In Euro-Asian Oil SA v Credit Suisse AG (handed down on 25 July 2018) the Court of Appeal upheld a judgment of over US$15 million obtained by Euro-Asian against Credit Suisse under a letter of indemnity (“LOI”).

Euro-Asian had entered a contract to buy a quantity of oil on cif terms from a company called Abilo (UK) Limited. The contract provided for payment by letter of credit. It further provided that, where bills of lading were not available, payment was to be made against presentation of an LOI and a commercial invoice. Abilo/its bank obtained payment of the full contract price by presenting under the letter of credit an LOI (signed by Abilo and co-signed by Credit Suisse) and a commercial invoice. The LOI contained various warranties and undertakings as to Abilo’s title and rights concerning the cargo being sold. However Euro-Asian did not receive any cargo and the cargo described in the LOI did not actually exist. Accordingly Euro-Asian claimed against Credit Suisse for breach of the LOI.

In addition to the issue of liability, the Court of Appeal considered the measure of damages and, in particular, the relevance of a sub-contract which had been entered by Euro-Asian.