Does a dishonouring LC bank have title to sue under an indorsed bill of loading?

On one level, Standard Chartered Bank v Dorchester LNG(2) Limited (Erin Schulte) [2013] concerns a technical issue in relation to the application of s.5(2)(b) of the Carriage of Goods by Sea Act 1992 (COGSA 1992), in particular, the circumstances in which ‘a person with possession of the bill as a result of the completion, by delivery of the bill, of any indorsement of the bill’ has title to sue under a bill of lading.

However, the wider issue addressed in this case is the question of what rights a bank that issues a letter of credit (an LC Bank) has in respect of the cargo represented by bills of lading indorsed to it in the context of a presentation under the letter of credit, in circumstances in which the LC Bank dishonours the credit. It is suggested that Mr Justice Teare’s judgment in this case gives rise to a number of concerns for parties presenting indorsed bills of lading under letters of credit.

On another level, it emphasises the risks to traders in issuing letters of indemnity (LOIs) in respect of discharge of cargo without presentation of bills of lading, a practice that is common in the oil business…

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