Court Ruling Gives Major Trade Finance Confidence Boost
(31 August 2023 – Singapore) A crucial Singapore court ruling that found Winson Oil made fraudulent representations to OCBC and Standard Chartered has provided transparency in the often opaque trade finance sector.
Winson Oil sued Standard Chartered and OCBC for non-payment under two letters of credit (LCs) totalling over US$60 million however the banks refused to pay on the basis of suspected fraud. The banks argued that it later emerged the cargo had already been sold to other buyers and that documents underpinning the trades had been forged.
The ruling is particularly notable for clarifying whether a reckless trader is acting fraudulently following a contentious 2022 ruling for PPT Energy, Crédit Agricole and collapsed trader ZenRock.
“The Winson judgement puts everything back into context. It means if a trader is recklessly indifferent to the truth of a transaction, then it runs the risk that it is not legitimate, and if that’s the case it doesn’t get paid. In my view, this case correctly balances that allocation of risk between the beneficiary of an LC and the bank” commented Blackstone & Gold MD Baldev Bhinder.
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