LOI and delivery to agent of nominated receiver. The Songa Winds.

 

In The Songa Winds [2018] EWHC 397 (Comm) the court considered the enforceability of a letter of indemnity for delivery of cargo without production of a bill of lading. Songa had time chartered their vessel to Navig8 who had concluded a voyage charter with Glencore carrying crude sunflower oil from the Ukraine to New Mangalore and Kakinada. Delivery was made without production of bills of lading in return for indemnities on back to back terms from Glencore to Navig8 and from Navig8 to Songa. The indemnities were on the terms of the International Group’s Letter of Indemnity for delivery of cargo without production of a bill of lading which provides

“we, [insert name of party requesting delivery], hereby request you to deliver the said cargo to “X [name of the specific party] or to such party as you believe to be or to represent X or to be acting on behalf of X” at [insert place where delivery is to be made] without production of the original bill of lading.”

Both indemnities stipulated delivery to Aavanti, who had purchased the cargo from Glencore. Delivery, however, was made to Ruchi, who were Aavanti’s sub-purchaser. A claim was made against Songa by SocGen, who had financed Aavanti’s purchase and claimed to be the lawful holder of the bills of lading.

Andrew Baker J found that Ruchi had been acting as Aavanti’s agent and gave summary final judgment that the two LOIs had been triggered. Although Ruchi had not paid Aavanti, the evidence showed that it was acting as its agent at the two discharge ports. There was a standing practice, between Aavanti and Ruchi, for delivery to be made to Ruchi of cargo quantities sold to it by Aavanti without production of bills of lading. Aavanti had issued LOIs to Glencore requesting it to procure delivery to Ruchi although it had not been paid and without reference to whether it was going to be paid before delivery. Aavanti had no representative office or other presence in India and no right to import cargo into India and had not appointed anyone to receiver the cargo on its behalf at the two Indian ports. Ruchi had its own dedicated tanks at both ports and the overwhelming likelihood was that the cargo was discharged into those tanks.

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