OCBC v STI ORCHARD: Misdelivery, Bills of Lading & Trade Financing

Oversea-Chinese Banking Corporation Limited (OCBC) sued the owner of the vessel “STI Orchard”, STI Orchard Shipping Company Limited, for misdelivery of cargo. OCBC financed Hin Leong Trading’s (HLT) purchase of a cargo that was shipped on board the vessel “STI Orchard” under a set of three bills of lading. HLT defaulted on its obligation to reimburse OCBC, and OCBC commenced the suit against the Owner for delivering the cargo to HLT without presentation of the Bills of Lading. The General Division of the High Court granted the Owner unconditional leave to defend, finding that the issues in the case merit further investigation, the chief of which is whether the Bills of Lading were intended to be relied on as security for OCBC’s financing in the underlying transaction.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Owner granted unconditional leave to defend.

1.3 Case Type

Admiralty

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

OCBC sues STI Orchard for misdelivery of cargo. The court granted the owner unconditional leave to defend, citing issues with OCBC's good faith.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Oversea-Chinese Banking Corporation LimitedPlaintiffCorporationUnconditional leave to defend granted to DefendantLost
Winson Oil Trading Pte LtdIntervenerCorporationUnconditional leave to defend granted to DefendantNeutral
Owner and/or Demise Charterer of the vessel “STI ORCHARD”DefendantCorporationUnconditional leave to defend grantedWon

3. Judges

Judge NameTitleDelivered Judgment
Navin AnandAssistant RegistrarYes

4. Counsels

Counsel NameOrganization
Douglas Lok Bao GuangAllen & Gledhill LLP
Ho Pey YannAllen & Gledhill LLP
Kenny YapAllen & Gledhill LLP
Bazul Ashhab bin Abdul KaderOon & Bazul LLP
Prakaash s/o Paniar SilvamOon & Bazul LLP
Levin Lin Lok YanOon & Bazul LLP
Tan Yu HangOon & Bazul LLP
Daryll Richard NgVirtus Law LLP
Ang KailiVirtus Law LLP
Kenneth Tan SCKenneth Tan Partnership

4. Facts

  1. OCBC financed HLT’s purchase of a cargo shipped on board the vessel “STI Orchard”.
  2. HLT defaulted on its obligation to reimburse OCBC.
  3. OCBC sued the Owner for delivering the cargo to HLT without presentation of the Bills of Lading.
  4. The Bills of Lading were issued or indorsed to the order of HLT.
  5. OCBC granted a Trust Receipt Loan to HLT.
  6. The Cargo was delivered to HLT between 5 and 6 March 2020 at Tanjung Pelapas, Malaysia.
  7. HLT was placed under interim judicial management.

5. Formal Citations

  1. The “STI Orchard”, Admiralty in Rem No 16 of 2021 (Summons No 5040 of 2021), [2022] SGHCR 6

6. Timeline

DateEvent
Credit facilities letter issued by OCBC to HLT.
Sale contract between Winson Oil and HLT.
Bills of Lading dated.
Vessel tendered notice of readiness to discharge at Singapore.
Cargo delivered to HLT between 5 and 6 March 2020 at Tanjung Pelapas, Malaysia.
HLT applied for a letter of credit from OCBC in favour of Winson Oil.
OCBC issued an irrevocable letter of credit in favour of Winson Oil.
Payment Letter of Indemnity (LOI) dated.
ING Bank presented documents to OCBC for payment under the Letter of Credit.
OCBC issued an import bill notification to HLT.
OCBC assigned internal reference number ‘TR5CF02003549’ for the trust receipt loan to HLT.
OCBC paid the sum of US$13,608,000 to ING Bank under the Letter of Credit.
HLT appointed financial and legal advisors.
HLT informed its bank lenders of its precarious financial position.
OCBC wrote to HLT alleging various events of default.
Mr Lim Oon Kuin filed an affidavit in support of HLT's application for moratorium relief.
HLT was placed under interim judicial management.
Winson Oil delivered the original Bills of Lading to OCBC.
OCBC applied in HC/SUM 5587/2020 for an order that HLT indorse the Bills of Lading in favour of OCBC.
Kannan Ramesh J ordered HLT to indorse the Bills of Lading in favour of OCBC.
HLT indorsed the Bills of Lading in favour of OCBC.
OCBC commenced action against the Owner for loss and damage suffered by the misdelivery of the Cargo.
OCBC emailed the Owner to demand delivery of the Cargo.
OCBC emailed the Owner to put it on notice that OCBC was holding it fully liable for the misdelivery of the Cargo.
The Vessel called at Singapore, and OCBC effected service of the in rem writ issued in this action.
Hearing date.
The Owner obtained an ex parte interim mandatory injunction in the English High Court.
The Owner provided security for OCBC’s claim by way of a letter of undertaking from Steamship Mutual Underwriting Association (Europe) Limited.
Scorpio obtained a mandatory injunction in the English High Court compelling Winson Oil to provide replacement security to OCBC.
Chua Lee Ming J ordered Winson Oil to provide replacement security for OCBC’s claim against the Owner.
Judgment reserved.

