Facts
Great Eastern Shipping owned the Jag Ravi, which Far East Chartering (then called Visa) chartered to carry coal from Indonesia to India. The receiver, Binani, gave Visa a letter of indemnity requesting delivery without the original bills of lading. Visa gave a separate indemnity to the shipowner. When Visa went into liquidation, Great Eastern sought to enforce Binani’s letter under the Contracts (Rights of Third Parties) Act 1999. The Commercial Court held that it could do so and Binani appealed.
Issue
Could Great Eastern enforce Binani’s letter of indemnity as a third party? Binani disputed who could accept the letter, whether delivery had occurred and whether public policy barred enforcement.
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Decision
The Court of Appeal dismissed Binani’s appeal. The letter was addressed to both the charterer and the shipowner. Visa could accept its terms, and Great Eastern was within the class of agents protected by the indemnity when it delivered the cargo on Visa’s behalf.
Delivery did not require Great Eastern itself to hand over the coal physically. It had effectively given up control over the cargo so that Binani could obtain possession. The court also rejected the public policy argument. The bills were unavailable in the context of a genuine payment dispute, and the indemnity was obtained in good faith.
Source: Full judgment
