ICC Digital Library Forum

Does a mate's receipt issued in negotiable form and endorsed in the name of the L/C issuing bank, provide sufficient protection to and control by that bank over the goods, if the relating charter party contract stipulated that this bank has the full and exclusive right to deviate the vessel and discharge the goods for its full diposal at any port of its choice?

QUOTE

Does a mate's receipt issued in negotiable form and endorsed in the name of the L/C issuing bank, provide sufficient protection to and control by that bank over the goods, if the relating charter party contract stipulated that this bank has the full and exclusive right to deviate the vessel and discharge the goods for its full deposal at any port of its choice?

UNQUOTE

Samaha,

Your query quoted above touches on too many uncertainties to enable a straightforward answer here. Points to be clarified are:

TOO BIG A JOB FOR A BANKER

1 Is a mate receipt a negotiable instrument like a draft or a bill of lading? Has the issuer, the first mate, due authorization from the shipowners or the master mariner to make the mate’s receipt a negotiable instrument? The answer should be “rarely” if not “No”.

2 There is no Article in the UCP 500 to rule on a mate’s receipt, which is not a transport document per se. What is the data content required under UCP 500? Uncertain. Maybe according to Article 21 if it is not a transport document, like a FCR or FCT.

3 "Deviation" is a word carrying negative connotation and also not allowed in the maritime legislations and conventions. It is an offence if committed by the carrier. So you should not use this word to mean change in originally intended port of discharge. Change of voyage or routing is either impossible for a voyage charter party due to many complicated reasons, such as this may cause delays to deliver the ship to the next charterer and heavy claims would have to be met. This may also open the golden opportunity for the shipowners to clean your wallet with additional hire fees. Shipowners, particularly those from X country, are notorious for milking the charterers. So don't even think of changing the course or voyage.

4 To allow alternative ports of discharge, which is not deviation, the charter party must be so worded. Usually three pre-selected ports of discharge are chosen and the cargo owner may choose any one or more of these three ports to discharge all or part of the cargoes (“goods” in invoice become “cargoes” in a transport document like BL or a TRANSPORT-RELATED document like the mate’s receipt).

5 The bank should not take on such “change in port of discharge” duties as they are trained mainly for banking and are not capable to give such order which may lead to serious consequences, such as demurrage, claims from other cargo owners for consequential delays or contamination, if the ship is only sub-chartered, pollutions claims, and other claims one may not be able to imagine, as the maritime lawyers are very efficient on this sort of task, not to mention the headaches and serious consequences from arrest of ship. So bankers, don’t touch this unless you want an early retirement!

6 Even if these issues are clarified, we still need the data content of all these documents, the DC, the C/P, the mates receipt to be harmonized. This is a job for the experts.

7 Our advice to bankers is: Don’t try to master this yourself. It is wise to look for assistance by out-sourcing.

www.tolee.com


[edited 8/2/02 5:28:31 PM]

Antoine,

As per the ISBP document 470/951rev3, the mate’s receipt is a document that does not reflect a contract of carriage and it is not a transport document; therefore it will be examined in accordance with Art. 21. Since it is not a document of title which can be issued “to order of”, then you have no control over the merchandise. This is a clean risk and if your are willing take such an exposure it should be properly assessed and reflected in your books.

You have also referred to a charter party contract which in itself is another headache. If a problem arises, the owner of the vessel may have a first lien on the goods to cover any unpaid freight charges.

Finally, I agree with T.O. Lee. We are bankers, not shipping experts!

Dimitri

Dimitri,

From your postings, it appears that you know more than an average banker in transport matters. Our congratulations! Would you mind to share with us how you come to acquire your transport knowledge?

www.tolee.com

[edited 8/4/02 4:35:37 PM]

T.O. Lee

There is no secret formula in knowledge. We are taught by Socrates (470 or 469-399 BC), the great Greek philosopher of classical Athens that knowledge is not something that is for granted, ready-made or painless. On the contrary, in order to be acquired, it requires a strenuous process. Socrates compared effort and agony to acquire knowledge with labour pains during the process of giving birth.

Learning is a personal conquest of each one of us.

Dimitri

Dimitri,

Learning is a painful experience for me as well. I have to acquire all these DC related knowledge all by myself. There is no one that I can learn from as bankers know mainly banking, carriers know mainly carriage of goods and insurers know mainly cargo insurance. I have to play two roles, the teacher and the student. It takes me a lot of time and efforts to access what I need to learn, the depth and breadth, and then see ways to get such knowledge and then learn it.

It is inevitable to head in the wrong direction from time to time as there is no one to guide me. When I realise this a lot of efforts and money have already been wasted.

The irony is that now I wish to share my knowledge with others, most of them say that they don’t want it. It is not directly related to their banking business. As Buddha says: “We cannot force people to learn. When the right opportunity comes, they will come to you.” But when is the right opportunity? I am going to retire in about five to six years.

A senior executive from one of the biggest banks in USA once said to me: ” T. O. I don’t mind to request you to do a workshop on transport documents for my bank. However, it should be free”. I was amazed that these words could come from a USA senior banker and DC expert of international fame, who is supposed to have commercial sense and believe in free and fair trade, as his country promotes so hard in other countries. Is such request reasonable? Why should I sacrifice for your bank, a commercial entity?

www.tolee.com

[edited 8/5/02 4:58:30 PM]