News & Insights
Singapore Court of Appeal holds that recklessness amounts to fraud in the context of letters of credit
A team comprising our Partner Sarjit Singh Gill, SC and Associates Daryl Cheng and Suresh Viswanath, successfully acted for Standard Chartered Bank (Singapore) Limited in defending an appeal brought by a beneficiary claiming payment of around US$30.4 million under a letter of credit. The Court of Appeal in Winson Oil Trading Pte Ltd v Oversea-Chinese Banking Corporation and Standard Chartered Bank (Singapore) Limited [2024] SGCA 31 upheld the High Court’s decision accepting the Banks’ defences for non-payment under the letters of credit, on grounds of fraud. In so holding, the Court provided much needed clarification on the knowledge requirements for establishing fraud.
Significantly, the Court of Appeal observed that “the law should call a fraud a fraud” and confirmed that a consistent approach should be taken in the treatment of fraud across various causes of action and factual contexts. The Court therefore clarified that the knowledge requirements for establishing fraud are the same when applying the Fraud Exception to different types of financial instruments, including letters of credit, performance bonds, and demand guarantees – recklessness, without belief as to the truth of the representations, is sufficient to establish fraud. These knowledge requirements are also the same as those required to establish fraud under the tort of deceit.
Please feel free to reach out to our Partner Sarjit Singh Gill, SC for more information.
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