As featured in Documentary Credit World
The Maersk Katalin case provides important clarification on how courts assess causation in misdelivery claims—particularly in commodity trade finance disputes involving banks and shipowners.
It reinforces that liability does not depend only on breach, but on whether that breach actually caused the loss.
The Dispute at a Glance
The case arose from a financed oil cargo transaction linked to Hin Leong’s collapse.
Key elements included:
• A bank financing the purchase of cargo via a letter of credit
• The cargo being discharged without presentation of original bills of lading (OBLs)
• The borrower’s subsequent insolvency, leaving the bank exposed
The bank brought a misdelivery claim against the shipowner.
The Core Issue: The “Causation Defence”
The shipowner argued that:
• Even if there was a breach (delivery without OBLs)
• That breach did not cause the bank’s loss
This defence relies on showing that:
• The bank would have allowed the discharge anyway
• The loss would have occurred regardless
Court’s Key Approach: Evidence is Critical
The court clarified that:
• The bank must prove its loss resulted from the breach
• But the shipowner must produce evidence supporting the causation defence
Importantly:
• Courts start from the assumption that banks take security for a reason
• They will not give it up without commercial justification
Why the Causation Defence Failed
On the facts, the shipowner was unable to prove that:
• The bank would have been consulted before discharge
• The bank would have consented to delivery without OBLs
Without this evidence:
• The argument that the loss would have occurred anyway could not succeed
Key Legal Principle Reinforced
The case confirms that:
• Misdelivery (delivery without OBLs) remains a serious breach
• A causation defence is possible—but difficult to prove
Shipowners face a high evidential burden to show:
• The bank’s conduct would have led to the same outcome anyway
Implications for Trade Finance
The decision has important consequences:
• Banks retain strong protection when holding bills of lading
• Shipowners must be cautious when discharging cargo without OBLs
• The market must recognise that liability turns on both breach and causation
The case reinforces the continuing importance of OBLs as security in trade finance.
Conclusion
The Maersk Katalin decision highlights a key reality:
• Not every breach defeats liability—but causation must be proven
In practice:
• Misdelivery claims remain strong
• But outcomes depend heavily on evidence and the commercial context
Ultimately, the case confirms that in trade finance disputes, what matters is not just what went wrong—but whether it actually caused the loss.
Read the full article at Documentary Credit World https://www.doccredit.world/causation-in-misdelivery-cases-the-maersk-katalin-2/