“CLEAN BILLS” LOIs, THE ENGLISH POSITION
Brown Jenkinson v Percy Dalton
1 remains the leading English case regarding the unenforceability of the letters of indemnity issued against clean bills of lading for cargoes which are clearly not in apparent good order and condition on shipment. It has also been cited as authority for the proposition that such letters of indemnity are unenforceable on grounds of public policy. Most recently in The Jag Ravi , 2
Brown Jenkinson was characterised by counsel for the defendant cargo receivers as an “important modern decision” establishing a public policy preventing the enforcement of a the letter of indemnity in those circumstances where the defendants were able to assert that the LOI was unenforceable on grounds that it encapsulated a fraud. Against this argument, the shipowners 3 contended that the Brown Jenkinson unenforceability defence “operates within narrow limits”. They argued that a line is to be drawn between an agreement made “with the intention of one or both parties to make use of the subject-matter for an unlawful purpose, that is to say a purpose that is illegal, immoral or contrary to public policy” and one where a LOI is issued where there is a good faith dispute.
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