The master can deliver the cargo to the holder of a ‘bearer’ bill of lading . If a bill of lading shows a named consignee or named endorsee the person demanding delivery of the cargo must provide some evidence that it is the person identified in the bill of lading. As the bill of lading would usually be presented through the shipowner’s or time charterers’ agents who are local to and familiar with the discharge port, the master probably need only be worried about identification of the person demanding delivery if the master has actual reason for believing there has been fraud or that the bill of lading may have been stolen or that the person is not entitled to claim the goods, or if he has been notified of a competing claim for the goods .
The problems which usually arise are where
(a) no bill of lading is available at the discharge port
(b) delivery of cargo is requested at a port which is not the named discharge port.
In the absence of clear guidance from the shipowners or the local P&I correspondent, the master should take note of the following points.
(a) The unavailability of a bill of lading at the discharge port is a problem for the buyers and sellers of the cargo to resolve .
(b) The master should not agree to discharge the cargo against a letter of indemnity (unless the shipowner has expressly agreed to this).
(c) Delay to the vessel while waiting for the bill of lading will usually be paid for under the charterparty in the form of hire or demurrage (or as part of the laytime which has been paid for in the freight payment). Even if the vessel is threatened with the cost of the delay, that threat should not justify delivery of the cargo without production of the bill of lading or at the wrong port.
(d) Delivery without production of the bill of lading, or at the wrong port, will be a breach of the terms of the shipowner’s P&I insurance and there will be no insurance if in consequence a claim is subsequently brought by the ‘true’ cargo owner.
(e) In some places the cargo can be discharged (at the named discharge port) into the custody of the port or a private warehouse where it will remain under the legal control of the master until the bill of lading has been produced. The master should investigate this, if possible through the P&I correspondent.
Other matters at the time of discharge
Lost bills of lading
Sometimes a person will claim to be entitled to possession of the cargo and will provide a plausible explanation that the bills of lading have been lost or destroyed. Sometimes the offer of a letter of indemnity (see below) accompanies the explanation. This is both a legal and a commercial problem for the shipowner and its advisors to resolve and the master should not agree to discharge the cargo (unless the shipowner expressly instructs him to do so) .
Letters of indemnity
The giving of letters of indemnity in return for delivery of cargo at the wrong discharge port or without production of the original bill of lading is not wrong, nor is it unusual. It is, however, a matter for the shipowner to decide upon. It is a commercial decision for it to make and one which it will make taking into consideration the fact that it may have no P&I cover as a consequence of doing so.
Standard letters of indemnity are included in the appendices. These standard forms include counter-signature by a bank. Banks are rarely prepared to sign an indemnity for unquantified amounts. Frequently, therefore, the letter is accepted without a bank’s countersignature. Alternatively a limit (e.g. 200 % of the value of the cargo) is placed on the bank’s liability under the letter. Again these are commercial decisions for the shipowner to take.
Photocopy or faxed bills of lading
Sometimes the master is asked to deliver against a copy or faxed bill of lading, the original being unavailable. Unless special arrangements have been made in writing by the shipowner to accept such a bill of lading, delivery should be refused. The usual rule is that delivery shall be given against presentation of at least one original bill of lading.
Multiple originals
Bills of lading are often issued in sets of three or four originals. The bill of lading will usually provide on its face that production of any one of those originals, will be acceptable. At the same time, the other originals are considered to be void and cancelled even if they have not been collected in by the master or ship’s agent.
Retention of the original bill of lading
The master should retain the original bill of lading against which cargo has been delivered. However, originals are sometimes required by local officials or customs and in those circumstances the master should ensure that he (or his agent) is allowed to see the original bill of lading and that he is allowed to retain a photocopy of the front and reverse side of the original.
This should, if possible, be certified by the receiver or his agent as follows:
‘This is certified to be a true copy of the original bill of lading which is now accomplished’.
More than one person demanding delivery of the cargo
This situation may arise where
(a) no bills of lading are available at the discharge port
(b) more than one set of bills of lading has been placed in circulation, all or some of which are unauthorised
(c) the original shipper has parted with the bills of lading and is asserting that the holder has not complied with its obligations under the sale contract, for example it has somehow acquired the bills of lading without making payment.
Each of the situations places the master (and the shipowner) in a very difficult position and can give rise to complex legal issues and may involve complex commercial and legal solutions. The best advice that can be given to the master, if he cannot obtain guidance for the shipowner, is as set out in paragraph
Change of destination during voyage
Sometimes the master may be asked to change destination during the voyage and to proceed to a discharge port other than that named in the bill of lading. That is a matter for the shipowner to give instructions upon. In the absence of clear guidance from the shipowner or the local P&I correspondent, the master should take note of the following.
(a) Even if the governing charterparty gives a range of discharge ports, once a bill of lading has been issued naming a discharge port, that destination should be treated as if written into the charterparty.
(b) So far as the bill of lading holder is concerned, the diversion of the vessel to a different discharge port will be a deviation, the consequences of which can be serious for the carrier.
(c) Promises by a person seeking to change the destination (be it charterer, shipper, or receiver) that it holds all of the original bills of lading or that the persons holding the bills of lading have agreed to the change, may at best be meaningless and at worst untrue. If such persons are genuinely in a position to make proper arrangements for the change of destination then they should be in a position to provide a letter of indemnity (see (d) below) including an undertaking for the return of all of the original bills of lading.
(d) The provision of letters of indemnity in return for delivery of cargo at a different destination is not unusual. However, the standard wording for a change of destination letter of indemnity expressly provides for the return of all of the original bills of lading and any letter of indemnity which omits this fundamental provision should be regarded as inadequate and rejected.