Multi-disciplinary law firm Helmsman LLC shared key highlights and importance of the recent Court of Appeal decision in Winson Oil Trading Pte Ltd v United Overseas Bank Ltd and another appeal [2025] SGCA 42 (“The Maersk Katalin”) as well how bills of lading remain the cornerstone of maritime trade:

The Maersk Katalin case involves three common practices in oil and bunker trading: (i) discharging cargo against a letter of indemnity (“Discharge LOI”) when the original bills of lading (“OBLs”) have not yet arrived down the sale chain, (ii) financing cargo sales through bank letters of credit (“L/C”); and (iii) obtaining payment under an L/C by presenting a letter of indemnity instead of the original bills of lading (“Payment LOI”). These practices are industry norms. But as the collapse of Hin Leong Trading (Pte) Ltd (“Hin Leong”) showed, the allocation of risk under these arrangements has significant consequences when a counterparty goes under.

MT: What happened in this case?

Hin Leong bought 752,870 barrels of gasoil from Winson Oil Trading Pte. Ltd. (“Winson”). The cargo was carried onboard the vessel, “Maersk Princess”, which was owned by Maersk Tankers Singapore Pte. Ltd. (“Maersk”). Upon arrival at the discharge port, at Winson’s request, Maersk discharged the cargo without presentation of the OBLs, in return for a Discharge LOI from Winson.

After the cargo was discharged, Hin Leong applied to United Overseas Bank (“UOB”) for the issuance of an L/C (in relation to 660,000 barrels). UOB did not know that the cargo had already been discharged. Under the terms of the L/C, Winson was required to present to UOB the OBLs endorsed to the order of UOB to receive payment. But if the OBLs were not available, Winson could present its commercial invoice and a Payment LOI instead.

After the financial collapse of Hin Leong, UOB obtained the OBLs from Winson, and demanded delivery of the cargo from Maersk. When Maersk was unable to deliver the cargo (since it had already been discharged at Winson’s request), UOB sued Maersk for misdelivery. Winson, having issued the Discharge LOI to Maersk, intervened to resist UOB’s claim together with Maersk.

MT: What happened in the Singapore High Court?

At first instance, the High Court held that Maersk was liable for misdelivery and awarded UOB US$39.37 million in damages.

Maersk and Winson raised four defences – which were all rejected by the Court.

First, Maersk/Winson argued that Maersk was contractually obliged under the charterparty to deliver the cargo against a Discharge LOI without presentation of the OBLs. The Court held that charterparty terms or letters of indemnity do not override the carrier’s basic duty to deliver only against presentation of OBLs.

Second, Maersk/Winson argued that UOB had, by its conduct, authorised or ratified the discharge of the cargo or otherwise waived its rights. The Court found that UOB never authorised or ratified discharge without presentation of OBLs. Financing arrangements and banking practices were not enough to amount to consent.

Third, Maersk/Winson argued that the OBLs were “spent” once the cargo was discharged to Hin Leong, and therefore UOB had no enforceable rights under them. The Court held the OBLs were not “spent” because discharge without presentation of OBLs was not good delivery. UOB, as lawful endorsee of the OBLs, acquired rights of suit under statute which it could enforce against Maersk as the carrier.

Finally, Maersk/Winson argued that even if Maersk had breached its obligations, UOB’s loss was not caused by the misdelivery but by the financial collapse of Hin Leong, as UOB would have authorised discharge without presentation of the OBLs in any event. The Court rejected this, finding that the misdelivery was the immediate cause of UOB’s loss. Arguments that UOB would have authorised discharge were speculative.

MT: What happened in the Singapore Court of Appeal?

On appeal, Maersk and Winson argued only that UOB never acquired rights under the OBLs because UOB did not treat them as security, and that damages were wrongly assessed.

The Court of Appeal rejected both arguments and dismissed the appeal, upholding the first instance decision.

The Court of Appeal held that, as the lawful holder of the OBLs, UOB acquired rights under the OBLs automatically by operation of law. Whether UOB subjectively regarded the OBLs as security was irrelevant.

On damages, the question was whether the court should assess the market value of the cargo based on the “spot price”, i.e., prevailing market price on the date of breach or the “spread price”, i.e., average of market prices over a period of time. The Court upheld the use of the “spot price” in assessing damages for misdelivery because the loss crystallises at the point of misdelivery.

MT: What does this mean for banks?

The Maersk Katalin decision is a welcome one. The Court has confirmed that the orthodox legal position continues to apply – the bank, as the lawful holder of the OBLs, may sue the carrier for misdelivery if the cargo is discharged without presentation of OBLs. Such rights remain intact even if the bank also holds other forms of security. This underscores that OBLs remain a critical part of the security package.

The Court of Appeal decision is particularly reassuring given the recent English decision in The Sienna [2024] 1 Lloyd’s Rep 177, which seemed to suggest a judicial shift in the other direction. In that case, the carrier successfully defended a misdelivery claim on the basis that the bank would have consented to the discharge of cargo without production of OBLs, i.e., the discharge did not cause the bank’s loss. In reaffirming the traditional understanding of a financing bank’s rights under bills of lading, the Singapore courts’ analysis now confines The Sienna to the specific facts of that case.

MT: What does this mean for carriers?

The decision reinforces the traditional understanding that carriers who discharge cargo without presentation of OBLs do so at their own peril.

Carriers should also be mindful about who issues the Discharge LOI. In this case, Maersk’s liability to UOB was ultimately covered by its Discharge LOI from Winson. But things would have been different if the Discharge LOI had come from Hin Leong – which would have left Maersk exposed with limited recovery from an insolvent Hin Leong.

MT: What does this mean for traders?

Traders issuing Discharge LOIs (to carriers) and Payment LOIs (to banks) must be to the risks involved. A seller who gives a Payment LOI to the bank will usually still need to provide the endorsed OBLs to the bank when it receives them; and a trader who gives a Discharge LOI to a carrier may ultimately be on the hook for any liability imposed on the carrier for misdelivery. This was exactly Winson’s position in this case.

MT: What is the key takeaway for the industry?

This case reaffirms that bills of lading remain the cornerstone of maritime trade. Carriers must be cautious when discharging cargo against Discharge LOIs, traders must weigh the risks before issuing LOIs, and banks can take comfort in the robustness of their rights under OBLs which continue to serve an important security function.

Photo credit: Helmsman
Published: 2 February, 2026