7. Legal Issues

  1. Misdelivery
    • Outcome: The court found that there was a prima facie case of misdelivery but granted the owner unconditional leave to defend.
    • Category: Substantive
    • Related Cases:
      • [2016] 3 SLR 1280
  2. Rights of Suit under Bills of Lading
    • Outcome: The court found that there was a triable issue on whether OCBC was in possession of the Bills of Lading in good faith.
    • Category: Substantive
    • Related Cases:
      • [2020] 3 SLR 573
      • [2003] 3 SLR(R) 611
  3. Good Faith
    • Outcome: The court found that there was a triable issue on whether OCBC was in possession of the Bills of Lading in good faith.
    • Category: Substantive
    • Related Cases:
      • [1998] 2 Lloyd’s Rep 39
      • [2006] 1 SLR(R) 1
  4. Spent Bills of Lading
    • Outcome: The court found that the Bills of Lading became spent on 17 February 2021, when HLT received the Bills of Lading in order to endorse them in favour of OCBC.
    • Category: Substantive
    • Related Cases:
      • [2020] 3 SLR 573
      • [2015] 1 Lloyd’s Rep 97
  5. Consent to Misdelivery
    • Outcome: The court found that whether the Trust Receipt Loan amounted to OCBC’s ex post facto consent to, or ratification of, Winson Oil’s instructions to the Owner to deliver the Cargo without production of the Bills of Lading is a matter that should be investigated at trial.
    • Category: Substantive
    • Related Cases:
      • [2003] 1 SLR(R) 471
      • [2001] 2 SLR(R) 754
      • [2021] 1 Lloyd’s Rep 109
  6. Summary Judgment
    • Outcome: The court granted the Owner unconditional leave to defend, as it was satisfied that there is a fair probability of a bona fide defence.
    • Category: Procedural
    • Related Cases:
      • [2020] 3 SLR 573
      • [2019] 2 SLR 412
      • [1997] 3 SLR(R) 829
      • [1999] 2 SLR(R) 880
  7. Choice of Law
    • Outcome: The court found that OCBC’s claim for breach of the contract of carriage is governed by English law and COGSA 1992.
    • Category: Jurisdictional
    • Related Cases:
      • [1981] 2 Lloyd’s Rep 389
      • [2000] 2 SLR(R) 240
      • [2012] 1 SLR 992

