Madiso Coffee (Madiso) is in the business of marketing, selling and renting coffee machines and coffee capsules. Its business was badly affected by the Covid 19 pandemic and it was not able to import and/or sell coffee machines and/or coffee capsules during the said pandemic.

However, with the recent opening up of the markets, it decided to actively market its coffee machines and recoup its losses incurred over the past 2 years. On 15 September 2022, Madiso entered into a supply contract with an Italian company, Italiano Coffees (Italiano) to purchase 2000 coffee machines at RM300.00 each. Madiso will issue 2 separate purchase orders for the coffee machines and the same to be delivered in 2 consignments. Each purchase order shall be for 1000 coffee machines. The supply contract was based on CFR, Milan, Italy (Incoterms 2020) and on UCP 600.

Madiso contacted their local bank, Zipron Bank Berhad to issue a continuing irrevocable Letter of Credit in favour of Italiano (the LC) for the supply contract. The LC provided for the payment of RM300,000 for the first consignment against the following documents:

i) clean bill of lading; ii) signed commercial invoice for 1000 coffee machines; iii) certificate of origin of coffee machines from Italy; iv) certificate of quality compliance of the coffee machines by the authorised Italian product certification board; and v) certified true copy of marine insurance policy.

[collectively referred to as the said documents]

After the first consignment of coffee machines was shipped on 30 September 2022, Italiano presented the said documents to its advising bank, Shodden Bank in Milan, Italy. Shodden Bank upon receipt of the said documents duly paid Italiano and forwarded the said documents to Ziphron Bank. However, Madiso noted that the commercial invoice only stated 900 coffee machines. At the same time, Madiso received a fax from Italiano explaining that they were only able to ship 900 coffee machines, as they found out just before shipping that 100 coffee machines may have some defects and the same will be forwarded in the next consignment. Since they will definitely ship the 100 coffee machines, they decided not to delay and have the coffee machines shipped, so that Madison will receive the same per the delivery date agreed upon.

The 2nd consignment was to be on 15 October and Madiso came to know that the Malaysian government has decided to stop the import of coffee machines from the European countries.

Under the circumstances, Madiso does not want Ziphron Bank to release the payments to Italianos bank.

(a) Advise Madiso whether it can prevent Ziphron Bank from releasing the payments to Italiano for the 2 purchase orders.

(b) Assuming that during the voyage some of the coffee machines were damaged and Madiso has taken a valid ICC A Marine Insurance Policy with XYZ Marine Insurance (XYZ). What key issues would you need to consider for a successful claim by Madiso against XYZ in relation to the Marine Insurance Act 1906 and the ICC A?