Malaysia is a key player in the international palm oil trade. Malaysia is one of the largest palm oil exporters and the Malaysian palm oil industry accounts for 39% of the global palm oil production.

As with most commodities, palm oil is primarily carried by sea under a bill of lading and paid for by way of a letter of credit. The shipment/delivery of, and payment for, palm oil cargo are areas of risk where disputes commonly arise.

This paper will discuss issues relating to the release of cargo from the vessel without presentation of the corresponding bill of lading, the duty of a bank in examining the relevant documents presented to it under a letter of credit and cargo shortfall claims. The paper will also consider practical suggestions for minimising risk.