Thera Agri Capital No 2 Pty v BCC Trade Credit Pty Ltd t/as The Bond & Credit Co (2022)

In the decision for this case, the Supreme Court of New South Wales declared that the the plaintiff, Thera Agri Capital No 2 Pty Ltd,  is entitled to be indemnified and ordered the defendant, The Bond & Credit Co, to pay out an insurance claim to the plaintiff that was defrauded by a customer. This case concerns whether the plaintiff insured, Thera Agri Capital No 2 Pty Ltd, is entitled to indemnity under a “Trade Credit Insurance Policy” issued by the defendant insurer, BCC Trade Credit Pty Ltd trading as “The Bond & Credit Co”. The trade credit insurance agreement, used to indemnify a seller against losses from the nonpayment of a commercial trade debt, was made to be sharīʿa-compliant, or in accordance with Islamic law, using a murābaḥa system, an Islamic sales contract where both parties agree on the markup price versus conventional interest-based loans. Although the insurer refused indemnity on the basis that the insured was defrauded and there was no purchase of goods, the court ordered that they must indemnify the insured because the murābaḥa agreement contractually obligated their customer to repay the funds.

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