Winson Oil Trading Pte Ltd v United Overseas Bank Ltd; Owners of the “Maersk Katalin” v Overseas Bank Ltd (The “Maersk Katalin”)

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DMC/SandT/25/13

Singapore

Winson Oil Trading Pte Ltd v United Overseas Bank Ltd; Owners of the “Maersk Katalin” v Overseas Bank Ltd (The “Maersk Katalin”) [2025] 1 SLR 1371

Singapore Court of Appeal: Sundaresh Menon CJ, Steven Chong JCA and Ang Cheng Hock J: [2025] SGCA 42: 5 September 2025

Judgment Available on e-Litigation at: https://www.elitigation.sg/gd/s/2025_SGCA_42  

Kenneth Tan SC (Kenneth Tan Partnership), instructed by Oon & Bazul LLP, for Winson Oil (Appellant in CA 69) and by Focus Law Asia LLC, for Maersk (Appellant in CA 70)

Lok Vi Ming SC, Mohd Haireez and C Sivah (LVM Chambers), Ian Teo, Chen Zhida and Low Yan Feng (Helmsman), instructed by Allen & Gledhill, for UOB (Respondent in CA 69 and CA 70)

BILLS OF LADING: LETTERS OF INDEMNITY: LETTERS OF CREDIT: MISDELIVERY OF CARGO WITHOUT PRESENTATION OF ORIGINAL BILLS OF LADING: TRANSFER OF RIGHTS OF SUIT FROM CARGO INTERESTS TO FINANCING BANK: UK CARRIAGE OF GOODS BY SEA ACT 1992: CAUSATION OF LOSS: DAMAGES: MARKET VALUE ASSESSMENT OF LOSS


Summary

The Singapore Court of Appeal (“CA”) unanimously dismissed an appeal by a carrier (Maersk) and its charterer (Winson Oil) (collectively, the “Appellants”), upholding the High Court (S Mohan J) decision which found them liable for misdelivering a cargo of gasoil without the presentation of the original bills of lading (“OBLs”).

The case’s significance lies in its firm rejection of the Appellants’ core argument that a financing bank’s subjective intention or internal policies could defeat its rights of suit. The key facts involved the bank (UOB) issuing a letter of credit (“LC”) after the misdelivery had already occurred and only receiving the OBLs months later, following the insolvency of the buyer (Hin Leong).

The CA held that:

  • The right to sue under a bill of lading is transferred automatically by law (an objective process) under the UK Carriage of Goods by Sea Act 1992 (“UK COGSA”).
  • Since the carrier admitted that UOB became the lawful holder of the OBLs in good faith, UOB automatically acquired all rights of suit under the contracts of carriage evidenced by the OBLs, just as if it had been the original party thereto.
  • The bank’s subjective intention (e.g. whether it regarded the OBLs as security) was irrelevant to this statutorily automatic transfer of rights.
  • The “spot pricing” approach to damages, valuing the cargo at the average of the benchmark prices on the day the breach commenced and the next available trading day (as the breach occurred over a weekend), applied.

Case Note contributed by Jin Wei Ng, LLB (Hons), Advocate & Solicitor of the Supreme Court of Singapore, Associate at DennisMathiew and International Contributor to DMC’s CaseNotes


Background

Winson Oil Trading Pte Ltd (“Winson Oil”) sold a cargo of gasoil to Hin Leong Trading (Pte) Ltd (“Hin Leong”). Winson Oil chartered the vessel “Maersk Princess” from Maersk Tankers Singapore Pte Ltd (“Maersk”) for the carriage.

At Winson Oil’s request and against a discharge letter of indemnity (“Discharge LOI”), Maersk discharged the entire cargo to Hin Leong at Universal Terminal, Singapore, between 28 and 29 February 2020. Crucially, this was done without presentation of any OBLs.

Days after the misdelivery, on 3 March 2020, Hin Leong applied to United Overseas Bank Ltd (“UOB”) to finance the purchase. On 4 March 2020, UOB issued an LC. The CA found as a fact that UOB was not aware, at the time it issued the LC, that the cargo had already been delivered. The LC allowed for payment to Winson Oil against a commercial invoice and a Payment LOI, the latter containing an undertaking from Winson Oil to deliver the OBLs, indorsed to UOB’s order, as soon as they were available. UOB subsequently paid Winson Oil against these documents. In April 2020, Hin Leong collapsed and UOB began pressing Winson Oil for the OBLs, which Winson Oil eventually obtained from its own suppliers and delivered, duly endorsed, to UOB on 15 July 2020.

UOB, as the lawful holder of the OBLs, demanded the cargo from Maersk. When Maersk failed to deliver, UOB commenced an in rem action for misdelivery. Winson Oil, being liable to Maersk under the Discharge LOI, intervened to defend the claim.

The High Court in The “Maersk Katalin” [2024] SGHC 282 (fn.1) found in favour of UOB, rejecting all of Maersk’s and Winson Oil’s defences (including arguments on consent, spent bills, good faith, and causation). The Appellants then appealed to the Court of Appeal.


Judgment

On appeal, the Appellants abandoned most of their High Court defences, including the arguments that UOB had not acquired the OBLs in good faith and that Winson Oil had not intended to transfer rights of suit. The appeal was thus fought on two main issues: (1) UOB’s right to sue (which the Appellants framed as a “causation” issue); and (2) the quantification of damages. The CA dismissed the appeal on both grounds.

