In our 4 September 2023 update titled Letters of Credit: Banks Successfully Prove Fraud Exception Where Beneficiary Recklessly Made False Representations, we highlighted the ruling of the General Division of the Singapore High Court (High Court) in Winson Oil Trading Pte Ltd v Oversea-Chinese Banking Corp Ltd and another suit [2023] SGHC 220 that the fraud exception (Fraud Exception) to an issuer’s obligation to pay under a letter of credit (LC) would be made out if, in presenting documents for payment under the LC, the beneficiary makes a false representation of material fact without belief in its truth, which would include situations where the beneficiary is reckless in the sense of being indifferent to the representation’s truth or falsity.
The Singapore Court of Appeal has now affirmed the High Court’s decision and further clarified that the Fraud Exception to an issuer’s obligation to pay under an LC does not bear a higher threshold than the standard applicable to other financial instruments such as independent guarantees: Winson Oil Trading Pte Ltd v Oversea-Chinese Banking Corporation Limited and another suit [2024] SGCA 31.
Our Deputy Chairman Tan Chee Meng, SC, Partners Manoj Pillay Sandrasegara and Tan Kai Yun, Senior Associate Felicia Soong, and Associates Hudson Wong and Andrea Soon acted for Oversea-Chinese Banking Corporation Ltd, the successful respondent in CA/CA 40/2024.
We have prepared an update highlighting the salient points of the Court of Appeal’s decision.
If you would like information and/or assistance on the above or any other area of law, you may wish to contact the Partner at WongPartnership whom you normally work with or any of the following Partners:
TAN Chee Meng, Senior Counsel
Deputy Chairman
d +65 6416 8188
e cheemeng.tan@wongpartnership.com
Click here to view Chee Meng’s CV.
Manoj Pillay SANDRASEGARA
Co-Head – Special Situations Advisory
d +65 6416 8106
e manoj.sandra@wongpartnership.com
Click here to view Manoj’s CV.
TAN Kai Yun
Partner – Restructuring & Insolvency and Special Situations Advisory
d +65 6416 6869
e kaiyun.tan@wongpartnership.com
Click here to view Kai Yun’s CV.