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Lawyers: Not end of the road for parties affected by thorny issues of commodity trading mishaps

Helmsman LLC lawyers discuss pausing of LC payment, what it means for parties buying ships from companies of a group affected by fraud allegations, and trafficking in spent bills of lading.
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A webinar discussing topical issues relating to Letter of Credit (LC) payments related to sale and purchase (S&P) of commodities, S&P of ships from financially troubled companies facing fraud allegations, and trafficking in spent bills of lading (BL), was organised by international shipping and commodity law firm Helmsman LLC on Wednesday (22 July).

The event started with Maureen Poh, Director at Helmsman, presenting a scenario of a buyer purchasing an oil cargo from a company affected by fraud allegations; with payment of the cargo on basis letter of credit (LC).

Pausing Letter of Credit bank payments

“The immediate concern for the buyer was try to stop payment under LC. It seems simple to tell the bank that there could be a suspected fraud involved with the transaction so ‘please stop’. But actually, this is not so straightforward,” said Poh, who, together with her colleagues, recently advised clients involved with the above scenario.

She explained the S&P chain and documentary chain, though related, are actually separate chains of contracts.

“You might have action against your counterparty in the S&P chain but that doesn’t mean you can stop payment under documentary chain. Documentary credit payment system is “the lifeblood of commerce”, and allowing others to affect documentary credit payment will spell the death knell of commerce,” noted Poh.

“But, some civil jurisdictions in Europe might have a more flexible position. In some jurisdictions there is a general duty of good faith where the court might be more sympathetic to the victim of an alleged wrongdoing.

“In one case, the client managed to get a temporary injunction to stop the issuing bank from proceeding with payment to the negotiating bank so they can gather more evidence of the alleged fraud.

“So, if you find yourself stuck in the LC chain it might be worth exploring another jurisdiction.”

S&P of ships from group under fraud investigations

A question related to considerations for players interested in the S&P of vessels owned by legally separate entities of a group under fraud investigations was posted by Singapore bunkering publication Manifold Times.

Chen Zhida, Associate Director at Helmsman, replied that it is “very common” for big commodity trading groups to have structures, such as a trading arm and shipping arm, to keep operations separate.

“Based on the question there is nothing to suggest the companies are set up to abuse the corporate structure. That being the case, their obligations would be kept separate,” he said.

“Another angle is if those shipowning entities are involved in the alleged fraud, then they might have an associated liability.”

Ian Teo, Managing Director at Helmsman, provided more details of liabilities and maritime liens.

“Maritime liens follow the vessel regardless of who are the owners. As the new owner you have to be responsible for these claims. In Singapore, the main maritime liens we recognise are claims for unpaid crew, and claims arising out of collision. Some countries recognise claims for unpaid bunkers,” said Teo.

“The danger of maritime liens is you do not know they exist until one day they appear. Technically, you can ask the ship manager for an account of who they owe money to but we will not know how accurate that is.

“In Singapore, you can check in the court system for certain vessel claims. There are many things you can do to make sure the vessel is free of liens but you need to bear in mind you are buying a vessel under such situations.  Do your due diligence.”

Trafficking of spent Bills of Lading

Tang Chong Jun, Executive Director at Helmsman and Managing Director of Tang & Co, shared there could be trafficking of spent BLs in Singapore.

“It is normal to present the Bill of Lading when taking delivery of cargo; but in shipping, many do not do this and there is a widespread practice of parties taking cargo under a Letter of Indemnity. The party which doesn’t surrender those Bills of Lading can take it into the bank and ask for finance,” said Tang.

“We have a recent case on hand where we are acting for the shipowner who did not collect the Bill of Lading. Obviously, when banks found out they sued the shipowner for failing to collect the original Bills of Lading and claimed the shipowner has misdelivered the cargo.

“The court has acknowledged that there could be trafficking in spent BLs.

“Now, the question is of what will be the implication for those banks who are in receipt of those spent BLs? In my view, this creates a lot of uncertainty where banks now need to do a lot more due diligence on whether BLs are spent.”

Teo added that the trafficking of spent BLs has been increasingly unraveling in recent years.

“This whole practice using the Letter of Indemnity has been going on many years and the practice is starting to show cracks and stress. We are seeing possibly the same cargo being resold and refinanced a few times,” he said.

“Most of time, there is no problem at end of day as the cargo is delivered. But if there is no cargo then something is definitely wrong.”

 

Published: 28 July, 2020

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Methanol

China: Chimbusco completes bunkering op with domestically produced green methanol

Chimbusco delivered 1,000 mt of domestically produced green methanol bunker fuel to “COSCO Shipping Yangpu”, China’s first 16,000 TEU methanol dual-fuel container ship, from 11 to 12 July.

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July 17, 2025

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China: Chimbusco completes bunkering op with domestically produced green methanol

China Marine Bunker (PetroChina) Co Ltd (Chimbusco) on Monday (14 July) said it successfully completed a green methanol bunkering operation for COSCO Shipping’s first methanol-dual-fuel container vessel at Shengdong Terminal in Yangshan Port. 

Chimbusco delivered 1,000 metric tonnes (mt) of domestically produced green methanol fuel to COSCO Shipping Yangpu from 11 to 12 July. 

COSCO Shipping Yangpu is the first methanol-dual-fuel container vessel invested and built by COSCO Shipping Group. The company previously deemed the vessel China’s first 16,000 TEU methanol dual-fuel container ship. 

