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BlackStone & Gold: Misdelivery – Are BLs good security anymore?

Law firm discusses relevance of BL holder’s knowledge and conduct in misdelivery claims by studying the recent case of UniCredit Bank v Euronav, where English Court of Appeal dismissed a misdelivery claim.




By Baldev Bhinder, Managing Director

The following article by law firm BlackStone & Gold LLC was shared with Singapore-based bunkering publication Manifold Times discussing the relevance of BL holder’s knowledge and conduct in misdelivery cases using the recent case of UniCredit Bank A.G. v Euronav N.V. 

It also draws attention that the decision on the case aligned with two summary judgement decisions in Singapore last year. The decisions showed judicial scrutiny of financing structures and the conduct of financing banks in deciding misdelivery claims brought by them against carriers:

By Baldev Bhinder, Managing Director, and Ramandeep Kaur, Associate Director of BlackStone & Gold

Bill of ladings (BLs) have formed an integral part of the trade finance structure. They are often a fundamental security for banks to receive because they give the lawful holder the right of possession to the cargo, and failing that, the right to bring a misdelivery claim against the shipowner that issues the BL. But international trade involves a disjunct: BLs are held by trade finance banks while cargo can be discharged without BLs by traders through letters of indemnity. Banks have allowed such practices to continue without objection with the comfort that if all else fails, they can still bring misdelivery claims against the carrier. But a string case of cases in Singapore and England is recasting these fundamentals of trade finance, with the key question now turning on what a bank would have done if it knew cargo was going to be discharged without BLs? The spotlight is now very much on the banks’ actions as gleaned from the recent case of UniCredit Bank A.G. v Euronav N.V. where the English Court of Appeal dismissed a misdelivery claim.


BP Oil International Limited (“BP”) sold a cargo of oil to Gulf Petroleum FZC (“Gulf”) for delivery ex ship Fujairah or Singapore. BP voyage chartered the vessel for the cargo from Euronav N.V. (“Euronav”), who issued a BL to BP for the shipment. UniCredit had financed Gulf’s purchase of the cargo on terms which provided, among other things, that the BL for the financed cargo would be pledged as security, and Gulf’s sub-buyers would pay UniCredit directly. UniCredit paid BP the purchase price and Gulf became owners of the cargo with UniCredit getting security of the BLs. UniCredit however did not receive the BLs by the time of discharge due largely to Covid restrictions. After BP was paid, Euronav, BP and Gulf entered into a novation agreement by which Gulf became the voyage charterer in place of BP. Euronav discharged the oil on Gulf’s instructions by ship-to-ship (“STS”) transfers against an LOI and without requiring the presentation of any BL. It then transpired that Gulf had perpetrated a fraud on UniCredit and did not repay UniCredit. After receiving the BLs, UniCredit brought a claim against Euronav for the value of the cargo alleging breach of the contract of carriage contained in or evidenced by the BL in delivering the cargo without production of the BL.

Contract of Carriage – BL or Charterparty?

The BL’s all powerful status in misdelivery claims rests on one fundamental basis: that it contains or evidences a contract of carriage. At first instance, the High Court found that since BP was also the charterer, the BL, when issued to it, was a mere receipt of the cargo, the contract of carriage being contained in the charterparty. After BP novated the charterparty to Gulf, the indorsement of the BL did not, in the court’s view, cause a new contract to spring up between Euronav and UniCredit and as such the bank had no right to pursue a misdelivery claim. The Court of Appeal however disagreed, reasoning that where a BL is issued to a charterer, the presumed intention of the parties is that the BL would not be a contract of carriage only as long as shipper and charterer remained the same entity. On the facts, the BL became a document containing or evidencing the contract of carriage when the CP was novated, and remained so until the date of discharge. There was no term of novation agreement which displaced this intention. At the time of discharge therefore, there was a BL contract between Euronav and UniCredit as the BL holder which was breached by discharge without production of BL.

Misdelivery: Did the Bank cause its own loss?

On the issue of causation, the Court upheld the first instance finding that UniCredit’s loss was not caused by Euronav delivering the oil without the production of the BL. The court considered that it was insufficient to conclude that breach caused the loss simply because in the absence of breach cargo would have initially remained on board the vessel. It was necessary to ask what would have happened to UniCredit’s security interest if Euronav had initially refused to discharge without production of the BL. As to this, the court noted that it was UniCredit’s own case that if Euronav refused to discharge without original BLs, instructions would ultimately be sought from UniCredit. As to what UniCredit would have done, the court below had made a number of significant findings of fact: UniCredit did permit and would have permitted discharge without original BLs; UniCredit would have permitted discharge by STS or would not have halted it upon becoming aware of it; and the loss would have occurred in any event. In making these findings, the court noted the following:

  • It was inherent in the structure of financing and common practice in the oil market for cargo to be discharged without the production of BLs. UniCredit’s witness admitted in cross-examination that she was aware that the cargo would be discharged without BLs, and the original BLs would not be available until after discharge.
  • The court rejected UniCredit’s position that it would specifically not have permitted discharge of the cargo by STS transfers. In reaching this conclusion, the court noted certain factors for example, UniCredit did not take the view that the conditions of the financing had to be strictly followed since it agreed that the cargo would not be discharged into storage at Fujairah, even though this meant that it lost its additional protection of control over storage facilities. Further, a request for STS may not have been entirely abnormal in the prevailing times of Covid induced port congestions.

