The DC-PRO online community of documentary credit professionals seems to have caused an international crisis in the shipping world after a contributor to a discussion forum spotted a clause in a Maersk Sealand bill of lading (B/L) that appeared to make it no longer a secure document of title.

Debate over the clause may now have prompted one of the world's leading shipping company's to alter the wording in its B/Ls, but some documentary credit professionals remain sceptical whether the changes are sufficient.

Questionable wording

The debate was sparked by Philip Gauntlett of KBC Bank NV who, in the same month as Maersk introduced new wording, alerted the DC-PRO online community to the apparently questionable nature of the shipping company's new clause and flagged up this wording in it's B/L:

"Where the bill of lading is negotiable, surrender of an original bill of lading will generally be required before delivery is given, but the Carrier has the option to deliver the Goods to a person whom he reasonably believes to be entitled to take delivery of the Goods without requiring surrender of an original bill of lading...

... Delivery as aforesaid is authorised and shall constitute due delivery hereunder and the Merchant shall have no claim for loss or non-delivery."

First impressions

"This is a discrepancy," observed the London-based banker who suggested that the clause possibly "casts doubt on one of the basic functions of a B/L", namely that it should be a document of title.

Gauntlett also pointed out that this type of B/L could have repercussions for banks relying on B/Ls as security for financing and asked other members of the discussion forum to put forward their points of view.

Legally discrepant?

Subsequent contributors to the discussion had different views over whether the courts would consider the new wording makes the Maersk B/L discrepant.

One forum member suggested that English courts would regard the wording as undermining the security that the documents offer a bank and would thus consider the B/L discrepant.

Another participant however doubted whether any French court would uphold non-payment of such a B/L, unless it found a stipulation in the UCP to support the case or an official International Chamber of Commerce opinion.

Additional clauses

In the apparent absence of legal opinion or ICC opinions on the matter some suggestions emerged of clauses to minimise the impact of the Maersk B/Ls in instances where goods are viewed as security.

Remedies could include the insertion of additional clauses such as "if Maersk B/Ls are presented they are to state on their face that goods will be released only against presentation of an original B/L," one contributor to the discussion suggested.

Another suggested that clauses would have to be more general than this since carriers other than Maersk could introduce similar wording in their documents.

Pressure on

Pressure on Maersk to change the wording in the B/Ls apparently came from importers and exporters as well as international trade financiers and carriers according to entries in the discussion forum's online log.

"Thought you might like to know that you have caused an international crisis in the shipping world..." commented a customer of a DC-PRO contributor who said that they had discussed the matter with the International Maritime Bureau and reported that Maersk had been "bombarded by all kinds of big clients who were outraged by this sneaky addition."

Maersk subsequently removed the now contentious clause from documents issued in Denmark and Indonesia according to forum contributors or their customers.

Maersk response

According to a posting on the discussion forum, Mearsk eventually responded with the following statement:

"When Maersk Sealand revised their Bill of Lading in August 2003, new clauses were inserted in order to better accommodate the needs of Customers and Carriers.

The clause in question (to which this discussion refers) was inserted to regulate situations where the Carrier has to hand over the cargo to Government Authorities - such as customs - who will then release the cargo directly to customers.

Unfortunately, this clause can be seen as an attempt to release Maersk Sealand of liability for misdelivery without Bill of Lading. That was of course not the intent.

Maersk Sealand has therefore decided to change the wording.

The Bill of lading has already been changed, in order to accommodate our Customers - and thereby their banks.

The sentence referring to delivery without a negotiable Bill of Lading has been taken out entirely."

Not satisfied

But several members of the DC-PRO online community remain unhappy with Maersk's revised wording, not least because it still appears to give the carrier the option to deliver to the consignee upon proof of identity without a B/L when it is non-negotiable:

"...Where the bill of lading is non-negotiable, the carrier may give delivery of the goods to the named consignee upon reasonable proof of identity and without requiring surrender of an original bill of lading..."

"I will continue to refuse any and every B/L that gives the carrier the right to release goods without production of the original B/L where the credit is subject to English law," said another contributor.

Good intentions?

Maersk introduced its new B/Ls on 4 August 2003 "to respond to various situations arising in liner business," according to a company statement that says the new wording now envisages shipping via several modes of transport.

The 'Bill of Lading for Ocean Transport or Multimodal Transport' represents the shipping company's first major changes since 1991 to its B/Ls and waybills.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.