Commodities in Focus Weekly: JSC “Kazan Oil Plant” v Aves Trade DMCC [2025] EWHC 2713 (Comm)
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In this recent Court of Appeal decision of Winson Oil Trading Pte Ltd v Oversea-Chinese Banking Corp Ltd and another appeal1 [2024] SGCA 31, the Singapore Court of Appeal held that where documents are presented for payment to a financial institution, the Fraud Exception will be made out where a beneficiary makes a false representation of material fact, without belief in its truth, or is reckless in the sense that there is no belief as to the truth of the representation.
This decision has clarified that the same threshold would apply regardless of the financial instrument i.e. whether the obligation to make payment arose out of a letter of credit transaction, performance bonds or on-demand guarantees etc, the same test will be applied.
Another key takeaway from this decision is that, for the purposes of deciding on whether the Fraud Exception should be invoked, the Singapore Courts will examine a party's response to "red flags" that have arisen in the course of the transaction to determine if the party has made the false representations fraudulently.
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