The court also considered it relevant that UniCredit’s behaviour should be considered against the context where it had no concerns about Gulf falling into default at the time; UniCredit had the benefit of insurance covering 90% of the sub-buyer’s default; and it had confirmed sub-buyers were acceptable.

Comment: Spotlight on the Bank

A similar inquiry into causation was conducted in the local case of Standard Chartered Bank v Maersk Tankers (2022 SGHC) (see here) where the Singapore High Court examined the underlying financing arrangements and concluded that it was arguable that the bank did not regard the BLs as security. The court had also referred to the first instance decision of UniCredit v Euronav in its analysis. Although not framed as a question of causation, the Singapore High Court in The ‘STI Orchard’ (2022 SGHC) (see here) also examined the underlying financing arrangements and concluded that it was arguable that the bank did not meet the threshold for honest conduct required to be a good faith holder of BLs as it did not look to the BLs as security when it financed the cargo. These recent local cases concerned applications for summary judgment on misdelivery claims, and the shipowners were granted unconditional leave to defend the claims. The judgments on merits are awaited.

That said, these cases do signal a greater scrutiny of banks’ treatment of BLs in their financing arrangements than misdelivery cases have traditionally called for. Not every case will replicate the factual matrix of UniCredit, in particular the court being swayed by the fact that UniCredit was wholly or largely secured in other ways. That said, the message is clear: if the bank wishes to maintain its security over its BLs its conduct with respect to the facility and borrower will have to be consistent with that position. This leaves a bank in a delicate position knowing that cargo is often discharged without BLs or not insisting on such a discharge because other types of security are in place.

So is this the end of the BL as the security backbone of a trade finance structure?


Photo credit: BlackStone & Gold LLC
Published: 19 June, 2023

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Singapore: Maritime Census 2023 survey deadline extended to 23 October 

‘MPA is conducting an annual survey to collect timely statistics on the maritime industry’s activities, technology, sustainability and manpower developments,’ says the port authority.





SG bunker tanker sailing Photo by Manifold Times

The Maritime and Port Authority of Singapore (MPA) on Wednesday (27 September) said the Maritime Census 2023 survey deadline has been extended to 23 October. 

“MPA is conducting an annual survey to collect timely statistics on the maritime industry’s activities, technology, sustainability and manpower developments,” it said in a social media post. 

Maritime firms selected for the survey will be notified by email or post to complete the survey online via

“Your participation will help us shape policies and programmes that will drive #MaritimeSG forward,” it added. 

Manifold Times previously reported MPA announcing it was conducting the census to collect timely statistics. 

Related: Singapore: MPA conducts Maritime Census 2023 to collect timely statistics

Photo credit: Maritime and Port Authority of Singapore
Published: 28 September, 2023

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Alternative Fuels

GCMD, BCG survey highlights three maritime decarbonisation archetypes

Survey identified three decarbonisation archetypes within the shipping industry, differentiated in their outlook, investment appetite and the challenges faced.





RESIZED Venti Views on Unsplash ship vessel

The Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG) conducted an industry survey to take stock of shipowners and operators’ progress in establishing six elements needed for the shipping industry to reach net zero, according to BCG on Wednesday (27 September). 

The survey saw strong participation from 128 shipowners and operators across vessel types, fleet sizes and geographies, which collectively own or operate 14,000 merchant vessels, and account for USD500 billion in revenue.

The duo found high decarbonisation ambitions: Most respondents viewed net zero as a strategic priority, and 77% had already set concrete decarbonisation targets. The industry has also mobilised resources to decarbonise: respondents are investing 2% of their revenues into green initiatives, and 87% have personnel working toward green objectives.

The path to net zero for shipowners and operators requires six elements:

  • A robust strategy and roadmap
  • Four specific decarbonisation levers to reduce emissions: operational efficiency, technological efficiency, fuel transition, and shipboard carbon capture
  • Enablers such as dedicated sustainability teams, strategic investments in green initiatives, internal carbon prices, and digitalization

While the industry has made some progress in adopting mature and cost-effective efficiency levers, adoption of complex or nascent levers remains low. Drop-in green fuels are constrained by costs and supply-side gaps, and optimism for future cleaner fuels is yet to translate into firm commitment.

The industry is now at a pivotal point, with many shipowners and operators ramping up their decarbonisation efforts. Three-quarters of respondents plan to increase investments in green initiatives. Stakeholders can build on this momentum with a variety of supportive actions. But to be effective, they need to tailor their interventions to address the specific challenges that shipowners and operators face at each stage of decarbonisation.

Three Decarbonisation Archetypes

GCMD and BCG saw three archetypes, differentiated in their outlook, investment appetite, and the challenges faced.

