COMMODITIES IN FOCUS
receipts were considered to be documents of title, but
rather because the bank had advanced money under
a contract of pledge and there was a presumption
that delivery of the pledged goods would be at the
earliest opportunity, that is, on shipment.
The situation was materially the same here: the
delivery of goods to a carrier, consigned to a bank,
amounted to a constructive delivery of the goods to
the bank, so as to perfect a pledge over the goods.
Therefore, by handing the diamonds to the freight
forwarder and directing that they be delivered to
BEA, Rupam Impex had constructively delivered the
diamonds to KBC and perfected the pledge.
KBC were awarded the full amount of the claim.
“KBC were awarded the full
amount of the claim”
Ignorance of the pledge
Brink’s then applied to the Court of Final Appeal,
where they argued that they did not know about
KBC’s interest in the diamonds and should not
therefore be liable to KBC for the misdelivery.
The Court rejected Brink’s argument and held that
Brink’s knowledge or ignorance of the pledge made
between KBC and Rupam Impex was irrelevant and
not reasonably arguable. The Court affirmed the
Court of Appeal judgment and dismissed Brink’s
“The Court affirmed the Court of
Appeal judgment and dismissed
Before the Brink's/KBC decision, constructive delivery
to a pledgee could be:
giving control of the goods through delivery of a
transferring valid title documents (such as bills
of lading) to the pledgee; and
acknowledgment by the custodian that he holds
the goods to the order or at the disposition of
The Brink's/KBC case did not fall into any of these
categories: there were no keys, the air waybills were
not title documents and Brink’s actually denied
knowledge of KBC’s interest in the diamonds.
This case therefore creates a new type of
constructive delivery: when the pledgor delivers the
goods to a carrier and directs the goods to be
delivered to the pledgee (or its agent). That is
sufficient to perfect the pledge. It is irrelevant
whether the carrier/custodian knows that the goods
are subject to a pledge.
Andrew Rigden Green
Partner, Hong Kong
T +852 2533 2761