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Note:Peer Voss, a German automobile dealer, offered a Mercedes CLK 320 to Korean buyers via a circular announcement for DM 108,000 c&f. Seohwan Co. Ltd., a South Korean company, bought the car from Voss. Buyer made an initial down payment of DM 48,500, and Voss made the arrangement to ship the car. Seller shipped the car with Carrier, APL Co. Pte. Ltd. from Hamburg to Busan, South Korea. Carrier issued a B/L. The B/ L was typical, containing blank boxes with printed headings. Seller's name appeared in the box entitled "Shipper" as "Voss". Buyer's full name and address were typed into the consignee box which contained the preprinted statement "non-negotiable unless consignee to order" . "The words "'Or Order'" did not appear in the box." The consignee box contained Seohwan's name and address as did the "Notify Party" box. The B/L was endorsed "shipped on board". Finally, on the bottom of the front page appeared the following "[a] set of 3 originals of this and one negotiable bill of lading is hereby issued by Carrier. Upon surrender to the Carrier of any one negotiable bill of lading, properly endorsed, all others shall stand void."

Three original B/Ls were issued which Seller retained until receipt of the balance due for the car from Buyer. Seller claimed to have not been paid up to the date of the court action. However, the vessel carrying the car arrived at the port of delivery. The car was taken into custody by Carrier's Korean office. Carrier released the car to a man named Seoh Pyung Hwan who identified himself as being from Buyer. He presented copies of commercial invoices from Seller, and presented an outgoing cable from the Korea Exchange Bank showing payment for the car and other transactions. The car was given to the man that day.

The following day, Seller's forwarders contacted APL's office in Hamburg and instructed them not to release the car without production of the original B/ L.

Subsequent to these instructions a dispute arose over payment of the balance for the car. At the same time, Seller demanded Carrier pay the balance due on the car because it had misdelivered the vehicle. Carrier refused these demands, arguing that it had made a proper delivery to Buyer as the named consignee without production of the original B/L.

Seller sued Carrier for DM 60,100, claiming that it was in breach of the contract of carriage or, in the alternative, in breach of its duty as bailee and or that it had negligently failed to exercise due care with the cargo by having failed to obtain an original B/L.

Seller's application for summary judgment was followed by Carrier's application for a determination of "[w]hether on the construction of the bill of lading, ..., [Carrier] was entitled to deliver the cargo ... without production of the original bill of lading."

Both applications were heard by the deputy registrar, who found in favor of Consignor on the ground that: 1) "[Carrier was] contractually not entitled to release the cargo ... without production of the original bill of lading, the clear inference from the undisputed objective evidence being that the parties had contracted on the basis that the original bill of lading would be produced against delivery of the cargo described therein". The decision was appealed to the Singapore High Court which affirmed.

The principal question was whether the contract for carriage required production of the B/L for delivery of the car.

Consignor argued that the principle was firmly established that "in the mercantile world in a contract for the carriage of goods by sea, delivery of the cargo is to be made at the discharge port by the carrier to the consignee only upon the production by the INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE 136 consignee of the original bill of lading." To support the argument that this principle is implied in every B/ L, Consignor cited the "well-known" observation in Sze Hai Tong Bank v. Rambler Cycle Co., MLJ 200 (1959) by Lord Denning "'[i]t is perfectly clear law that a shipowner who delivers without production of the bill of lading does so at his peril. The contract is to deliver, on production of the bill of lading, to the person entitled under the bill of lading." However, the Carrier argued that this observation applied "only to the situation where the bill of lading issued was a 'to order' bill of lading." Carrier contended that "[i]f the bill made the goods deliverable to a specific person as consignee and did not contain any words importing transferability, the carrier's duty was simply to deliver the goods to the consignee on proof of identity."

The court observed that the bill that was issued was not "an order bill since the consignee box contained Seohwan's name only." The court asked "whether when it came to delivery, there was a distinction between the delivery of goods covered by a bill of lading that was made out 'to order' or 'to bearer' and commonly known as an order bill of lading and one that specified the name of the consignee without the addition of the words 'to order' or 'assigns'. This latter type of bill of lading has been referred to variously as a 'non-negotiable' bill of lading, a 'straight consigned' bill and a 'straight bill'".

The court reviewed a series of cases dating back to The Stettin decision of 1889 14 PD 142. The Stettin court ruled that "a shipowner was not entitled to deliver goods to the consignee without the production of the bill of lading and that the defendants had to take the consequence of having delivered the goods without production of either of the two part of which the bill of lading consisted." The High Court noted that in The Stettin, the judge "did not distinguish in his judgment between an order bill and a straight bill" and "considered that even a named consignee had to produce one part of the bill of lading in order to obtain delivery."

The court recited cases to the present to the effect that a bill of lading is required regardless of whether the bill is order or straight.

In considering the Carrier's argument, the court examined the authorities cited; however, the cases were dismissed as being "obiter" or pertaining to sea waybills. The court then distinguished a sea waybill from a bill of lading stating that a sea waybill "operates as a receipt for goods received for shipment and evidences the contract of carriage. One significant difference between it and a bill of lading is that it is never ever a negotiable instrument and is therefore usually used on short sea routes and where neither the shipper nor the cargo receiver needs to pledge shipping documents in order to raise finance. It is not issued in sets and the receiver is able to take delivery of the goods merely by establishing his identity. The original sea waybill need not be produced. Further since it is not a bill of lading the Hague Rules and the Hague Visby Rules do not apply to it."

The court stated that "no doubt ... the document issued in respect to the carriage of the car from Hamburg to Busan was a bill of lading, not a waybill." The document "called itself a bill of lading. It was issued in a set of three and bore the indorsement 'Original B [sol] L'." The court observed "[a]lthough the format used contemplated that it could be used either as a non-negotiable bill or as an order bill ... it contained no term that would vary the carrier's delivery obligations depending on which type of bill it was chosen to issue." The court also noted that the Defendant "accepted in their pleadings that they had issued a bill of lading."

The court concluded "[a] shipper who, like Seller in this case, asks for the issue of a straight bill of lading even though the alternative of a sea waybill is available to him, wants to retain some degree of control over the delivery of the goods. The shipowner is aware of this. If he is not prepared to accept the restriction on delivery rights that bill of lading imposes he can insist on issuing a waybill instead. Once he issues a bill of lading instead, however, whether it is an order bill or a straight bill, he must not deliver the cargo except against its production."

Comment:

If this decision rests on the theory that the terms of the contract of carriage impliedly requires presentation of the B/Ls, then it is understandable. If it concludes that a non-negotiable B/L is negotiable, however, it is confusing, to say the least.

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