 With an overall length of 366 meters and a beam of 51 metres, it has a maximum container capacity of 16,136 TEUs. 

The vessel employs an advanced dual-fuel propulsion system that enables flexible switching between methanol and traditional fuels. When using green methanol as fuel, it significantly reduces carbon emissions and pollutant discharges during operations, injecting strong impetus into the green transformation of China’s shipping industry.

“This green methanol bunkering operation, jointly completed by COSCO Shipping Lines, CHIMBUSCO, and SIPG Energy Shanghai, represents another proactive exploration by CHIMBUSCO in the field of green methanol bunkering at Shanghai Port,” Chimbusco said.

“It also marks another significant step by COSCO Shipping Group in advancing the green and low-carbon transformation of the shipping industry and integrating the entire methanol supply chain.”

“As a leading domestic marine fuel supplier, CHIMBUSCO actively responded to shipowners’ demand for green methanol bunkering and worked closely with COSCO Shipping Lines, SIPG Energy Shanghai and other entities to develop a detailed supply plan and emergency response plan in advance, in accordance with relevant bunkering standards for marine methanol fuel.”

Manifold Times previously reported Chimbusco completing a methanol bunkering operation of the same vessel in Shanghai on 11 May. 

COSCO SHIPPING YANGPU was supplied approximately 900 mt of methanol marine fuel by Chimbusco at Pier 1 of COSCO Shipping Heavy Industry. 

Related: Chimbusco completes bunkering op of China’s first 16,000K TEU methanol DF boxship
Related: COSCO Shipping names China’s first 16,000 TEU methanol dual-fuel container ship

 

Photo credit: Chimbusco Dalian
Published: 17 July 2025

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Methanol

Shanghai Electric starts producing first batch green methanol bunker fuel with new plant

New batch of green methanol will soon arrive at Shanghai Port and be delivered to CMA CGM to enter the international market as a marine fuel.
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July 17, 2025

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Shanghai Electric starts producing first batch green methanol bunker fuel with new plant

Shanghai Electric on Thursday (17 July) announced its Jilin Taonan Green Methanol Project, China’s first facility to fully integrate wind-to-hydrogen with biomass gasification, is now producing its first batch of ISCC-EU certified green methanol.

This batch of green methanol will soon arrive at Shanghai Port and be delivered to CMA CGM to enter the international market as a marine fuel.

The company said the milestone event marked a major national breakthrough in the field of green hydrogen-based fuels. 

Shanghai Electric will use this project as a catalyst to build a world-leading, full-industry-chain platform for green fuels, to accelerate the development of an integrated industrial ecosystem encompassing green energy, green hydrogen, green methanol and green applications.

The company will continuously improve new energy power generation, water electrolysis for hydrogen production, biomass gasification, carbon capture, green ammonia, and to promote the large-scale application of green fuels in shipping, aviation, chemical industry and other fields.

At a ceremony, Cai Dong, member of the Standing Committee of the Jilin Provincial Party Committee and Executive Vice Governor, launched the start of production of the fuel. 

As the first large-scale commercial green methanol project in China, the Taonan project has an annual production capacity of 50,000 metric tonnes in the first phase.

“It is the first green methanol project in China to pass the EU ISCC full-process certification and to market to the international market,” the company said. 

 

Photo credit: Shanghai Electric
Published: 17 July 2025

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Business

Singapore-based Seatrium secures USD 400 mil sustainability-linked revolving credit facility

Credit facility will significantly contribute to Seatrium’s long-term goals of achieving its ESG targets, further bolstering its commitment to sustainable development in the offshore, marine and energy sector.
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July 17, 2025

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RESIZED scott graham

Singapore-headquartered marine engineering firm Seatrium on Tuesday (15 July) said its wholly-owned subsidiary Seatrium Financial Services Pte. Ltd. (SFS) has successfully secured a USD 400 million sustainability-linked revolving credit facility with United Overseas Bank (UOB).

This credit facility, anchored in sustainability-linked principles, aligns with Seatrium’s Sustainable Finance Framework and includes revolving credit features which will strongly enhance the Group’s liquidity and financial flexibility. It will significantly contribute to Seatrium’s long-term goals of achieving its Environmental, Social, and Governance (ESG) targets, further bolstering its commitment to sustainable development in the offshore, marine and energy sector.

Dr Stephen Lu, Seatrium’s Chief Financial Officer, said, “Our continued partnership with UOB marks an important milestone in advancing our financial agility and deepening our commitment to environmental stewardship. By linking our financing framework to clearly defined sustainability targets, we are not only reinforcing accountability but also embedding climate-conscious principles into our capital strategy. This alignment will actively support our decarbonisation goals and longterm value creation.”

Ms Cindy Kong, Managing Director of Group Corporate Banking at UOB, said: “As the global energy transformation accelerates, sustainability-linked financing is playing a crucial role in driving the shift toward decarbonisation. We are proud to partner Seatrium in championing forward-looking initiatives within the global renewable energy segment. Together, we aim to foster innovation while paving the way for responsible and sustainable business growth globally.”

Since 2023, Seatrium has successfully secured over SGD 3 billion in sustainability-linked loans and green financing, further establishing itself as a global provider of sustainable engineering solutions for the offshore, marine, and energy sectors. 

“The Group is steadfast in its commitment to fulfilling its Sustainability Vision 2030, which is centred on empowering clients to minimise their carbon footprints through energy-efficient and environmentally sustainable vessels and offshore platforms.”

 

Photo credit: Scott Graham
Published: 17 July 2025

 

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