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract of Carriage

10. Practice Areas

  • Admiralty
  • Shipping
  • Commercial Litigation
  • Trade Finance

11. Industries

  • Finance
  • Shipping
  • Oil Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
The “Star Quest” and other mattersSingapore Court of AppealYes[2016] 3 SLR 1280SingaporeCited for the principle that a shipowner who delivers goods without production of the bills of lading does so at his peril and is typically liable for any consequential losses suffered by the holder of the bills of lading.
The “Yue You 902” and another matterSingapore Court of AppealYes[2020] 3 SLR 573SingaporeCited for principles relating to summary judgment and the requirements for establishing rights of suit under spent bills of lading.
The “Soeraya Emas”Singapore High CourtYes[1991] 2 SLR(R) 479SingaporeCited for the principle that an intervener in admiralty in rem proceedings may set up any defences that the defendant shipowner could have set up.
Akfel Commodities Turkey Holding Anonim Sirketi v Townsend, AdamSingapore Court of AppealYes[2019] 2 SLR 412SingaporeCited for the principles relating to summary judgment, unconditional leave, and conditional leave to defend.
The “Jarguh Sawit”Singapore Court of AppealYes[1997] 3 SLR(R) 829SingaporeCited for the principle that it is not appropriate to order further security as a condition for leave to defend where the plaintiff is already fully secured.
The SLS EverestEnglish High CourtYes[1981] 2 Lloyd’s Rep 389England and WalesCited for the principle that where an incorporation clause refers to, but does not identify a charterparty, the court will assume that the reference is to any charter under which the goods are carried.
The “Epic”Singapore High CourtYes[2000] 2 SLR(R) 240SingaporeCited for the principle that where an incorporation clause refers to, but does not identify a charterparty, the court will assume that the reference is to any charter under which the goods are carried.
The “Dolphina”Singapore Court of AppealYes[2012] 1 SLR 992SingaporeCited for the principle that general words of incorporation in a bill of lading are wide enough to incorporate a choice of law clause from the charterparty.
Pacific Recreation Pte Ltd v S Y Technology Inc and another appealSingapore Court of AppealYes[2008] 2 SLR(R) 491SingaporeCited for the principle that a party wishing to prove the content of foreign law can do so by adducing raw sources of foreign law as evidence, or by adducing the opinion of an expert on foreign law.
Swiss Singapore Overseas Enterprises Pte Ltd v Navalmar UK LtdSingapore High CourtYes[2003] 1 SLR(R) 688SingaporeCited for the principle that evidence from an English law expert is not necessary where misdelivery and the rights under COGSA 1992 are concerned.
Bandung Shipping Pte Ltd v Keppel TatLee Bank LtdSingapore High CourtYes[2003] 1 SLR(R) 295SingaporeCited for the principle that Singapore’s Bills of Lading Act was adopted from, and is in pari materia with, the UK’s COGSA 1992.
BNP Paribas v Bandung Shipping Pte Ltd (Shweta International Pte Ltd and another, third parties)Singapore High CourtYes[2003] 3 SLR(R) 611SingaporeCited for the principle that an order bill of lading entitles the lawful holder to call for delivery of the goods covered by that bill and that delivery without production of the bill of lading constitutes a breach of contract.
Sze Hai Tong Bank Ltd v Rambler Cycle Co LtdPrivy CouncilYes[1959] AC 576England and WalesCited for the principle that the duty imposed on the shipowner under the bill of lading contract is to deliver the goods, on production of the bill of lading, to the person entitled under the bill of lading.
The “Aegean Sea”English High CourtYes[1998] 2 Lloyd’s Rep 39England and WalesCited for the requirements for establishing rights of suit under COGSA 1992, specifically the requirements of indorsement by delivery and good faith.
The “Erin Schulte”English High CourtYes[2015] 1 Lloyd’s Rep 97England and WalesCited for the requirements for establishing rights of suit under spent bills of lading and the interpretation of 'completion of an indorsement by delivery'.
UCO Bank v Golden Shore Transportation Pte LtdSingapore Court of AppealYes[2006] 1 SLR(R) 1SingaporeCited for the definition of 'good faith' in the context of COGSA 1992.
The “Cherry” and othersSingapore High CourtYes[2003] 1 SLR(R) 471SingaporeCited for the defence of consent in misdelivery cases and the circumstances under which it may be established.
The “Neptra Premier”Singapore High CourtYes[2001] 2 SLR(R) 754SingaporeCited for the principle that the defence of consent may be established through acquiescence.
The “Nika”English High CourtYes[2021] 1 Lloyd’s Rep 109England and WalesCited for the principle that the defence of consent may be established through actual authority from the holder for a third party to take delivery of the goods without production of the original bills of lading.
Barber v MeyersteinHouse of LordsYes[1870] LR 4 HL 317England and WalesCited for the principle that a bill of lading’s status as the symbol of the goods is exhausted when the symbol is united with the goods.
Habibullah Mohamed Yousuff v Indian BankSingapore Court of AppealYes[1999] 2 SLR(R) 880SingaporeCited for the principle that the power to grant summary judgment is intended only to apply to cases where there is no reasonable doubt that a plaintiff is entitled to judgment.
The “Navig8 Ametrine”Singapore High CourtYes[2022] SGHCR 5SingaporeCited as a case where summary judgment was entered in favour of the financing bank.
Forsa Multimedia Limited v C&C Logistics (HK) LimitedHong Kong Court of First InstanceYes[2011] HKCU 254Hong KongCited for the principle that the defence of consent may be established through express consent in the form of written instructions from the holder to the shipowner to release the goods without production of the original bills of lading.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Bills of Lading Act 1992 (2020 Rev Ed)Singapore
Carriage of Goods by Sea Act 1992 (c 50)United Kingdom
Evidence Act 1893 (2020 Rev Ed)Singapore
Civil Law Act (Cap 43, 1988 Rev Ed)Singapore
Application of English Law Act (Cap 7A, 1994 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Bills of Lading
  • Letter of Credit
  • Trust Receipt Loan
  • Misdelivery
  • Good Faith
  • Spent Bills
  • Letter of Indemnity
  • Voyage Charterparty
  • Trade Finance

15.2 Keywords

  • Admiralty
  • Shipping
  • Bills of Lading
  • Misdelivery
  • Trade Finance
  • OCBC
  • STI Orchard
  • Hin Leong Trading

17. Areas of Law

Area NameRelevance Score
Admiralty and Maritime Law90
Bills of Lading Act80
Misdelivery70
Civil Practice70
Breach of Contract60
Summary Judgement60
Contract Law50
Banking Law40
Trade Finance30

16. Subjects

  • Admiralty
  • Shipping
  • Trade Finance
  • Bills of Lading