ICC Digital Library Forum

In the International Maritime Bureau Issue no 22 dated 15th November 2002 there is mention of a recent court case concerning the release of goods covered by a straight Bill of Lading i.e. it was consigned to a specific party - Voss Peer v APL & Co Ltd

The Shipping company had released the goods to the consignee without presentation of the Bill of Lading.

The Court of Appeal in Singapore affirmed that the goods should not have been released.

Later in the article it mentions that recent cases have shown courts to take a different view and gives as an example a Hong Kong High Court decision which stated that as the Bill of Lading was not intended to be a negotiable document , the carrier was entitled to release the goods to the consignee without production of the Bill of Lading. It also mentions Professor A. Guest in "Benjamin's Sale of Goods" 5th Edition which affirms this.

Has anyone any experience of this?

Alistair.

I'm sure there are others more conversant on maritime shipping law than I, but it has long been my understanding that the United States is the only country that defines what a "straight bill of lading" is (in the Pomerene Act of 1952, also known as the Federal Bills of Lading Act). In all other laws, the denomination "bill of lading" means that the document controls title. U.K. law (which I understand is used in numerous other countries, including Singapore), for example, does recognize the concept of a non-negotiable variant of the bill of lading, but it is referred to as a sea waybill (in the Carriage of Goods by Sea Act of 1992). Specifically, it states "references in this Act to a sea waybill are references to any document which is not a bill of lading but is a receipt for goods as contains or evidences a contract for the carriage of goods by sea and identifies the person to whom delivery of the goods is to be made by the carrier in accordance with the contract." The question then becomes whether you can use a document titled "bill of lading" and still convince the courts that it is actually a sea waybill despite the name on the document by virtue of the fact the two words "to order" have been omitted in the consignee box. (This is how the U.S. law distinguishes between negotiable and straight bills of lading.) It sounds to me like either no one made this argument in the case in question or they tried but were unable to convince the judge, possibly because of other language in the document itself, and the judge went on to apply the provisions of the law that apply to bills of lading.

Alistairo,

STRAIGHT BL WORKS LIKE SEA WAYBILL

A SBL works like a SWB, where the carrier may deliver the cargoes to the straight consignee by checking identity rather by production of original documents, since both SBL and SWB are not negotiable instruments.

When I immigrated to Canada, I sent my belongings in a 20 ft container from T. O. Lee to T. O. Lee. In this case both the shipper and the consignee are one and the same person. Would you please ask a court whether the carrier needs the original BL for T. O. Lee to claim for the cargoes?

Common sense tells us that there should be no such need.

A WISE JUDGE FROM HONG KONG DISTRICT COURT

That makes me think of a past incident.

Whilst I was doing my consultant work in Hong Kong, one of the frequent attendees of my workshops asked me to help him as a friend to appear in a district court in a dispute about the additional fees of unreasonable amount, concerning a giant crane used for the container depot project in Hong Kong. He guessed that he should have lost his case (from the attitude of the Judge) if it were not due to his request for an adjournment, for the reason of looking for an expert witness.

I asked my friend working in a world-class carrier to make an affidavit to support my opinions. After reading both of our opinions, the Judge then refused to give judgment and referred the case to a higher level of court to adjudicate the issues related to the BL. The reasons were that the BL is a very technical document. Hence it is not suitable for a district court judge to adjudicate those highly technical issues. The parties then made an out of court settlement to avoid much higher costs involved in a higher-level court.

MURPHY'S LAW ALSO WORKS IN A COURT OF LAW

So not all the Judges behave like this and we may have some cases gone wrong, with judicial decisions made by those judges who are not aware that they are not competent enough. Part of the blame may be due to the poor performance of the court expert witness, if any.

DISCLAIMER: As different countries may have different local laws, I give above opinions only for discussion sake. Readers should consult their lawyers and experts before they rely or act on my opinions. I am not responsible for any consequences whatsoever.

T. O.
www.tolee.com

[edited 11/20/02 7:38:11 PM]

T. O.

I am not fully convinced that a SBL is not a negotiable document. The Consignee box in most Bs/L is preprinted "to order of". Unless one strikes out this, the completion of this box makes it negotiable.

