1) L/C includes (under field 47A) the following special condition: "B/L which contains clause(s) that gives the carrier the right to release the goods covered under the carrier without requiring surrender of an original B/L, or any similar expression, is strictly prohibited."
2) B/L presented (forwarded to the issuing bank for payment) which indicates on its face (front)"One original bill of lading should be surrendered, except clausee 22 paragraph 5, in exchange for delivery of the shipment.", and on the reverse (back side fine print) under clause 22 paragraph 5 reads "Where the carrier is obligaed to hand over the goods so carried into the custody of the port, customs or any other authorities at the port of discharge or place of delivery and the goods are delivered by the same to the merchant without necessity of production of this bill of lading by the merchant as required by the local law, regulation and/or practice, such hand-over shall constitute due delivery to the merchant under this bill of lading and thereupon the liability of the carrier in respect of the goods shall entirely cease."
3) Documents were rejected by the issuing bank with the following discrepancy: "Bill of lading - contains clause that gives the carrier rights to release the goods without requiring surrender of an original B/L."
Is this a legitimate discrepancy?
Reverse side of B/L
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RolandLeupi
- Posts: 115
- Joined: Fri Apr 05, 2019 5:26 pm
Reverse side of B/L
This clause is unfortunately appearing more often lately on B/L, thus creating not few problems in case of financing. In this precise case, the clause is not mentioned with full wording on it's face ; it however clearly refer to the exception clause which is written in full on the back. It's therefore not easy to justify that banks are not responsibile for the conditions of carriage shown on the back of the document. Your customer should have make his forwarder aware in order to avoid any problem. On my opinion the discrepancy exists.
Roland
Roland
Reverse side of B/L
Albert,
Firstly, I regard this term of the credit as potentially causing major difficulties for a bank as it could well be considered to override the last part of sub-Art 23(a)(v) that banks will not examine the terms and conditions of carriage, whether such terms appear on the front (not to be confused with the ‘face’) or the reverse of the BL.
Secondly, as to the specific question you raise I frankly am uncertain as to the answer. I certainly believe it is debatable whether or not the T&C of carriage in question is a discrepancy. (Incidentally, I would observe the term of the credit in question is not correct English: the ‘goods covered under the carrier’ is nonsensical.) If I were in your situation (which I assume is documents taken up by your bank but refused by the issuing bank) I would argue that the T&C of carriage appears to relate to where by local law the carrier has no legal choice but to hand over the goods to a third party and that third party then releases the goods. In other words, this T&C does not give the carrier the ‘right’ to release goods without requiring surrender of an original BL (or similar). Rather it merely covers the situation where it is compelled to do something and events concerning a third party that subsequently arise as a result.
Jeremy
Firstly, I regard this term of the credit as potentially causing major difficulties for a bank as it could well be considered to override the last part of sub-Art 23(a)(v) that banks will not examine the terms and conditions of carriage, whether such terms appear on the front (not to be confused with the ‘face’) or the reverse of the BL.
Secondly, as to the specific question you raise I frankly am uncertain as to the answer. I certainly believe it is debatable whether or not the T&C of carriage in question is a discrepancy. (Incidentally, I would observe the term of the credit in question is not correct English: the ‘goods covered under the carrier’ is nonsensical.) If I were in your situation (which I assume is documents taken up by your bank but refused by the issuing bank) I would argue that the T&C of carriage appears to relate to where by local law the carrier has no legal choice but to hand over the goods to a third party and that third party then releases the goods. In other words, this T&C does not give the carrier the ‘right’ to release goods without requiring surrender of an original BL (or similar). Rather it merely covers the situation where it is compelled to do something and events concerning a third party that subsequently arise as a result.
Jeremy
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
Reverse side of B/L
Dear Albert,
How can you ask such a question
It is impossible to answer – not least in light of the discussion on these B/L clauses …
To me this is not a front, back, face discussion. I think that it is rather clear that the box usually placed in the bottom right corner – just above the field for signing must be checked by the document examiner. So if you come across the mentioned L/C clause – combined with this “except clause 22 paragraph 5” wording – the I see no option but check what this one says (as you have done).
One of the basic problems with these clauses initially was that it was worded in a way, that it would appear that the goods could be delivered to anyone without the original – but if you asked the shipping lines about the purpose, then this would be in line with this clause 22 paragraph 5. Which I think is absolutely fair!
So one problem here is that there is no official opinion from the ICC on this issue. The only thing available is the ICC document 470/1038 (19 October 2004) “Clauses on bills of lading” in which it has been agreed with Maersk Sealand that THEY will remove the clauses that the goods may be released without surrender of the original (where the B/L is negotiable that is).
Consequently this issue; delivering to customs etc – which is the real purpose has never been addressed in this case.
My personal view is that the clause in the L/C is an attempt to secure one self from clauses like the original Maersk Sealand Clause – because there is no opinion from the ICC on this. I do not think it is fair to refuse on the one mentioned, where it is not the carriers choice to deliver the goods – but something they are “forced” to by the authorities.
Best regards
Kim
How can you ask such a question
It is impossible to answer – not least in light of the discussion on these B/L clauses … To me this is not a front, back, face discussion. I think that it is rather clear that the box usually placed in the bottom right corner – just above the field for signing must be checked by the document examiner. So if you come across the mentioned L/C clause – combined with this “except clause 22 paragraph 5” wording – the I see no option but check what this one says (as you have done).
One of the basic problems with these clauses initially was that it was worded in a way, that it would appear that the goods could be delivered to anyone without the original – but if you asked the shipping lines about the purpose, then this would be in line with this clause 22 paragraph 5. Which I think is absolutely fair!
So one problem here is that there is no official opinion from the ICC on this issue. The only thing available is the ICC document 470/1038 (19 October 2004) “Clauses on bills of lading” in which it has been agreed with Maersk Sealand that THEY will remove the clauses that the goods may be released without surrender of the original (where the B/L is negotiable that is).
Consequently this issue; delivering to customs etc – which is the real purpose has never been addressed in this case.
My personal view is that the clause in the L/C is an attempt to secure one self from clauses like the original Maersk Sealand Clause – because there is no opinion from the ICC on this. I do not think it is fair to refuse on the one mentioned, where it is not the carriers choice to deliver the goods – but something they are “forced” to by the authorities.
Best regards
Kim
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RolandLeupi
- Posts: 115
- Joined: Fri Apr 05, 2019 5:26 pm
Reverse side of B/L
I do not disagree, however since this clause seems to refer to "exceptions" why has same to appear on the B/L ? We have been talking about similar clauses and generally people in charge of documentary credits do not like them very much. If now we have to differentiate one clause to the other one..........
If for a reason or another special handlings or procedures are made and are already known by the shipping company it would be safer to clarify this outside the document itsefs by way of a separate agreement.
If for a reason or another special handlings or procedures are made and are already known by the shipping company it would be safer to clarify this outside the document itsefs by way of a separate agreement.