ICC Digital Library Forum

Paras 102 and 147 of the latest (also in previous) version of ISBP state:

'If a bill of lading states that the goods in a container are covered by that bill of lading plus one or more other bills of lading, or words of similar effect, this means that the entire container is to be surrendered to the consignee and therefore all bills of lading related to that container must be presented in order for the container to be released. Such a bill of lading is not acceptable unless all the bills of lading form part of the same presentation under the same credit.'

I think that this statement is wrong and I have regularly accepted a b/l which refers to the container described therein as including goods covered by another (or more) b/l.

The only instance in which I would reject such a b/l would be if it also specifically stated a clause such as '...contents of container only to be released against simultaneous surrender of b/l no's ...'. Such a clause restricts the right of the holder of the b/l to take delivery of the goods.

However, a simple statement that goods in a container are covered by more than one b/l does not necessarily mean that a banker should assume all b/l's have to be presented simulatenously and reject the document (i.e. the position to be taken when ISBP published). I am supported in the view that the b/l should be accepted by:
a) clause 21 of P&O Terms and Conditions on reverse of b/l
b) R79 of ICC Opinions (1980-1981)
c) ICC letter (DOC 470 GE 61) dated 29/3/96 giving a supporting opinion by the Group of Experts (not published but I possess a copy of this letter as signed by Charles Del Busto)

I feel that the ICC have exceeded their mandate by incorporating para 102/147 since it is not a matter regarding interpreration of an Article of UCP nor, in my opinion, does it actually reflect current banking practice.

Anyone agree with me (and is it too late to remove these offending paras from ISBP)?

Philip Gauntlett

AN OLD PROBLEM CREATED BY CONSOLIDATION SHIPMENTS

This is an old problem that we have faced for the last ten years and a lot of questions were asked around this problem in our transport workshops from bankers and traders.

NO PROBLEM WITH LCL SHIPMENT MADE BY THE SHIPPER HIMSELF

To make the problem lucidly clear to members here, we have to explain why this happen. Firstly, this problem does not exist in a LCL shipment shipped by the shipper himself without going through any freight forwarder. The goods will be claimed in CFS (for LCL shipments) on arrival and not in CY (for FCL shipments). CFS and CY are different areas in a container depot to perform different operations.

HOW LCL AND FCL SHIPMENTS ARE HANDLED UPON ARRIVAL

For a LCL shipment, the carrier will unload the container on arrival in the CFS area and separate the goods consigned to different parties stowed in the same container. When the consignees come to claim for their goods, the goods are already identified and set aside in different heaps. So one consignee cannot take the goods of other consignees originally stowed in the same container during carriage.

For a FCL shipment, the container will be stacked up on arrival at the CY area. The carrier will not unload the goods since it is a FCL shipment. The carrier cannot break the seal(s) added by the shipper. Hence only a full container will be given to the shipper(s). If the goods inside that container belong to three different consignees, and when the first consignee shows up first, he may be given the whole container, loaded with goods belonging to the other two consignees. When the other two consignees show up, their goods are already carried away with the container. This is what the carrier tries very much to avoid. That is why there is a declaration in the BsL saying that the goods will not be released until all the BsL are presented.

NO PROBLEM WITH A FCL SHIPMENT WITH GOODS ALL BELONGING TO THE SAME SHIPPER

If the shipper hires the whole container to ship his goods by FCL, to different buyers overseas from the same port of discharge, then only one bill of lading will be issued by the carrier to cover this FCL shipment, charging a lower FCL freight- the “box rate”.

On arrival, the agent of the shipper claims the goods with this FCL BL and then different delivery orders are issued to different buyers for claiming the goods from the agent of the shipper. Due to lack of education, some may issue house BsL for such purposes. Anything can happen, a thing we learn form our ten years’ consultancy experience.

PROBLEMS ARISE WHEN THE GOODS ARE CONSOLIDATED BY A FREIGHT FORWARDER

If a LCL shipper ships through a freight forwarder, then the freight forward would gain profits by consolidation – combing all the goods from different LCL shippers into one container to make a FCL shipment – and charge them with higher LCL freights (or sharing some of the discounts as an incentive), whereas the freight forwarder would pay for lower FCL freight by shipping them in FCL mode.

The carrier issues one FCL BL to the freight forwarder. The freight forwarder would issue many house BsL (showing FCL shipment CY/CY) to different LCL shippers. These house BsL may have a declaration that it only covers part of the goods stowed in that container. This implies that there are other house BsL also covering the other goods stowed in that same container.

UNREGULATED AND NON-STANDAZRDIZED HOUSE BL FORMATS AND DECLARATIONS

There are many ways that freight forwarders issue their house BsL. Some look like a house BL and some look like a master BL. It would take an expert to differentiate which is which.

There are so many versions of such declarations that it is difficult to name them all here. Some are in bad English too. So without seeing these declarations it is difficult to comment.

BASIS OF DETERMINATION OF DISCREPANCIES IN A BL

We would determine discrepancy on one basis – whether or not the consignee can receive the goods with that particular (master or house) BL alone, without waiting for other BsL to show up.

Some BsL may declare that the goods are not to be released until receipt of a fax or telecommunication message from the carrier (or even shipper) authorizing release of the cargoes.

Is this a discrepancy? We would like to leave it to members to discuss.

