UNICREDIT BANK AG V GLENCORE SINGAPORE PTE LTD

[2022] SGHC 263, General Division of the High Court, Singapore, Andre Maniam J, 21 October 2022

Contracts (Letters of credit) – Misrepresentation – Fraud

The plaintiff bank’s case was that the defendant, a seller of goods, had committed fraud by simultaneously buying back the same goods without informing the bank about this second transaction. The bank had granted credit facilities to Glencore’s buyer HL, a company now in insolvent liquidation, and had by a letter of credit financed HL’s purchase of 150,000 mt of high-sulphur fuel oil (HSFO) from Glencore. The sale contract between Glencore and HL stipulated that the HSFO was to arrive on MT New Vision and be delivered in Singapore in the period 18 to 25 December 2019. Glencore and HL agreed that title was to pass to HL at 00.01 on 2 December 2019, and that it would immediately pass back to Glencore. Nevertheless, on 28 November 2019 when HL applied for a revision to the letter of credit, it referred to the HSFO as “unsold goods” and for several months thereafter continued to conceal the sale back to Glencore. As a result, when the bank issued the letter of credit on 29 November 2019 and paid Glencore on 3 December 2019, the bank was unaware that Glencore had bought the goods back from HL. When in the course of 2020 HL entered into judicial management and insolvent liquidation, the bank had not been repaid, did not have the bills of lading and did not have security over the goods. It asserted claims against Glencore based on rescission; fraud or deceit; conspiracy and unjust enrichment.