Lessons from Crédit Agricole v. PPT: The Evolution of the Fraud Exception and the Critical Role of Letters of Credit – Why Financing Banks Must Remain Wary

On 24 October 2023, the Singapore Court of Appeal handed down its decision in Crédit Agricole Corporate and Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd [2023] SGCA(I) 7 ("Re CACIB"). The judgment in Re CACIB imparts some valuable lessons for issuing banks seeking to protect their credit positions by relying on letters of indemnity in lieu of a bill of lading. The principles established will be relevant to lenders in the business of providing asset or trade financing through letters of credit.

Singapore-based partner Pierre Dzakpasu and associate Anne Jesudason set out the key takeaways for lenders from this recent decision in the latest volume of Pratt's Journal of Bankruptcy Law. This in-depth article includes a close reading of the facts of the case and a detailed analysis of the implications the judgment may have on financiers in the business of providing asset or trade financing through letters of credit.

This article was first published in Volume 20, Number 8 of Pratt's Journal of Bankruptcy Law in the November-December 2024 edition.