In light of recent market pressures, the area of trade finance has seen a number of disputes arising from the enforcement of debentures, pledges and assignments. One such case is Italmatic Tyre & Retreading Equipment (Asia) Pte Ltd v CIMB Bank Berhad [2021] SGCA 56, where the Singapore Court of Appeal had to tackle issues relating to trade finance such as the complications of multiple parties and contracts in trade arrangements.
The lender in this case sought to enforce book debts assigned from the borrower. The Court considered whether the debtor was entitled to raise the defence of set-off in light of conflicting contractual clauses – the borrower and debtor had entered into a set-off agreement, but the borrower’s standard terms and conditions required the debtor to make payment without set-off. Ultimately, the Court found that the standard terms and conditions did not preclude the debtor from exercising its right of set-off under the set-off agreement, but the debtor had failed to exercise this right by notice and confirmation.
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