In a nutshell, to determine whether a BL is discrepant or not, one has to know whether that particular BL has fulfilled all the functions of a BL. If the answer is No, then it is discrepant.

To understand fully the key functions and features of a bill of lading, only a transport workshop can do.

www.tolee.com

[edited 10/8/02 9:32:02 PM]

In general, I would support the views of Philip & T.O. expressed here. However, T.O. states that a determining factor of a discrepancy is a B/L which fails to fulfill all the functions of a B/L. While this is true, it may give the false impression that a B/L presented which fulfills all the functions of a B/L is, ceteris paribus, acceptable. This may or may not be the case, depending on the details in the B/L.
In my view, a B/L which is drafted to present unwarranted obstacles in the path of utilisation of the B/L is discrepant. Examples are (1)DC calling for CFR terms, but B/L showing freight collect; (2) B/L claused requiring surrender of other B/L to gain access to goods.

In response to Philip's question, it is not too late to alter the ISBP. This is one of a number of aspects of ISBP which could cause problems. At this stage, unfortunately, the only way to alter it may be to vote against it in Rome or to make your opinions felt at your National Committee level to the same end.

Regards

Laurence

Laurence,

When we say that determination of discrepancies in a BL depends on whether or not the BL fulfills the key functions of a BL, we are addressing this problem "as far as the BL itself is concerned". However, it goes without saying that members here should be clear that the BL also has to meet the specific requirements, if any, stipulated in the DC. This is common sense. And the BL should also comply with the respective Article(s) of the UCP 500 and ISBP as well.

Laurence, please understand that his is a discussion forum, we do not need to throw out all the related issues here, like in a workshop presentation.

If a BL cannot be used to claim the goods and the success depends on presentation of other BsL, then if these other BsL never show up, for example, being lost, then what is the use of such a BL?

And delays would trigger on demurrage. From our experience, if the goods are low valued goods, such as cotton, the demurrage may be more than the market value of the goods. Members have to consider this also.

The interest of all the parties involved in a DC transaction must be balanced.

www.tolee.com

[edited 10/8/02 1:49:58 PM]

Phil,

The situation described is one we extremely rarely encounter, therefore to talk of our ‘practice’ would be misleading. Nonetheless, my understanding is that we would apply the approach outlined in the latest version of ISBP, for the reasons given therein.

Having read R79 I must say I cannot see that the clause at issue covers the same scenario as that in ISBP. As to Doc470 GE61, we do not appear to have a copy.

Whether or not this aspect of ISBP is reflective of ‘banking practice’ I cannot say. In the absence of ICC opinions (and I appreciate you are saying that there is/are) or other authoritative written source it is usually a question of supposed experts giving their views and someone deciding (where they conflict), such as a court of law, who’s right (as I’m sure you know). However, given what I believe to be the rarity of the occurrence, and the beneficial impact of ISBP in ‘uniformising’ practice, I believe this is something with which we bankers could live even if not actually currently reflective of banking practice.

As to if it is too late to change ISBP, I believe the answer is ‘yes’, as it will be voted on (presumably as a whole document) at the Commission on Banking Technique and Practice Meeting on Wednesday 30 October and Thursday 31 October 2002 and, I imagine, 'adopted'.

Hope we’ll be able to get together soon.

Regards, Jeremy

Jeremy,

We live in different worlds. For you such BL declaration is rare. But for us we came across such BsL ten years ago. Freight forwarders in the Far East gain their main profits by consolidation.

Please do realise that 80% of the traders are SMEs, particularly in the Far East who make LCL shipments.

Like ordering a steak, Westerners say "rare", whilst Easterners say "well done". Guess what the people in the Middle East would say? If we apply simple logic, the answer appears to be – “medium rare”, particularly so in Istanbul, which is situated partly in Europe and partly in Asia.

If this phenomenon were rare, as regarded by you, then the ICC Banking Commission would not add this special article in the ISBP. We have been highlighting this problem for the last ten years in our workshops.

www.tolee.com

[edited 10/9/02 6:47:43 PM]

T.O.,

I find your faith in the acts of the ICC Banking Commission being driven by the kind of logic that you describe as being quite touching.

Jeremy

Dear T.O.LEE,

I must admit that I am a bit confused. The remark in the ISBP as discussed above is related to B/L. I agree with the Jeremy that the occurance of the clause appearing in B/Ls is very rare. Your comments seem to be related to house B/L – forwarding agents documents – but this is another issue. Please explain.

Best Regards,

Pavel Andrle

Pavel,

I WISH I COULD, BUT HERE IS NOT THE RIGHT FORUM

It is not a surprise to hear that you are confused with our comments. From my workshop experience, I can anticipate such comments from those participants who come from the banks or those who have not adequate knowledge and experience in transport practices.

It is not possible to explain to your satisfaction, as this would require lengthy “lecturing” type of analysis and explanation that are not suitable in Discussion Forum. However, we are looking forward to a future opportunity to explain all these from start to finish in a transport workshop to be held in your country.

By the way I would like to thank you for making a snap shot of me with your lovely digital camera in a coffee break in the ICC Banking Commission meetings in Rome. Would you be kind enough to send it as an email attachment to experts@tolee.com?
If you are interested in photography, you may read those photo articles in our website that I wrote in a personal column in the “Photo Asia” magazine of Singapore.

www.tolee.com