 January 2009.
- Another bill of lading was issued later, which indicated that the shipping date was 2 January 2009.
- Abani brought an action against BNP to recover US$64,431.53.
5. Formal Citations
- Abani Trading Pte Ltd v BNP Paribas and another appeal, District Court Appeal Nos 19 and 24 of 2013, [2014] SGHC 111
6. Timeline
| Date | Event |
|---|---|
| Abani applied to BNP for a letter of credit. | |
| BNP issued a letter of credit in favor of Metal Market. | |
| Bill of lading issued by Caretta. | |
| Another bill of lading issued indicating the shipping date. | |
| BNP received the bill of lading and other relevant documents from Fortis Bank. | |
| BNP debited Abani’s account. | |
| Hearing took place. | |
| Hearing took place. | |
| DJ dismissed Abani’s claim. | |
| DJ ordered costs in favor of BNP to be taxed on a standard basis. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Duty of Care
- Outcome: The court held that BNP Paribas did not breach its duty of care.
- Category: Substantive
- Sub-Issues:
- Failure to properly examine documents
- Acceptance of non-conforming documents
- Related Cases:
- [1983] 1 AC 168
- [1992] 3 SLR(R) 146
- [1986] 1 Lloyd’s Rep 311
- Compliance with Letter of Credit Terms
- Outcome: The court held that the bill of lading presented was a conforming document.
- Category: Substantive
- Sub-Issues:
- Conforming documents
- Forwarder bill of lading
- Clean on board bill of lading
- Related Cases:
- [1983] 1 AC 168
- Costs on an Indemnity Basis
- Outcome: The court allowed BNP Paribas' appeal and awarded costs on an indemnity basis.
- Category: Procedural
- Sub-Issues:
- Contractual indemnity clause
- Failure to plead indemnity costs
- Manifest injustice
- Related Cases:
- [1988] 1 SLR(R) 76
- [2008] 1 SLR(R) 237
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Failure to exercise due care
10. Practice Areas
- Commercial Litigation
- Banking Litigation
- International Trade Finance
11. Industries
- Banking
- Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| United City Merchants (Investments) Ltd v Royal Bank of Canada | House of Lords | Yes | [1983] 1 AC 168 | United Kingdom | Cited for the principle of autonomy of letters of credit from the underlying sale contract. |
| Brody, White and Co Inc v Chemet Handel Trading (S) Pte Ltd | Court of Appeal | Yes | [1992] 3 SLR(R) 146 | Singapore | Cited for the principle of autonomy of irrevocable credits in Singapore law. |
| The Bhoja Trader; Intraco v Notis Shipping Corp of Liberia | Not specified | Yes | [1981] 2 Lloyd’s Rep 256 | N/A | Cited to emphasize the importance of not disturbing the mercantile practice of treating rights under documentary credits as equivalent to cash in hand. |
| Westpac Banking Corporation v South Carolina National Bank | Privy Council | Yes | [1986] 1 Lloyd’s Rep 311 | New South Wales | Cited to support the principle that it is not the bank's function to speculate about the underlying facts when considering whether to pay against documents. |
| Rafsanjan Pistacho Producers Co-operative v Bank Leumi | Not specified | Yes | [1992] 1 Lloyd’s Rep 513 | N/A | Cited to support the principle that each letter of credit transaction is a separate and autonomous transaction. |
| Fortis Bank SA/NV v Indian Overseas Bank | Not specified | Yes | [2010] 2 Lloyd’s Rep 641 | N/A | Cited regarding the persuasive weight of opinions from the International Chamber of Commerce Banking Commission. |
| Fortis Bank SA/NV v Indian Overseas Bank | English Court of Appeal | Yes | [2011] 2 Lloyd’s Rep 33 | England | Cited regarding the international nature of the UCP and the commercial practice of international bankers and traders. |