REAL LIFE
Some time ago I encountered an incident where goods were despatched, documents sent under URC, but consignee failed to accept draft. B/L was straight consigned, but I arranged for original documents to be returned from the presenting bank. The original Bs/L were given back to the carrier in order to prevent delivery to the consignee and to arrange return of the goods. One assumes that a SBL gives the consignee exclusive non-negotiable access to the goods, but this is not strictly correct as in the above example. Therefore can we strictly claim that a SBL is truly non-negotiable ?

Laurence

DOES STRAIGHT B/L WORK LIKE A SEA WAYBILL?

In U.S., as correctly mentioned above by BuddyB, the position is quite clear. The Pomerene Act defines “the straight B/L” and its nature. Quite interesting is that the updated U.S. legislation now refers to “Non/Not Negotiable Bills” rather than to term of “Straight” which has been used in the original Act.

So in the U.S. the Pomerene Act provides that delivery of the goods represented by a “Straight B/L” can be made to the named Consignee without surrender of the Bill but only upon proof of identity. So in U.S. law a Straight B/L is like a Sea Waybill, consequently they have little use for sea waybills. This principle has applied to U.S. export only, I am not sure whether it has been extended to U.S. imports by now as well.

But outside U.S. there is strong reluctance to treat “Straight B/L” as analogous to Sea Waybill. General practice is to require the surrender of the straight B/L in exchange for the delivery of the goods as in case of the “negotiable Bill of Lading”.

Clearly if it was general practice to treat the straight B/L like a sea waybill, there would be no use for sea waybill and it would not have been developed in the first place!

Re. the other posting – the Straight B/L is non negotiable transport document. If the “to the order” wording is left there – it is not straight B/L but negotiable B/L. The “real life” story has, in my opinion, nothing to do with issue of negotiability.

Best Regards,

Pavel Andrle

[edited 11/21/02 10:46:11 PM]

Pavel & Laurence,

LAURENCE’S ‘REAL LIFE’ STORY PROVES THE OPPOSITE –THE MALPRACTICE

We agree to Pavel’s comments on the “real life” case from Laurence. To add to that, on the contrary, this “real life” case points out that even in the transport industry, sometimes, due to lack of proper training, some staff may treat all BsL the same, whether negotiable or non-negotiable.

Why we say this? Because we train them and some of the transport people have admitted that the one who knows all these stuff is always flying and has no time to share his knowledge with them on the ground. We have pointed out this in our previous posting in the Discussion Forum.

So Laurence, don’t count on what the transport people do as an example of right practice or best practice. They could be wrong!

In the same way, a lot of AWBs are endorsed by certain banks. And certain DCs are asking for AWB made out to order! Can this be quoted as a "real life" case in ISBP?

WHY SBL IS STILL USED WHEN WE HAVE SWB?

To answer the query from Pavel why we still need SBL when we have SWB already? This is a long story and it is better for us to explain in details in a transport workshop. The best we could do here is to briefly point out the historical background and give some bullet points as follows:

1 SBL is a generic term used for many years before SWB was born.

2 In the 1992 COGSA UK the position of SWB is formally recognised and new articles are written specifically for SWB, along with SDO (Ship’s Delivery Order) to differentiate from ordinary DO that can be issued by Tom Dick & Harry & Co.

3 But we can’t stop people from using SBL, as we can’t stop people from using FOB Airport.

4 In some countries, SWB is not recognised by their national maritime legislations. So for those countries, we have to use SBL instead.

SBL AND SWB “WORK” OUT THE SAME, BUT NOT “ARE” THE SAME!

We must stress that SWB and SBL are NOT identical. They have many differences. But as far as ‘receipt by identity’ is concerned, they WORK out the same. So please take care that all the times, we are using the word “WORK” and not the word “ARE”.

NEED FOR BANKERS TO UNDERSTAND MORE ON TRANSPORT DOCUMENTS

We strongly feel that it is better for bankers to understand more in depth all these transport documents. Otherwise our inputs may be mis-interpreted and further queried.

DISCLAIMS: Our opinions are for discussion sake and parties should not rely or act on them before they seek consultation form lawyers and experts. We do not hold ourselves responsible for any consequences whatsoever.

www.tolee.com

[edited 11/22/02 1:45:01 AM]

HOW TO MAKE A BL A SBL?

