Enforcing A Letter Of Indemnity

Great Eastern Shipping Company Ltd v (1) Far East Chartering Limited and (2) Binani Cement Ltd [2011] EWHC 1372 (Comm)

In The Laemthong Glory (No 2) [2005] 1 LLR 688, the Court held that the provisions of a letter of indemnity ("LOI") issued by receivers to voyage charterers requesting delivery of cargo without presentation of original bills of lading purported to confer a benefit on the ship-owners in their capacity as the agents of the charterers for the purpose of delivering the cargo. Consequently, the owners were entitled to enforce the LOI in their own name pursuant to section 1(1) of the Contracts (Rights of Third Parties) Act 1999 (the "Act") which allows a third party to enforce in his own right a term of a contract if the contract expressly provides that he may do so or if the term "purports to confer a benefit on him". In the present case, His Honour Judge Mackie QC considered that the LOI issued by receivers was in terms identical to the LOIs in The