Crédit Agricole v PPT Energy: Letter of Credit, Fraud, & Indemnity Dispute

Crédit Agricole Corporate and Investment Bank, Singapore Branch (CACIB) appealed against the decision of the Singapore International Commercial Court (SICC) in favor of PPT Energy Trading Co. Ltd (PPT) regarding two suits, SIC/S 1/2021 and SIC/S 2/2021. The dispute arose from a letter of credit issued by CACIB to PPT, induced by the fraud of Zenrock Commodities Trading Pte Ltd. CACIB sought remedies including an injunction and reimbursement, while PPT cross-claimed for payment and damages. The Court of Appeal allowed CACIB's appeal in part, finding that PPT had breached its warranty under the letter of indemnity and awarding damages to CACIB.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a letter of credit dispute involving fraud. Court found PPT breached warranty under letter of indemnity, awarding damages to Crédit Agricole.

1.7 Decision Date

23 October 2023

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Credit Agricole Corporate and Investment Bank, Singapore Branch	Appellant, Plaintiff	Corporation	Appeal allowed in part	Partial	Nair Suresh Sukumaran of PK Wong & Nair LLC Bryan Tan of PK Wong & Nair LLC David Joseph of Essex Court Chambers Bibek Mukherjee of Essex Court Chambers Tay Yu-Jin of Mayer Brown (Singapore) Pte Ltd
PPT Energy Trading Co Ltd	Respondent, Defendant	Corporation	Judgment against	Lost	Giam Chin Toon of Wee Swee Teow LLP Lee Wei Yuen Arvin of Wee Swee Teow LLP Michael Collett of Twenty Essex Chambers Wan Hui Ting of Wee Swee Teow LLP Monique of Wee Swee Teow LLP Tay Ting Xun Leon of Wee Swee Teow LLP

3. Judges

Judge Name	Title	Delivered Judgment
Judith Prakash	Justice of the Court of Appeal	Yes
Jonathan Hugh Mance	International Judge	No
Bernard Rix	International Judge	No

4. Counsels

Counsel Name	Organization
Nair Suresh Sukumaran	PK Wong & Nair LLC
Bryan Tan	PK Wong & Nair LLC
David Joseph	Essex Court Chambers
Bibek Mukherjee	Essex Court Chambers
Tay Yu-Jin	Mayer Brown (Singapore) Pte Ltd
Giam Chin Toon	Wee Swee Teow LLP
Lee Wei Yuen Arvin	Wee Swee Teow LLP
Michael Collett	Twenty Essex Chambers
Wan Hui Ting	Wee Swee Teow LLP
Monique	Wee Swee Teow LLP
Tay Ting Xun Leon	Wee Swee Teow LLP

4. Facts

CACIB issued a letter of credit in favor of PPT based on Zenrock's application.
Zenrock committed fraud by doctoring a sale contract to inflate the price.
PPT was involved in a circular trade arranged by Zenrock.
PPT issued a letter of indemnity to CACIB in lieu of shipping documents.
CACIB obtained an interim injunction against payment under the letter of credit.
CACIB eventually made payment to PPT under the letter of credit.
TOTSA received notices of assignment from both SOCAR and CACIB.

5. Formal Citations

Crédit Agricole Corporate & Investment Bank, Singapore BranchvPPT Energy Trading Co Ltd and another appeal, , [2023] SGCA(I) 7

6. Timeline

Date	Event
2020-03-30	Zenrock entered into a sale contract with TOTSA.
2020-04-01	CACIB gave notice to TOTSA of the assignment of the TOTSA receivable.
2020-04-02	PPT and Zenrock entered into a sale contract.
2020-04-03	TOTSA counter-signed the notice of assignment.
2020-04-03	CACIB issued an unconfirmed letter of credit in favor of PPT.
2020-04-06	Original bills of lading were issued.
2020-04-09	PPT issued a letter of indemnity to CACIB.
2020-04-16	Payment was made by Shandong and PPT.
2020-04-22	CACIB indicated acceptance of PPT's letter of indemnity.
2020-04-23	TOTSA sought explanation from Zenrock regarding the legitimate beneficiary of the amount receivable.
2020-05-28	CACIB obtained an interim injunction restraining payment under the letter of credit.
2020-06-05	Original due date for payment under the letter of credit.
2020-11-13	Interim Injunction was lifted.
2020-11-18	CACIB made payment to PPT under the letter of credit.
2021-01-01	SIC/S 1/2021 Suit 1 commenced.
2021-01-01	SIC/S 2/2021 Suit 2 commenced.
2022-01-13	Decision on liability was delivered by the Judge.
2022-03-30	Order made on issues of damages, interest and costs.
2022-10-19	Appeals heard by the Court of Appeal.
2023-10-24	Judgment reserved.

