Singapore: Enforcing A Bank's Right Under A Pledged Bill Of Lading

Last Updated: 21 August 2019
Article by Liew Kai Zee and Moses Lin
Most Read Contributor in Singapore, August 2019

The "Yue You 902" and another matter [2019] SGHC 106

In this case, the Singapore High Court ("Court") allowed Overseas-Chinese Banking Corporation Limited ("Bank") to enforce its pledge over original bills of lading in its possession as security over a trust receipt loan. The Court clarified the law in relation to the rights of a trade finance bank over pledged original bills of lading, especially in the case where the trade finance bank only became the lawful holder of the original bills of lading after the cargo was discharged without the production of the original bills of lading.


The Bank was given a pledge over 14 original bills of lading ("BLs") to secure a trust receipt loan granted to the buyer ("Buyer") for the purchase price of the cargo. The cargo was discharged by the defendant shipowner ("Defendant") against a letter of indemnity provided by its contractual charterer without production of the BLs. The Buyer defaulted on the trust receipt loan and the Bank demanded delivery of the cargo from the Defendant as lawful holders of the BLs. As the cargo was already discharged, the Bank claimed against the Defendant for breach of contract of carriage, breach of contract of bailment, conversion and detinue.


(a) Was the Bank a lawful holder of the BLs?

The Bank was a lawful holder of the BLs if the Bank became the holder of the BLs in "good faith". The Defendant argued that the Bank was not a holder in "good faith" as the Bank had particular knowledge of the Buyer's commercial practices and knew that the cargo had already been discharged against the letter of indemnity by the time the Bank became the holder of the BLs. The Court held that the Bank did not have actual knowledge of the discharge of the cargo. General knowledge that letters of indemnity may be used in the trade of certain commodities involving short voyages was not sufficient by itself to input such actual knowledge. In any case, the Bank had acted honestly and provided valuable consideration in the form of a loan in return for a security interest in the BLs.

(b) Were the BLs "spent" before the Bank became a holder of the BLs?

The Defendant argued that the cargo had been discharged prior to the Bank becoming a holder of the BLs. As such, the BLs had become "spent" before the Bank acquired them. The Court held that the BLs were not "spent". The BLs do not become spent if delivery is made to persons not entitled. In this case, the delivery was made against a letter of indemnity to a person who was at the material time not entitled to delivery under the BLs.

(c) Did the Bank still have rights against the Defendant if the BLs were "spent"?

The Bank will still have rights of suit under the "spent" BLs against the Defendant pursuant to section 2 of the Bills of Lading Act, if the Bank became the holder of the BLs by virtue of a transaction effected in pursuance of any "contractual or other arrangements", made before the BLs became "spent". In this case, the relevant "contractual or other arrangement" would be the facility agreement for the trust receipt loan, and it is undeniable that the request and grant of the trust receipt loan were made pursuant to the facility agreement.

The relevant "contractual or other arrangement" also does not have to be one which the Bank is a party to, if it can be said that the sale contract for the cargo is a cause or reason for the trust receipt loan. Thus, even if there was no facility agreement to rely on, the Bank can rely on the sale contract for the cargo as the relevant "contractual or other arrangement".

Learning Points

This case provides assurance to trade finance banks in relation to their rights under pledged bills of lading in a typical trade finance transaction. However, the outcome may have been different if the trade finance bank had actual knowledge of, or consented to, the discharge of the cargo. This is especially so in supply chain financing where the trade finance bank may have greater knowledge of the modus operandi of the various parties including the seller, charterer and shipowner. The risk of misrepresentation which can lead to an estoppel of the rights of the trade finance bank is also higher in such cases.

In addition, it is also worth mentioning that it is important that a trade finance bank obtains the bills of lading through conventional trade structures. In this case, the Bank received the BLs through banking channels. This is a good indication that the BLs could not have been "spent" in the Bank's possession, because any delivery by the Defendant would not be delivery to a person entitled to delivery under the BLs, since the BLs are in the possession of the Bank. The outcome may again be different if the Bank received the BLs from the Buyer or a third party, as there will be the risk that the cargo was already delivered with the BLs, before the BLs were delivered to the Bank. Likewise, it is also prudent for the bills of lading to be consigned to the order of the trade finance bank. This will again mitigate the risk of the bills of lading becoming "spent" as any delivery of the cargo other than to the order of the trade finance bank would not be delivery to a person entitled to delivery under the bills of lading.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions