Commodities Fraud: How reliable is the victim’s recourse under their security and insurance arrangements

When fraud strikes, there is often little point in the victims pursing the
fraudster to recoup their losses. Instead, the victim looks first to their
insurance or security arrangements – after all, that is what that insurance
or security was for, was it not?

But are things as simple as that? If the same goods were sold many times over
by the fraudster, can one of the unfortunate buyers say they have an ‘insurable
interest’ in those goods? Have they ‘lost’ goods that were in fact illusory?

And what of the bank financing the purchase of goods at sea by a fraudster?
Such a bank will often hold the bill of lading as security. But what value that
security? Often the bank will know that the purchaser will need to take
delivery of the goods other than against the bill of lading (which the bank
has retained as security) in order to deliver them to its sub-purchaser, and
so generate funds to pay back the bank. When things then go wrong, can
the bank turn on the carrier under the bill of lading and cry ‘misdelivery’?
Does the bank even have the right to sue under the bill of lading?

Specific Issues for Discussion:
1. The ‘mere receipt’ rule and the relationship between a bill of lading and a charter as analysed by the Court of Appeal and Mrs Justice Moulder in the Unicredit Bank AG v Euronav NV litigation
2. The ‘causation’ argument that defeated the bank’s claim in Unicredit Bank AG v Euronav NV, and its wider implications
3. ‘Insurable interest’ in a cargo sold many times over as analysed by the Court of Appeal and Mr Justice Butcher in the Quadra Commodities case

Date:26/06/2024
Chair:The Hon. Mr Justice Andrew Baker
Panellists:Mark Jones - Barrister at 36 Stone
John Robb – Barrister at Essex Court Chambers
Peter MacDonald Eggers KC – Barrister at 7 King’s Bench Walk
Venue:The IDRC,
1 Paternoster Lane
London
EC4M 7BQ
Time:6.00pm - 7.30pm
CPD Points:1.5 CPD points

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