7. Legal Issues

Breach of Warranty
- Outcome: The court found that PPT breached its warranty under the letter of indemnity by lacking a marketable title.
- Category: Substantive
- Sub-Issues:
  - Defective title
  - Lack of marketable title
  - Title subject to litigation or hazard
Construction of Letter of Indemnity
- Outcome: The court held that the letter of indemnity was effective and that payment by the due date was not a condition precedent.
- Category: Substantive
- Sub-Issues:
  - Condition precedent
  - Unilateral contract
  - Interpretation of terms
Fraudulent Inducement
- Outcome: The court determined that the fraud by Zenrock did not relieve CACIB of its obligations under the letter of credit to PPT.
- Category: Substantive
- Sub-Issues:
  - Third-party fraud
  - Beneficiary's knowledge
  - Impact on letter of credit
Damages for Breach of Warranty
- Outcome: The court awarded damages to CACIB based on the loss it would have avoided if it had unquestionable security over the receivable.
- Category: Substantive
- Sub-Issues:
  - Causation
  - Measure of damages
  - Counterfactual analysis

8. Remedies Sought

Monetary Damages
Declaration of Non-Liability
Injunction

9. Cause of Actions

Breach of Contract
Breach of Warranty
Indemnity

10. Practice Areas

Commercial Litigation
Banking Law
International Trade
Commodities Trading

11. Industries

Finance
Commodities

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Kuvera Resources Pte. Ltd. v JPMorgan Chase Bank, N.A.	Court of Appeal	Yes	[2023] SGCA 28	Singapore	Cited for the characterisation of letters of credit as independent and autonomous unilateral contracts with a sui generis exception of irrevocability.
United City Merchants (Investments) Ltd and Glass Fibres and Equipments Ltd v Royal Bank of Canada, Vitrorefuerzos SA and Banco Continental SA	House of Lords	Yes	[1983] 1 AC 168	England and Wales	Cited for the principle that a letter of credit gives rise to a binding contractual relationship separate from the underlying contract and the established common law exception of fraudulent presentation.
Taurus Petroleum Ltd v State Oil Marketing Company of the Ministry of Oil, Republic of Iraq	Supreme Court	Yes	[2018] AC 690	United Kingdom	Cited for the principle that a letter of credit is enforceable immediately upon issue, without consideration.
Edward Owen Engineering Ltd v Barclays Bank International Ltd	Queen's Bench	Yes	[1978] QB 159	England and Wales	Cited for the fraudulent presentation rule, where a seller fraudulently presents documents to draw on the credit.
Sztejn v J. Henry Schroder Banking Corporation	New York Supreme Court	Yes	(1941) 31 N.Y.S. 2d 631	United States	Cited for the principle that a bank's obligation under a letter of credit should not protect an unscrupulous seller when fraud is called to the bank's attention.
Solo Industries UK Ltd v Canara Bank	High Court	Yes	[2001] 1 WLR 1800	England and Wales	Cited for the principle that a bank can impugn the validity of a credit by reference to fraud or misrepresentation by the beneficiary inducing its issue.
Safa Ltd v Banque Du Caire	Commercial Court	Yes	[2000] 2 Lloyd’s Rep 600	England and Wales	Cited for the principle that a bank can impugn the validity of a credit by reference to fraud or misrepresentation by the beneficiary inducing its issue.
Rafsanjan Pistachio Producers Co-operative v Bank Leumi (UK) Plc	High Court	Yes	[1992] 1 Lloyd’s Rep 513	England and Wales	Cited regarding the issue of fraud in obtaining a letter of credit and the beneficiary's involvement.
Scholefield v. Templar	Court of Chancery	Yes	(1859) Johns 155	England and Wales	Cited for the principle that fraud precludes not only the original party but every other party from taking any benefit.
Huguenin v. Baseley	Court of Chancery	Yes	14 Ves 273	England and Wales	Cited for the principle that fraud precludes not only the original party but every other party from taking any benefit.
Garnac Grain Company Incorporated v HMF Faure & Fairclough Ltd and another	Queen's Bench	Yes	[1966] 1 QB 650	England and Wales	Cited regarding circularity in commodity dealing.
UniCredit Bank AG v Glencore Singapore Pte Ltd	High Court	Yes	[2022] SGHC 263	Singapore	Cited regarding circularity in commodity dealing.
Carlill v Carbolic Smoke Ball Co	Court of Appeal	Yes	[1893] 1 QB 256	England and Wales	Cited as an example of a unilateral contract.
Barclays Bank PLC v Weeks Legg & Dean (A firm)	Queen's Bench	Yes	[1999] QB 309	England and Wales	Cited for the definition of marketable title as a title that may be forced on an unwilling buyer.
Pyrke v Waddingham	Court of Chancery	Yes	(1852) 10 Hare 1	England and Wales	Cited for the definition of marketable title as a title that may be forced on an unwilling buyer.
Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd	Court of Appeal	Yes	[2016] EWCA Civ 982	England and Wales	Cited regarding an obligation of timely payment not being a condition making time of the essence.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Sale of Goods Act 1979	United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

Letter of Credit
Letter of Indemnity
Fraud
Marketable Title
Warranty
Indemnity
Bill of Lading
Floating Charge
Circular Trade
Beneficiary
Issuing Bank
UCP 600

15.2 Keywords

Letter of Credit
Fraud
Indemnity
Singapore
Commercial Law
Banking
PPT Energy
Crédit Agricole
Zenrock

17. Areas of Law

Area Name	Relevance Score
Letter of Credit Law	85
Fraud and Deceit	80
Contract Law	75
Letters of Indemnity	70
Commercial Law	70
Banking and Finance	65
Breach of Contract	60
Trade Finance	55
Guarantee	50
Bank Guarantee	40
Estoppel	30
Agency Law	25

16. Subjects

Banking
Finance
International Trade
Commodities Trading
Contract Law