Business email impersonation scams are on the rise. Scammers utilise highly sophisticated means to hack or spoof business email accounts, or create new accounts that closely mimic genuine ones. The scammers lurk within the email database of their unsuspecting victims to learn about business practices and transactions, and the personal email traits of employees. The scammers then use these fraudulent spoof accounts to issue fraudulent payment instructions to victims, for funds to be transferred to a new bank account controlled by the scammers.
In the legal context, would payment based on fraudulent instructions discharge a buyer’s payment obligation? Much would depend on the facts, but in an ad hoc international arbitration, Dentons Rodyk successfully represented a prominent Indonesian shipbuilder (Client) in persuading the Tribunal that the answer ought to be a firm ‘no’.
Our Client had commenced arbitration for an unpaid milestone payment of about S$900,000 for new vessels under a shipbuilding contract. The buyer (Buyer) claimed it had already paid based on (fraudulent) payment instructions that “emanated” from our Client. The case involved highly technical features which, in the Tribunal’s words, allowed the unknown fraudster(s) to be “well aware of the parties’ practices and exchanges”.
Nevertheless, the Tribunal ultimately rejected, amongst other things, the Buyer’s pleas that the fraudulent payment instructions were issued by email accounts allegedly under our Client’s control, and that our Client had owed the Buyer a duty of care to protect it from third party fraud, finding in our Client’s favour.
The case is a timely reminder for companies and their employees to remain vigilant in their online business dealings, particularly where payment instructions are concerned.
The Dentons Rodyk team was led by Senior Partner Rodney Keong, and assisted by Partner Terence Wah and Associate Chong We Feng.
About Dentons Rodyk
Dentons is the world's largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons' polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work.
Dentons Rodyk & Davidson LLP is a limited liability partnership registered in Singapore with Registration No. T07LL0439G, and a member of Dentons' global legal practice.