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Note: Kerry Foodstuffs, Co. Ltd., a broker, purchased 3,000 metric tons of Thai sugar for resale to S. Arumugam and Brothers, a partnership, for US$ 969,000. Payment was to be by LC. The goods were entrusted to a charter party in bulk and comprised other orders, as well. The carrier, Super Bulk Cargo Lanka Ltd., issued a negotiable charter B/L consigned to the order of the LC issuer, Bank of Credit and Commerce International. The seller/ beneficiary presented the documents to the negotiating bank, ANZ Bank, which claimed reimbursement from BCCI's New York correspon-dent. At this time, however, BCCI's accounts had been frozen by action of the U.S. Government as a result of a coordinated worldwide closure of the bank due to BCCI's fraudulent activities, and the documents remained in the control of the beneficiary. In the meantime, the goods arrived in Colombo, Sri Lanka, and the buyer with the assistance of the buyer's cargo handling agent obtained possession of the goods although it did not have the B/L. The broker/ beneficiary then brought this action against the buyer for conversion and against the carrier and the cargo. handler for conversion and wrongful delivery of goods. The Court of First Instance, Chung, J., entered a judgment of US$969,000 for seller/beneficiary against the three defendants and a judgment of US$969,000 for the carrier in an indemnity claim against the buyer and cargo handler. The carrier argued that title to the property had passed to the buyer at the latest when the documents were presented so that there could be no conversion of the goods. The court rejected this argument and concluded that the seller/beneficiary intended to retain control of the goods until it was paid under the LC. It stated that the evidence revealed that the seller "regarded the bills of lading to be crucial to its interest in securing payment." The appellate court noted that "merely because the bill of lading was made out to the order of the buyer's bank does not indicate an intention to pass property in the goods to the buyer. The retention of the bills of lading has been considered as an indication that the holder intends to retain title and control over the goods." The court concluded that the carrier was a bailee and responsible to the seller/ shipper for mis-delivery of the goods. The court indicated that the description of the role of the negotiating bank in its communications was "irrelevant" since there was no purchase of the documents and the bank had, in effect, acted as a collecting bank outside the credit.

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