Bill of Lading - clause 'if reqired by the carrier...'

Wolfgang1 · Post by **Wolfgang1** » Mon Mar 14, 2005 12:00 am

Bills of Lading were presented to us, containing following preprinted wording in the document:
'If required by the carrier (resp. if required by the MTO), one (1) original Bill of Lading must be surrendered duly endorsed in exchange for the Goods or delivery order.'
Question:
Would you accept such Bills of Lading under a letter of credit calling to an ocean Bill of Lading made out to order, blank endorsed?

Comments from fellow DCPRO users are welcomed. We would appreciate all your feedback and/or comments.

JudithAutié · Post by **JudithAutié** » Wed Mar 16, 2005 12:00 am

This seems to bring us back to the "Maersk problem" and we have been unable to obtain any clear statement from the ICC on that point -- very unfortunately in my opinion.

Judith

NigelHolt · Post by **NigelHolt** » Wed Mar 16, 2005 12:00 am

Judith,

Did not the Banking Commission issue guidance, after the new Delhi meeting, but then a lot of people object to it (wrongly in my opinion) resulting in its withdrawal?

Incidentally, I’m struggling to see the problem here, particularly in the light of sub-Art 23(a)(v).

Hope you’re well.

Jeremy

KimChristensen · Post by **KimChristensen** » Sat Mar 19, 2005 12:00 am

Re to all

There have been said so much about this, so I will do my utmost to be as short as possible

It is true, that the “basis” for those discussions was a document published after the Banking Commission meeting in India. This document described 3 scenarios:

1) A negotiable (to order) bill of lading allowing the carrier to release the goods without presentation of the original being surrendered.

2) A non-negotiable (straight) bill of lading allowing the carrier to release the goods without presentation of the original being surrendered.

3) That the carrier would be entitled to release the goods against a “genuine bill of lading” only.

This document was subsequently (as Jeremy points out) withdrawn, and the status is that there is no “clear statement” (as Judith points out) from the Banking Commission. I think that we all would prefer that, but it would be fair to add that they have (in my view) tried to the extent possible.

The direction that the Banking Commission has taken in this matter is “dialogue”. One of these took place in September or October 2004 between (representatives from) 3 ICC Commissions and the Shipping Industry.

The result of this dialogue was:

Scenario 1: Not acceptable in a L/C transaction
Scenario 2: Acceptable
Scenario 3: Acceptable with a new – slightly changed – wording. (I have no idea if this has ever been implemented)

This has not been endorsed in the Banking Commission, and I think that the hope is, that based on this, the shipping industry will adjust their wordings accordingly.

So Wolfgang; I would categorize your example (If issued according to L/C terms “to order”) as “Scenario 1”; and I would think that you could receive refusals on that one.

Best regards
Kim

NigelHolt · Post by **NigelHolt** » Sun Mar 20, 2005 12:00 am

How would one refuse the b/l on the basis of the terms of the credit, which include as part of them the UCP and thus sub-Art 23a(v)? I have yet to hear a satisfactory explanation as to what entitles banks to ignore this sub-Article as you would seem to be suggesting Kim, or Wolfgang would seem to conceive could be possible.

[edited 3/20/2005 10:59:49 AM]

KimChristensen · Post by **KimChristensen** » Sun Mar 20, 2005 12:00 am

But … Jeremy. Working on such a holy Sunday … then again it is important issues we are discussing here

I think this case have risen from “right” or “wrong” … from “article this“ or “article that”. So my point is simply to say, that this is a very controversial issue – where no consensus has been found; not among the banking community – and not in the Banking Commission. Therefore accepting these clauses incurs a risk. You will argue that so will the opposite. Bottom line is however as I see it, that you may face a refusal, where you will have a very thin case.

So I am not arguing for one side or the other – merely trying to state the facts … and I simply refuse to “explain” anything in public

Have a nice Sunday.

Best regards
Kim

NigelHolt · Post by **NigelHolt** » Sun Mar 20, 2005 12:00 am

Kim, not working, just 'surfing' from home and as it required little 'brain power' thought I'd make a quick posting. Trust you're not in the office. If you are, my commiserations. Hope you enjoy what's left of Sunday.

WALES: 6 NATIONS GRAND SLAM CHAMPIONS!!!!!

[edited 3/21/2005 9:43:29 AM]

larryBacon · Post by **larryBacon** » Mon Mar 21, 2005 12:00 am

Art. 23 a iv requires a minimum of one Bill of Lading, which by definition and accepted practice is a document of title. A clause denying this (doc of title) on a document precludes it from being a B/L and therefore subject to refusal under the UCP.

Congrats to the Celtic winners of the Grand Slam 2005 !!!

Laurence
[edited 3/21/2005 11:20:28 AM]

NigelHolt · Post by **NigelHolt** » Mon Mar 21, 2005 12:00 am

Laurence,

I am not saying you are definitely wrong. I would merely observe that:
1. The English courts at least seem to accept a document described as a ‘bill of lading’ may not be a ‘document of title’ (the ‘MacWilliam case’ refers).
2. Sub-Art 24(a)(iv) also requires a minimum of one original document (and incidentally, as the English courts have apparently shown in the Macwilliam case, ‘negotiability’ is not a prerequisite for a document to be a ‘document of title’).
3. The UCP does not cover the question of bills of lading being ‘documents of title’.
3. As with apparently all people who seem to have your view or one similar to it, you are completely silent on the question of sub-Art23(a)(v). Until this is directly and logically dealt with I cannot see how this type of view can be convincing.

Commiserations on Ireland’s 3rd place. Better luck next year (provided it’s not at the expense of the Red Dragon!).

Jeremy

larryBacon · Post by **larryBacon** » Mon Mar 21, 2005 12:00 am

Jeremy,

Is the MacWilliam case to be found in the bailii website ?
I agree that negotiability is not a prerequisite for a doc of title and that the UCP does not directly address the question of docs of title.
However, I will accept that there is a contradiction between Art. 23 a iv & 23 a v, where on the one hand a requirement for a B/L is specified, but on the other banks will not examine the contents of terms & conditions. How can anyone determine if a document presented is a B/L without examining the terms & conditions, even if only those printed on one side ?

Although on the day the Irish didn't deserve to win, we have the dual consolation of defeating the white dragon and toasting our Celtic cousins - til next year !

Laurence