1. UOB’s Rights of Suit

The Appellants’ primary argument was that UOB’s loss was caused by Hin Leong’s insolvency, not Maersk’s misdelivery. They contended that because UOB issued the LC after the cargo was already discharged and structured the financing to be repaid from export receivables, UOB never subjectively regarded the OBLs as security. Therefore, they argued that UOB acquired no rights under the OBLs. This reasoning was firmly rejected by the CA on the following bases:

  • Statutory Transfer of Rights: The transfer of rights was governed by ss. 2(1)(a) and 5(2)(b) of UK COGSA. These provisions stated that a person who became the lawful holder of a bill of lading in good faith had “transferred to and vested in him all rights of suit under the contract of carriage as if he had been a party to that contract”.
  • Subjective intention is irrelevant: The above transfer occurred automatically by operation of law. It was an objective fact, not a matter of subjective intention. By abandoning their “good faith” and “endorsement” defences, the Appellants had conceded that UOB met the statutory requirements: it had possession of the OBLs as a result of the valid indorsement and, therefore, had become the holder in good faith.
  • Objective Test: Once the objective statutory test was met, the holder’s subjective purpose or internal assessment of the OBLs as “security” was irrelevant. UOB acquired all rights of suit the moment it became the lawful holder.
  • Causation: The loss claimed by UOB was the loss of the cargo (or its value), to which it was entitled as the lawful holder of the OBLs. This loss was directly and effectively caused by Maersk’s breach in delivering the cargo to a party not entitled to the cargo. The Appellants’ attempt to re-characterise the loss as an unsecured debt owed by Hin Leong was, therefore, misconceived.
  • Distinction from The “Sienna” (CA): The “Sienna” (CA) (fn.2), where a bank's claim failed on the ground of factual causation, was distinguishable. In The Sienna, the bank was already involved in the financing before the misdelivery, and the court found as a matter of fact that the bank would have consented to the discharge of the cargo without the presentation of the OBLs. In this case, UOB was not even involved at the time of the carrier’s cargo misdelivery, making any counterfactual argument that UOB would have consented purely speculative and factually impossible.


2. Quantification of Damages
The CA upheld the High Court's assessment of damages at US$39,372,300 on the following bases:

  • Valuation Date: The breach occurred from 28 February 2020 (Friday) to 29 February 2020 (Saturday). The correct measure of damages is the market value of the cargo at the time and place of the breach.
  • "Spot Pricing" Approach: The High Court had taken the average of the Platts benchmark prices for Friday 28 February 2020 and Monday 2 March 2020 (the next available trading day, as the market was closed on the Saturday). The CA affirmed that this was the "best available assessment" and the "simplest, most logical and accurate" approach, because it valued the cargo at the time the loss crystallised.
  • No Deduction for Recoveries: No deduction should be made for sums UOB had partially recovered from Hin Leong. Those sums were either from unrelated transactions or from UOB's general right of set-off against its insolvent debtor. Such recoveries were a private matter between UOB and Hin Leong (i.e. res inter alios acta, namely that a thing done between others is of no assistance to a third party) and had no bearing on Maersk's liability for the full value of the cargo it misdelivered.


Comment

This decision is a powerful endorsement of the "presentation rule" and the strength of the statutory regime governing the transfer of rights under bills of lading between parties with an interest in the cargo carried by the carrier and its vessel.

For trade finance banks, the judgment is a significant reassurance. It establishes that a carrier cannot defeat a bank's misdelivery claim by cross-examining the bank's internal credit policies or subjective intentions. The decision affirms a fundamental distinction between the contract of carriage (evidenced by the OBL) and the underlying cargo sale or financing contracts, making it clear that it is not the carrier’s concern how the lawful holder came into possession of the OBL. The test is objective: did the bank become the lawful holder of the OBL in good faith? If yes, it unquestionably acquires all rights of suit. The carrier’s duty is simply to deliver the cargo to the person presenting the OBL. The fact that UOB's financing was "late" (i.e. post-misdelivery) was irrelevant to the rights it acquired once the OBLs were validly indorsed to it.

The case also closes the door on the "causation" argument that the bank's "real" loss is the customer's insolvency. The CA was clear: the loss in a misdelivery claim is the cargo itself (or its value), and that loss is caused by the carrier's breach in not delivering the cargo to the lawful holder against the presentation of the OBLs.

For carriers and charterers, this judgment is another stark reminder of the absolute liability associated with delivering cargo without the presentation of the OBLs. A charterer's LOI protects the carrier from its own breach, but it offers no defence whatsoever against the claim of a lawful holder. The carrier's only recourse is to its indemnitor, if that party is good for the money, not to attacking the bank's right to sue.


Footnote 1:  See Singapore High Court judgment at https://www.elitigation.sg/gd/gd/2024_SGHC_282/ Footnote 2:  Unicredit Bank AG v Euronav NV (The “Sienna”) [2023] EWCA Civ 471 – see DMC case note at https://www.onlinedmc.co.uk/index.php/Unicredit_Bank_AG_v_Euronav_NV_-_The_Sienna

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