Factual Summary: An LC was issued to cover three shipments of goods, totaling seventeen containers, from Charleston, South Carolina to Belgium. The beneficiary hired the freight services company, among other things, to prepare bills of lading. The bill of lading contained a forum selection clause, which provided:

The contract evidenced by or contained in this Bill of Lading is governed by the law of Italy and any claim or dispute arising hereunder or in connection herewith shall be determined by the courts of Italy and no other court.

The beneficiary alleged that it made the final shipment, and presented the required documents to the confirmer for payment on the LC and was paid. The issuer, however, advised the confirmer that it would not honor the draft because the "On Board" stamp on the bill of lading was not dated even though the acknowledgement of receipt of the cargo was dated. Subsequently, the confirmer charged back the beneficiary's account for the full amount of the LC.

The beneficiary bought this action against the issuer for wrongful dishonor and against the freight forwarder for improper preparation of the bill of lading. The beneficiary further alleged that the freight forwarder improperly released the goods to the applicant even though it was directed not to do so until the bill of lading problem was resolved. Additionally, the beneficiary alleged that it was required to pay demurrage and other charges resulting from when the return of the last shipment, despite having advised that it would not be responsible for such charges. The trial court granted the freight forwarder's motion to dismiss based on the form selection clause.

Legal Analysis:

1. Forum Selection Clause:The court noted that the freight services company signed the bill of lading "as agent for the carrier" and acknowledged that the goods had been received by the carrier. The court ruled that the beneficiary's claim against the carrier's agent was a dispute arising in connection with the bill of lading whose terms were broad enough to encompass a dispute with the freight services company. The court rejected the beneficiary's claim that the clause only applied to disputes between the beneficiary and the carrier, not to an action for preparation of the bill of lading.


1. The court indicated that the trial against the issuer would proceed. The question, which is raised by the court's recital of the facts, is why the confirmer was not joined. If, as it appears, payment had been made by the confirmer, it is unclear how that payment could be revoked due to a mistake regarding a discrepancy unless it was made under reservation since payment under an LC confirmation is final. The opinion, however, does not address these issues.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.