The Erin Schulte

The Erin Schulte1 concerns an action by a confirming bank to sue the shipowner for delivery without production of an original bill of lading. There are issues of title to sue, and of whether the shipowner had acted wrongfully in any event. If the view is taken that there should be a “simple rule that … the master must only deliver the cargo to the holder of the bill of lading who presents it to him”,2 and that the aim of the Carriage of Goods by Sea Act 1992 (“COGSA 1992”) was to “simplify the law as to the transfer of rights under a bill of lading”,3 then it is a decision to be welcomed, in stemming the tide of complexity that threatens to overwhelm this area of law.

The facts of The Erin Schulte are quite complicated, but are essentially these. Gunvor (an independent oil trading company) had agreed to sell a quantity of gasoil to the United Infrastructure Development Corporation (“UIDC”), for onward sale to Cirrus Oil Services Ltd. Pursuant to these sale contracts, the United Bank of Africa (“UBA”) issued a documentary credit, on the application of Cirrus, in favour of UIDC, and this credit was confirmed by Standard Chartered Bank (“SCB”). Gunvor became second beneficiary under a transfer of the credit. The cargo was shipped on board two vessels, the Maria E and the Erin Schulte, but when the Maria E arrived (some considerable time before the Erin Schulte), the gasoil (when sampled) was found not to be of the required quality, and was rejected by UIDC and Cirrus. Eventually Cirrus agreed to pay a reduced price for the Maria E cargo, and alternative buyers were found for the Erin Schulte cargo—Chase Petroleum Ghana Ltd (“Chase”) and UBI Energy Petroleum Ghana Limited (“UBI”) —presumably also at a reduced price (though the report of the case does not make this clear). In response to these developments, UBA advised SCB of an amendment to the letter of credit, described as “amendment no. 3” in the report, which reduced the value and