It sounds all simple but not so, as possession, responsibility and title changes hand as soon as the goods pass the ship’s rail. How? Bill of lading represents the goods and commonly described as “keys to the warehouse” and it is treated as document of title. Accordingly, constructive possession of the goods can be passed by endorsement and delivery of the bill of lading from one person to another.
Order of event and how Bill of Lading is issued: Once the cargo is loaded on board and in good condition, Mate’s receipt is typically issued to the shipper. This will in turn be exchanged for Bill of Lading and remarks concerning condition of cargo, if any, will be transferred to the bill of lading. However, naturally any adverse remark is a contentious issue and viewed as undesirable by sellers or shippers as it hinders payment to sellers.
Bills of lading are issued in sets of 3 and whence the goods are delivered against any one of these Bills of Lading, the other two are automatically rendered void. Bill of lading is a transferrable document of title, acts as evidence of contract of carriage between shipper and carrier and also as receipt for goods. Nowadays, buyers insist that sellers/shippers send the full set of Bill of Lading to the buyer/consignee.
There are various types of bill of lading and additionally if parties wish to use non-transferable document then waybills may be used i.e. sea waybill. Also, ship’s delivery orders may be used for dividing the consignment amongst several consignees.
Hague, Hague-Visby Rules, SDR Protocol addressed the imbalance between carriers and cargo owners.
Hamburg Rules – it’s over 30 years since the Rules were drafted, signatories hoped it becomes the uniform set of Rules governing shipowners obligations for carriage of goods by sea but the Rules failed to gain widespread support.
Rotterdam Rules (The Convention for the carriage of Goods wholly or partially by sea) – to date 23 states have signed the Convention but only two have ratified it. Rules are intended to extend and modernize the existing Rules governing carriage of goods by sea and in line with Hague, Hague-Visby and Hamburg Rules, Rotterdam Rules aim to protect cargo interest against unfair conditions of carriage.
However, despite plethora of Rules in force, there are numerous cases involving bill of lading for instances where there is a conflict between bill of lading and terms and condition of charterparty under which it was issued as well as determination of who the carrier is, seaworthiness of the vessel and delivery without original bill of lading but with letter of indemnity (P&I Clubs position) or provision of indemnity clause in charterparty, etc.
AWS is well placed to help assist cargo interests as well as carriers (shipowners and charterers) and insurers to deal with any issues/claims arising in connection with bills of lading, expediently and efficiently.