| Mizuho Corporate Bank Ltd v Woori Bank | High Court | Yes | [2004] SGHC 219 | Singapore | Cited regarding the persuasive value of DOCDEX decisions, even when one party did not participate in the process. |
| Hadley v Baxendale | Not specified | Yes | (1854) 9 Exch 341 | N/A | Cited for the principle of remoteness of damages. |
| Susilawati v American Express Bank Ltd | High Court | Yes | [2008] 1 SLR(R) 237 | Singapore | Cited regarding the need to plead for indemnity costs specifically. |
| Susilawati v American Express Bank Ltd | Court of Appeal | Yes | [2009] 2 SLR(R) 737 | Singapore | Cited regarding the award of costs on a contractual basis. |
| OMG Holdings Pte Ltd v Pos Ad Sdn Bhd | Court of Appeal | Yes | [2012] 4 SLR 231 | Singapore | Cited regarding the court's discretion to allow an unpleaded point to be raised if no injustice is caused. |
| Thornton v Shoe Lane Parking | Not specified | Yes | [1971] 2 QB 163 | N/A | Cited regarding the principle that onerous terms have to be brought to the attention of the contracting party. |
| Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd | Not specified | Yes | [1989] QB 433 | N/A | Cited regarding the principle that onerous terms have to be brought to the attention of the contracting party. |
| Consmat Singapore (Pte) Ltd v Bank of America National Trust & Savings Association | High Court | Yes | [1992] 2 SLR(R) 195 | Singapore | Cited regarding the customer's duty to verify statements of accounts. |
| Tai Hing Cotton Mill Ltd v Liu Chong Hin Bank Ltd | Privy Council | Yes | [1986] AC 80 | N/A | Cited regarding the clarity required for a term stipulating that failure to notify the bank of errors means the customer can no longer challenge the statements. |
| Hakko Products Pte Ltd v Danzas (Singapore) Pte Ltd and another | High Court | Yes | [1999] 1 SLR(R) 651 | Singapore | Cited regarding the incorporation of standard trading conditions. |
| Press Automation Technology Pte Ltd v Trans-Link Exhibition Forwarding Pte Ltd | High Court | Yes | [2003] 1 SLR(R) 712 | Singapore | Cited regarding the incorporation of conditions in a signed contract. |
| Tilden Rent-A-Car Co v Clendenming | Not specified | Yes | [1978] 83 DLR 3d 400 | Canada | Cited regarding the manifestation of assent to a document. |
| United Overseas Bank Ltd v Sin Leong Ironbed & Furniture Manufacturing Co (Pte) Ltd and others | High Court | Yes | [1988] 1 SLR(R) 76 | Singapore | Cited regarding the bank's entitlement to rely on contractual indemnity clauses. |
| Hong Leong Finance Ltd v Lee Siang Wah and another | Not specified | Yes | [1993] 2 SLR(R) 577 | N/A | Cited regarding the court's discretion to override the parties' agreement as to costs in situations where the outcome is manifestly unjust. |
| DBS Bank (Hong Kong) Limited v San-Hot HK Industrial Company Limited and another | Not specified | Yes | HCA 2279/2008 | Hong Kong | Cited regarding the court's discretion to take into account contractual clauses in the exercise of its discretion on costs. |
| Abani Trading Pte Ltd v BNP Paribas | District Court | Yes | [2013] SGDC 243 | Singapore | The District Court decision that was appealed in this case. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Letter of credit
- Bill of lading
- UCP 600
- Forwarder bill of lading
- Indemnity costs
- Autonomy principle
- Conforming document
- Standard Terms and Conditions
15.2 Keywords
- Letter of credit
- Bill of lading
- UCP 600
- Breach of duty
- Indemnity costs
- Singapore
- Banking law
- Contract law
16. Subjects
- Banking
- International Trade
- Documentary Credits
17. Areas of Law
- Banking Law
- Contract Law
- International Trade Law
- Civil Procedure
- Documentary Credits
- Letter of Credit Law