02/03/2018

Judgment: “SONGA WINDS” – important case for parties considering issuing/accepting a letter of indemnity on the international group standard form wording

The Commercial Court has handed down judgment today in the latest of a series of cases (most recently The Bremen Max [2009] 1 Lloyd’s Rep 81 and The Zagora [2017] 1 Lloyd’s Rep 194) considering the construction and operation of the international P&I Clubs’ standard form for letters of indemnity for delivering cargo without the production of the original bills of lading.

The case arises out of a chain of letters of indemnity issued in turn by Glencore to Navig8 and Navig8 to Songa seeking discharge of cargo in absence of the original bills of lading at the Indian ports of New Mangalore and Kakinada (the “Navig8 and Glencore LOIs”). Both sets of LOIs instructed the recipients to deliver to Aavanti Industries Pte Ltd. It was common ground between the parties that delivery had been effected to Ruchi Soya Industries Limited, Aavanti’s buyer. After discharge of the cargo, Songa was the recipient of a misdelivery claim advanced by Societe Generale, who claimed to be the rightful holder of the bill of lading. As a consequence Songa called upon the LOIs to which it was a recipient from Navig8, and Navig8 did the same up the LOI chain against Glencore. Glencore denied that the LOIs it had issued to Navig8 had been engaged, a position adopted down the line by Navig8.

Granting summary judgment to Songa vis a vis Navig8, and Navig8 vis a vis Glencore, the Court held that in the circumstances of the case delivery by Songa and Navig8 to Ruchi did engage the various LOIs because Ruchi were representing or acting on behalf of Aavanti for the purpose of the LOIs. Both the Navig8 and Glencore LOIs were accordingly engaged. The Court also granted Navig8 summary judgment on a separate issue that arose solely between it and Glencore, holding that an argument advanced by Glencore that Navig8’s claim under the Glencore LOIs was time-barred had no prospect of success at a trial.

This is an important case for any party considering issuing or accepting a letter of indemnity on the international group standard form wording.

Oliver Caplin acted for Navig8.

Timothy Young QC and Luke Pearce acted for Glencore.