ICC Digital Library Forum

Our trades are conducted by chartering
vessel importing bulk cargo into China
from Far East.It often takes three to
five days for the voyage from loadport
to discharge ports in China.

Thus we always release the cargo to
cargo receivers by Charterer's letter
of indemnity.Subsequently we get the
full set Bs/L from our supplier then
we present the same to our Chinese
final buyer's LC issuing banks for
the proceeds payment.As I say that
the cargo has been released to
receivers by LOI, so once the
original Bs/L are submitted to LC
Opener, these Bs/L becomes title
documents, the legitimate B/L holder
(i.e.LC opener or other third party)
could ask for taking delivery of
goods from shipowners again.It will
create commercial disputes. How could
we solve it?

Another question, if the B/L shows
the consignee a specified person/
cargo receiver(straight consignee Bs/L)
instead of "to order"B/L.
Is there any difference between "to
order" B/L and "named Consignee"B/L
on its rights of the holder's legal
title?Suppose we only ask shipowners
issue "named consignee" B/L which shows
only the name of cargo receiver, could
we avoid other third parties making use
of this B/L taking delivery of the goods
after we have released the cargo by LOI?
Please elaborate.

Q1

The charter party bill of lading (C/P B/L) is the only title document for the goods under charter party carriage. If the DC presentation is refused by the issuing bank or the applicant due to discrepancies, then the beneficiary may claim the goods from the shipowners or the demise/barebaot, head, time or voyage charterer, depending on whether the charter party is under demise/bareboat, time, voyage or sub charter.

The shipowners or the carrier (other than the charterer itself) should claim on the applicant (being a consignee) or the issuing bank (being an indemnifier) that have taken delivery of the goods against the LOI.

That means if the applicant that has received the goods does not pay the DC, it has to pay the carrier against the LOI (which it cannot refuse) and the carrier would pay the beneficiary (being a shipper other than a carrier) against the C/P B/L.

If the beneficiary is the demise/bareboat charterer, then it may claim against the shipowners as the charterer is the carrier. Or it may institute "action in rem" and arrest the ship. However, this is a more complex issue and not frequently encountered in DC transactions.

Q2

This is a complex subject and we cannot explain in details in the Discussion Forum, that is not meant for lecturing. If you are interested in this FAQ, you may refer to the article we wrote by reuest of the Lloyd's of London: "What 'To Order' and 'Blank Endorse' Actually Mean" in our website.

http://www.tolee.com

[edited 10/13/01 5:28:26 PM]