Frontrunners have the greatest ambitions and are willing to invest heavily. They are pushing boundaries, adopting even nascent decarbonisation levers, such as wind propulsion and air lubrication. A majority plan to pilot shipboard carbon capture solutions by 2025. Frontrunners are also planning to adopt methanol and ammonia as early as 2026 and 2029 respectively, and the availability of fuels and bunkering infrastructure will be critical to enabling adoption.

Followers believe in decarbonising their fleets, but have tighter investment thresholds and a near-term outlook. They have kept pace with Frontrunners in adopting mature and cost-effective efficiency levers, such as main engine improvements and slow steaming, but are behind in the adoption of nascent levers, such as wind propulsion and air lubrication.

Conservatives are still early in their decarbonisation journey, likely due to a lack of awareness and familiarity with the various decarbonisation levers, and the capabilities to assess and deploy them. They are best supported by measures that increase their familiarity with the levers and help contextualise them to their specific fleets and operational requirements.

The research highlights five key actions for stakeholders:

Conduct technical pilots and facilitate data sharing, especially for nascent levers

  • Create innovative financing mechanisms to de-risk adoption of less mature levers
  • Raise awareness, contextualize levers, and build capabilities, especially among Conservatives
  • Start to build out future fuels infrastructure at ports
  • Develop mechanisms to equalize and share the costs of levers across the ecosystem
  • Maritime decarbonization is a complex, critical endeavor. The successful implementation of these five key actions demands a whole-of-value-chain approach. By working together, stakeholders can transform the maritime sector into a beacon of environmental stewardship, and set a course for a greener future where decarbonization and commercial success go hand in hand.

Note: The GCMD-BCG Global Maritime Decarbonisation Survey report can be downloaded here.

Photo credit: Venti Views on Unsplash
Published: 28 September, 2023

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Itochu enters MoU with firms for study of ammonia bunkering safety for container carrier

Through this cooperation, several companies and organisations will come together to discuss and study safety issues during ammonia bunkering of a container carrier that uses ammonia as a bunker fuel.





Itochu enters MoU with firms for study of ammonia bunkering safety for container carrier

Tokyo-based Itochu Corporation on Tuesday (22 September) said it has executed a Memorandum of Understanding for a joint study of ammonia bunkering safety for an ammonia-fuelled container carrier among eight companies and organisations with the aim of implementing the use of ammonia as a bunker fuel in shipping industry. 

Through this cooperation, several companies and organisations will come together to discuss and study safety issues during ammonia bunkering of a container carrier that uses ammonia as a main fuel.

“This MOU for Ammonia Bunkering Safety for Container Carrier is an important milestone for social implementation of the use of ammonia as marine fuel on a global scale, and also a necessary step toward the realisation of the Integrated Project consisting of the construction of a global ammonia supply chain and the development of ammonia-fuelled ships by ITOCHU and its partner companies,” the firm said in a statement. 

A joint study that will be carried out under the MOU is a successive phase of the existing Joint Study Framework launched in 2021 by 34 companies and organizations including ITOCHU and Joint Study Framework for Ammonia Bunkering Safety launched in 2022 by 16 companies and organizations including ITOCHU, and focused on discussion and study of safety issues of ammonia bunkering to ammonia-fueled container carriers among experts from port authorities, container liner operators, bunkering related players and shipping company. 

A key subject of the joint study under this MOU for Ammonia Bunkering Safety for Container Carrier is the safety assessment for simultaneous operations of container cargo operations and ammonia bunkering in a container terminal, which is generally required for container carriers to achieve operational efficiencies.

ITOCHU said it is promoting a development of ammonia-fueled container carriers with potential partners following the development of ammonia-fuelled bulk carrier, which obtained Approval in Principle in 2022. ITOCHU will accelerate the development of an ammonia-fueled container carrier based on findings of this MOU for Ammonia Bunkering Safety for Container Carrier and plans to bring it to the international shipping market in late 2020s.

ITOCHU will accelerate the development of sustainable energy systems through these initiatives and ensure its contributions to the SDGs and improvement of related efforts, one of the basic policies laid out in its new medium-term management plan, as the company pursues a low-carbon society.

The eight companies and organisations are; Algeciras Bay Port Authority, Spain; Port of Rotterdam, Netherlands; CMA CGM, France; A.P.Moller Maersk A/S, Denmark; Mitsui O.S.K. Lines, Japan; Pavilion Energy Singapore, Singapore; TotalEnergies Marine Fuels, Singapore; and ITOCHU. 

Related: Itochu-led joint study of ammonia as an alternative marine fuel expands to 34 players
Related: 23 industry players participate in joint study of ammonia as an alternative marine fuel
Related: Singapore: Pavilion Energy, MOL, Total join Itochu and Vopak ammonia bunker fuel study
Related: Spain: Itochu, Peninsula enter MOU for joint development of ammonia bunkering in Gibraltar Strait
Related: Japan: “K” Line, ITOCHU and partners receive ClassNK AiP for ammonia-fuelled bulk carrier

Photo credit: Itochu Corporation
Published: 28 September, 2023

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