Banque de Commerce et de Placements SA, DIFC Branch & Anor v China Aviation Oil (Singapore) Corporation Ltd

Facts

Banque de Commerce et de Placements SA (BCP Geneva), a Swiss commodity trade finance bank, and its then Dubai branch (BCP Dubai) financed the purchase of a parcel of gasoil by Zenrock Commodities Trading Pte Ltd from China Aviation Oil (Singapore) Corporation Ltd (CAO). CAO had bought the cargo from Shandong Energy International (Singapore) Pte Ltd and sold it on to Zenrock under contracts dated 21 January 2020. BCP Geneva issued a letter of credit in CAO's favour, confirmed by UBS, which allowed payment against CAO's invoice and a letter of indemnity if the original bills of lading were not available. BCP's security was an assignment of Zenrock's receivables from an onward sale to PetroChina on open account. It was not disputed on appeal that Zenrock had engineered a circular series of transactions in which title passed through several companies and back to itself.

CAO presented its letter of indemnity, which represented and warranted the existence, authenticity and validity of the bills of lading issued or endorsed to the order of BCP Dubai, and on 12 March 2020 BCP Geneva paid US$19,091,491.80. PetroChina's contract was cancelled, Zenrock went into judicial management and was wound up, and no bills endorsed to BCP Dubai were ever found. BCP sued CAO in Suit No 675 of 2020. The High Court dismissed all its claims in [2024] SGHC 145, and BCP appealed in Civil Appeal No 1 of 2025, confined to the tort of deceit.

Issues

1. Whether BCP Geneva could claim the loss even though BCP Dubai had reimbursed it internally.
2. Whether the representation in CAO's letter of indemnity was false on its proper interpretation.
3. Whether CAO made the representation fraudulently, judged by its own understanding of what it said.
4. Whether the representation was made to BCP, relied on by it and caused its loss.

Holding

The Court of Appeal dismissed the appeal because the representation was neither false nor fraudulently made, and ordered BCP Geneva to pay CAO costs fixed at $100,000 (all-in).

Reasoning

A bank's branches are one legal entity under Singapore law, so any loss BCP Dubai incurred was BCP Geneva's loss, and BCP Geneva had standing. How the bank kept its internal accounts made no difference.

On falsity, the representation had to be read in its context, including the letter of credit, the sale contract and the chain of back-to-back sales. By agreeing to pay against a letter of indemnity in place of the bills, BCP had accepted that it would no longer control delivery of the cargo, so the timing of endorsement had ceased to matter. In a chain, each party endorses the bills on when they reach it. The court agreed with the Judge that CAO represented the existence of the unendorsed bills, which had in fact been issued for a genuine cargo, and its intention to endorse them to BCP Dubai once received. There was no evidence that CAO lacked that intention, so the representation was true.

Even on BCP's reading, fraud is judged by the representor's own understanding of an ambiguous statement, unless that understanding is destitute of all reasonable foundation. CAO's understanding was well founded, and it had carried out checks through the cargo inspector, the copy bills and its seller's warranties. The matters BCP relied on, such as the copy bills naming another bank as consignee and the deletion of a clause from a draft, did not show dishonesty.

The court added that, had it been necessary, it would have held that the representation was made to BCP, because the letter was created to obtain payment from it and BCP had introduced the wording. It said the Judge used the wrong test for reliance; the correct one asks whether the statement played a real and substantial part in inducing payment, which it did, and Zenrock's fraud and insolvency would not have broken the chain of causation.

From the judgment