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 Rodyk is one of Singapore's biggest law firms and part of the world’s largest, with a team of around 200 lawyers offering clients a full suite of legal services necessary to do business locally and globally. With over 160 years of establishment, consistently ranked highly in leading publications, we pride ourselves on providing the highest quality advice to our clients while maintaining strong working relationships with key public sector agencies and leading organisations in the private sector. Our combination with global law firm Dentons, makes us part of the world’s largest law firm with more than 12,500 professionals in over 160 locations in more than 80 countries.

Designed to be different, Dentons Rodyk can help you grow, protect, operate and finance your business. Our polycentric and purpose-driven approach, together with our commitment to inclusion, diversity, equity and ESG, ensures we challenge the status quo to stay focused on what matters most to you.

The first global pan-ASEAN law firm, Dentons ASEAN has an established history in Indonesia, Malaysia, Myanmar, the Philippines, Vietnam and Singapore and will continue to grow our presence through combinations with exceptional local firms across the ASEAN region and help clients navigate change wherever they are located.

In the new dynamic decade, clients continue to be confronted with complex scenarios and want to work with a purpose-driven law firm that has the experience and confidence to help them thrive at wherever they are located. Through our combinations with firms that are leaders in their respective communities and local markets, along with the partner firms in Dentons’ Nextlaw Referral Network, Dentons is ideally positioned to support our clients everywhere in ASEAN and around the globe.