Valency International Pte Ltd v JSW International Tradecorp Pte Ltd and others

Valency International Pte Ltd v JSW International Tradecorp Pte Ltd and others was a trial in Suit No 297 of 2020 in the General Division of the High Court over a cargo of 55,000MT of South African steam coal. JSW sold the cargo to Kamachi (K.I. (International) Limited) under a contract of 16 May 2018, and at Kamachi's request Valency financed the purchase by a letter of credit in JSW's favour. JSW had chartered the MV Stella Cherise from Oldendorff Carriers GmbH & Co KG, and Unicorn Maritime (India) Pvt Ltd was the discharge port agent. Unicorn did not take part in the trial.

The original bill of lading was split into 22 bills of 2,500MT each. Unicorn gave Valency a letter dated 31 August 2018 confirming the cargo would be released only on surrender of the original bills or Valency's written instruction. The cargo was discharged at Krishnapatnam port by 31 August 2018 against letters of indemnity. Valency pledged the bills to HSBC for a loan and took them back under a trust receipt on 11 September 2018; that loan was repaid on 24 and 25 September 2018. Oldendorff instructed Unicorn to issue delivery orders on 13 September 2018 and JSW did so on 17 September 2018. Unicorn issued delivery orders naming Kamachi between 17 September and 15 November 2018, and Kamachi took the cargo without presenting bills of lading. Kamachi did not pay for 50,000MT, and the court found Unicorn then misrepresented to Valency that 52,500MT remained. Valency sued all three for conversion and JSW and Unicorn for breach of an implied agreement, unlawful means conspiracy, breach of contract and inducing breach.

1. Whether Valency had an immediate right to possession when each alleged conversion occurred
2. Whether the release instructions and delivery orders were acts of conversion
3. Whether an implied financing agreement or a sale contract between JSW and Valency existed
4. Whether the conspiracy and inducement claims succeeded

Conversion requires actual possession or an immediate right to it, and ownership alone is not enough; in any event Valency was only Kamachi's financier and had not proved it owned the cargo. When Oldendorff and JSW gave their instructions, the bills were still pledged to HSBC, and release under a trust receipt does not end a pledge, so only HSBC had the right to possession then. Once the loan was repaid the pledge ended, so Valency had the right for the delivery orders Unicorn issued from 25 September 2018, covering 38,000MT. Valency's absence from the import manifest affected only its practical ability to collect, not its legal right.

JSW's instruction released Unicorn only from its own undertakings to JSW, not from Unicorn's undertaking to Valency, which JSW knew about; earlier dealings on two other shipments and Unicorn's later false balance reports confirmed that understanding, so it was not conversion. Oldendorff's instruction, given almost two weeks after discharge was complete, was an instruction to deliver to Kamachi and was conversion, but Valency then lacked the right to possession. Unicorn's delivery orders were conversion.

Damages were the market value at conversion, USD3,751,766 on Oldendorff's expert's figures, which Valency accepted, less the deposit and a sum paid in Indian bail proceedings. No consequential loss was proved.

No implied agreement existed: the invoices and comfort letters were explained by Valency's role as financier. There was no JSW-Valency sale contract, since the Term Sheet left purchase obligations between Kamachi and JSW and the JSW-Kamachi Contract was never abandoned. There was no evidence of any combination between JSW and Unicorn, and JSW did not know of Valency's contract with Kamachi, so the remaining claims failed.

The court allowed the claim in part: it dismissed Valency's claims against JSW and Oldendorff and granted judgment for Valency against Unicorn for conversion of 38,000MT in the sum of USD2,694,451 with interest at 5.33% from the date of the writ until judgment. It made no order on JSW's contribution claim against Unicorn, and costs were to be argued on written submissions.