In transport practice, BsL are designed, printed and provided for the general purpose of them being used in the negotiable form.

That is why we always point out in our transport workshops that to prepare a SBL, the shipper has to make sure that in the "CONSIGNEE' box, the pre-printed words "To Order of" must be crossed out or deleted, and for presentation under DC, also authenticated with a correction chop by the carrier or issuer.

The SBL we are talking about all the time refers only to the properly made one, not the improperly made one.

For further clarification about such issues, please refer to the specific article we wrote for Lloyd's of London, "What 'To order' and 'Blank Endorsed' Actually Means?" in our website.

www.tolee.com

[edited 11/22/02 1:27:52 AM]

QUOTATIONS FROM THE AUTHORITY

To clear the mist, we are pleased to quote from Lloyd’s of London “Contracts for the Carriage of Goods” from our private library as follows (where our transport handouts and opinions are based upon):

“Where a bill is made out to a named consignee, but not to order, the better view is that it is NOT negotiable. In this sense it is said to be a straight bill, i.e. deliverable STRAIGHT to a particular person named in the bill. A document may expressly be called a straight bill of lading on its face, or parties may describe a document as such which is not made out to order. In the latter example, the document is probably a little more than waybill by another name (although production of a sea waybill is not necessary in order to obtain delivery of goods) and the use of the word “bill” is misleading.”

"The question of whether a particular document is a "bill of lading" or some form of non-negotiable document, such as a waybill, can have significance in a number of contexts".

“Further, a straight “bill of lading” is a misnomer in this context as it is generally accepted that one of the qualities which makes a document a bill of lading is the fact that it is negotiable. Despite the usage of the word “bill”, it seems that a straight bill (not made out to order) cannot be a “similar document of title”, as it is not generally considered to be a document of title at common law (see Benjamin para. 18-010 and Rights of Suit, para. 2.50). On that analysis, and in any event, the straight bill would in English law fall within the definition of sea waybill in section 1 (3) of the Carriage of Goods by Sea Act 1992”.

P&O “SCAR” APPROACH

We appreciate the intelligent P&O SCAR approach, to mark on the face of the P&O SCAR Bills "Straight Consignment - Automatic Release" (SCAR) to give themselves protection to meet US importers requirement to demand delivery without production of the original SBL.

P&O LASER “SHIPPED ON BOARD” NOTATION TO AVOID FRAUDS

Through the distinguished leadership of J. W. Richardson, P&O has a lot of innovative ideas, such as the LASER "shipped on board" notation intended to stop frauds in a country we do not wish to mention openly here to avoid complaints from her consulate in Canada.

For those who have signed up "What Bankers Should Know About Marine Bills of Lading?" on 5th December 2002 with Hong Kong Institute of Bankers, these issues will be discussed in more depth.

www.tolee.com

[edited 11/22/02 3:05:59 AM]

DOES THE ATLANTIC DIVIDE US ?

My experience (as an importer) is similar to Pavel's. The distinguishing factor between SBL & SWB is that surrender of the SBL is required to obtain goods.

It may be that practice is different in North America as indicated by T.O., but I seem to remember that the first use of SWB type document was transatlantic in the early 1970's & was often called "Express B/L" or "Express Waybill" before becoming generally known as SWB. As suggested by Pavel, the rationale for this was that there was a demand from US importers for a transport document to be used which did not require presentation. Obviously the SBL was not seen as fulfilling this function.

From memory (which may be flawed) the first line to use this was Sea-Land (as was).

Laurence

In T.O. Lee’s yesterday’s posting it was mentioned that there are a lot of AWB’s that are endorsed by banks and that certain DC’s ask for AWB’s made out to order.

In Saudi Arabia, it is the practice to have aiway bills consigned to banks. In addition, although such transport documents are straight (non-negotiable), Customs dept. require that they are endorsed to the DC applicants or drawees of documentary collections.

What are the risks taken by banks in these situations, i.e. a straight transport document made subject to an endorsement? We know however that in doc. collections having the bank itself as a consignee means that it becomes a party in the AWB which could expose it in problematic situations to potential claims such as payment of freight charges under FOB trade terms, etc.

Dimitri