by Shariar Masum

With regard to a marine bill of lading, shipped on board is one of the few things a document examiner is most concerned about. And why shouldn't he be? After all, UCP 600 sub-article 20 (a) (ii) clearly says that a bill of lading must indicate that goods are shipped on board. This bold requirement was not always in the UCP. UCP 82 accepted a received for shipment bill of lading in its article 19: "When Sea or Ocean Bills of Lading are required, the following may be accepted: a) 'Received for Shipment', or b) 'Alongside' Bills of Lading." The same provision continued until UCP 222.

Maritime law distinguishes between a received for shipment bill of lading and a shipped bill of lading. The received for shipment B/L is given to the shipper after the carrier has received the cargo for carriage but before the goods have actually been placed on the vessel. The major benefit of this B/L is that it may be issued as soon as the goods are actually received and can be used as evidence of the contract of carriage regardless of whether or not the goods are shipped. However, the history of the received for shipment bill of lading was not very smooth. And it is linked to the bumpy history of "shipped on board bill of lading".

An early court case

On 17 April 1846, the ship "Belle", scheduled for London, was floating safely in the river Hooghley near Calcutta. Her master, Henry Tillman, was having a busy day as usual. He issued a shipped bill of lading and delivered it to Biale, Koch & Co, which had shipped, in good order, twelve bales of silk in the ship. Later Koch & Co. sold the goods to Gladstone & Co. and endorsed the bill of lading in their favour. But something went terribly wrong. The vessel sailed and arrived in London, but the goods were never shipped and the contents of the bill of lading were false. Gladstone & Co sued the owner of the vessel. In 1851, in their verdict on the case, Justice Jervis CJ, Cresswell and Williams JJ wrote:

"So, here, the general usage gives notice to all people that the authority of the captain to give bills of lading, is limited to such goods as have been put on board; and a party taking a bill of lading, either originally, or by indorsement, for goods which have never been put on board, is bound to shew some particular authority given to the master to sign it [emphasis added]."

If the master's authority is to sign bills of lading only on receiving the goods "on board", the owner does not hold him out as his agent until the goods are, in fact, on board. The principle established by this case came to be referred to as the rule in Grant v. Norway. It was hard to accept for the endorsee of the bill of lading, who had no means of knowing whether the master had received the goods, but took the bill of lading in good faith.

In 1855, shortly after the Grant v. Norway case, the UK's Bill of Lading Act 1855 was enacted. It attempted to cure the problem of Grant v. Norway by its provision in Section 3 which read: "Every Bill of Lading in the Hands of a Consignee or Endorsee for valuable Consideration representing Goods to have been shipped on board a Vessel shall, be conclusive Evidence of such Shipment as against the Master or other Person signing the same, notwithstanding that such Goods or some Part thereof may not have been so shipped ...".

Later cases

Even with this Act, the problem was far from over, in that Section 3 did not bind the shipowner. Thus, if the bill of lading were signed by the master or its agent, the shipowner or charterer would not be responsible. This error eventually came to light. In Heskell v. Continental Express, Ltd (1949), the shipped on board B/L was issued by the shipowner, but the goods were never actually shipped, as the shipper failed to make them available at the designated port. The court judged in favour of the shipowner.

A similar judgment came in 1965 in Rasnoimport v. Guthrie, when the ship's agent issued a B/L for 225 bales of rubber while only 90 bales were shipped. Again, the judgment was in favour of the ship owner.

Although the general understanding should be that the responsibility of carrier is to deliver the cargo to the port of destination, in the above cases the bill of lading functioned as an evidence of promise that the cargo had been shipped as represented by the B/L. Had the B/L functioned as a promise to deliver the goods recorded in the B/L, the shipper would not have had to show that the goods were actually shipped, but only that the goods recorded in the B/L were not delivered at destination.

This difficulty arose since the law of bills of lading historically stated that the goods represented by it had been shipped (Bill of Lading Act 1855). And this is perhaps the reason why UCP, from the very beginning, has advocated, if not expressly, for a shipped bill of lading.

The 1971 and 1992 Acts

With the UK's Bill of Lading Act 1855 being ineffective, a second attempt was made in the Carriage of Goods by Sea Act 1971 (COGSA). Article III (4) of the Act reads in part:

"Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs 3(a), (b) and (c). However, proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith [emphasis added]."

The COGSA 1971 was effective in assuring a third party endorsee even when the goods were not shipped by the carrier. A received for shipment bill of lading was apparently now equally as good as a shipped on board bill of lading. But what happened if no goods were received by the carrier as was the case was in Heskell v. Continental Express? Did the Act protect the shipper or the endorsee? The answer was no. To be an Article III (4) bill of lading under COGSA 1971, there must be a receipt of goods by the carrier. Without such a valid B/L, Article III (4) had no effect.

This anomaly was addressed in Section 4 of UK's COGSA 1992, which provides that a bill of lading signed by a person with authority is conclusive evidence for the lawful holder of the B/L against the carrier of the receipt for shipment or actual shipment of the goods concerned. The result is that anyone lawfully holding a B/L can use it in an action against the carrier as proof that goods were received or shipped, even if they were not. The carrier is not able to deny the authority of the person signing the B/L to so sign; therefore, it becomes a validly issued B/L.

Remaining issues

While COGSA 1992 effectively addresses the cases mentioned earlier, there is a possibility of a new problem: what would be the result if the shipper endorses the B/L in favour of a third party? Will the shipper have any action against the carrier, especially when the Act says that the B/L is conclusive evidence for the lawful holder? Does this mean that a CIF seller has to have physical possession of the B/L in order to sue the carrier?

Whatever the answer, it can be said that in COGSA 1992, by definition in Article 1 (2) (a), a bill of lading now includes a received for shipment B/L in addition to a shipped on board B/L. Should it now be the time to treat a received for shipment bill of lading as a complying B/L under the UCP?

The answer to this question depends on the context in which the question is asked. Even with a respectable legal status for the received for shipment B/L, a shipped B/L is more desirable for the buyer, as it better communicates the estimated arrival time of the vessel. So it may still be too early to ask ICC to allow for a received for shipment bill of lading in the next version of the UCP. But we can still expect that there will be some changes in the UCP bill of lading articles in future.

Shahriar Masum is a Manager in MTB International Trade Services, Mutual Trust Bank in Dhaka, Bangladesh.

His e-mail is