Misdelivery Liability: The Maersk Katalin and the Carrier’s Duty
The foundational principle of Singapore maritime law is the stark warning from Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd[1]: a carrier who delivers cargo without the original Bill of Lading (“OBL”) is liable for misdelivery and does so at its peril.
For decades, this rule established a position of near-absolute liability for carriers. However, a series of complex legal disputes involving trade finance banks introduced new defences that have tested and complicated the carrier’s liability, suggesting the position was less absolute than previously understood. Just last month, the Court of Appeal’s decision inThe Maersk Katalin[2] marks a critical moment in this development, refining the boundaries of these arguments and bringing the law back toward its core principle.
The evolution began with cases like The STI Orchard[3] and The Maersk Princess[4] which successfully introduced triable issues against what were once considered “watertight” misdelivery claims. In The STI Orchard, the court refused summary judgment for the bank, finding the carrier had triable issues to raise. This allowed carriers to test defences centered on the bank’s conduct, specifically whether the bank acquired the OBLs in good faith (intending to hold them as security) and whether it had consented to the cargo’s release without OBLs.
These arguments were fully tested at trial in The Maersk Katalin[5], where the carrier relied heavily on the “causation defence”, drawing inspiration from the English case of The Sienna. The core of this defence asserts that even if the carrier breached its duty, the breach was not the effective cause of the bank’s loss because the bank would have consented to the delivery without OBLs anyway. However, the High Court ultimately rejected the causation defence on the facts, finding that the carrier failed to meet the very high evidential burden required to prove the bank would have consented999. The court found in favour of the bank for misdelivery, confirming that a carrier remains liable unless a strong defence is proven10.
Dissatisfied, the carrier appealed, arguing that due to the structure of the financing, the bank did not genuinely regard the OBLs as security. The Court of Appeal firmly rejected this “security intent” argument and affirmed the carrier’s liability, ruling that the bank’s subjective commercial intention is irrelevant to the nature of the legal rights it acquired. The right to delivery is a statutory right flowing from being the lawful holder of the OBL.
By its decision, the Court of Appeal brought the law on misdelivery back toward the orthodox principle, reaffirming the carrier’s strict obligation to deliver only upon presentation of original bills, regardless of the complexities of the trade finance structure.
In essence, the law has completed a conceptual cycle. While cases like STI Orchard and the Maersk Katalin trial introduced and tested complex defences like consent and causation that can defeat a misdelivery claim, the Court of Appeal has restricted their scope. By re-anchoring the analysis to the legal status of the OBL, the Maersk Katalin decision ensures that the OBL retains its fundamental power as security for financing banks, while placing a high evidential burden on the carrier to prove any mitigating defence. The Sze Hai Tong proposition remains the baseline legal principle.
For more information relating to this article, kindly contact Partner, Tan Hui Tsing.
Disclaimer: This information is provided for general information and does not constitute legal or other professional advice. Specific advice should always be sought in relation to any legal issue.
[1] [1959] MLJ 200
[2] [2025] SGCA 42
[3] [2022] SGHCR 6
[4] [2022] SGHC 242
[5] [2024] SGHC 282
