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Note: Silvor Company Limited (Applicant), a South Korean company, obtained a commercial letter of credit from Hana Bank (Issuer) to pay for the purchase of scrap metal from Prime Metals, an American subsidiary of Applicant. The LC was secured by the scrap metal. The scrap metal was shipped from the U.S. to South Korea by Maersk Line (Carrier), which issued a master bill of lading. Carrier’s agent, Top Logistics (U.S. Freight Forwarder) issued a house bill of lading (HBL) listing Issuer as consignee, as required by the LC. The same day, U.S. Freight Forwarder issued another house bill of lading, the surrendered bill of lading (SBL), carrying the same identification number as the HBL, but listing Applicant as the consignee and having “Express Release” noted in the “description of goods” box.

U.S. Freight Forwarder sent the SBL onto its South Korean agent, Hansaeng Express (Korean Freight Forwarder), and told Korean Freight Forwarder that the [HBL] “was not being issued.”

Korean Freight Forwarder presented the master bill of lading to the Carrier, received the goods, and delivered them to Applicant, as instructed. At the same time, the HBL was presented to Issuer in accordance with the LC terms, and Issuer paid USD 421,072.10.

Issuer was allegedly not reimbursed and was unable to exercise its security instead. Subsequently, Issuer sued Korean Freight Forwarder for wrongfully delivering the scrap metal to Applicant under the SBL. The Seoul District Court, Lee, Park, and Yoon, J.J., dismissed Issuer’s claim.

The court ruled that Korean Freight Forwarder’s delivery to Applicant “cannot be regarded as wrongful…when there is no evidence to show that [Korean Freight Forwarder] was aware of the issuance of the [HBL].” As an agent of U.S. Freight Forwarder, Korean Forwarder did not have a duty to investigate the circumstances surrounding the issuance of the SBL.

Comment: “Express Release”:

“No original House Bill of Lading will be provided. Please release accordingly. TOP100432 / MAEU952541030 (Master Bill of Lading No).”

[CTR/JLN]

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