Imagine this scenario: goods arrive at their destination after a long sea voyage, but the buyer easily takes possession without paying or presenting the original bill of lading. This is not fiction but a real risk in international trade known as "release without original bills of lading" (or "unlawful cargo release"). While prohibited in many jurisdictions, this practice persists in certain regions, potentially leaving exporters empty-handed. This article examines the definition, high-risk areas, preventive measures, and response strategies to help businesses safeguard their interests.
1. What Is "Release Without Original Bills of Lading"?
"Release without original bills of lading" occurs when a carrier or its agent allows a consignee to take delivery of goods without surrendering the original bill of lading, instead accepting copies, scanned versions, or letters of indemnity. The original bill of lading serves as proof of ownership in standard trade practices, requiring the consignee to present it to claim goods. Circumventing this process exposes exporters to significant financial and legal risks.
Though explicitly banned under Chinese law, certain countries permit this practice due to local regulations or port customs, creating vulnerabilities for shipments to these destinations.
2. High-Risk Countries and Regions
While unlawful in China, "release without original bills of lading" remains legally or tacitly accepted in parts of Latin America and West Africa. Notable high-risk jurisdictions include Angola, Guatemala, Honduras, Costa Rica, the Dominican Republic, and Venezuela, where importers can often clear goods unilaterally, weakening carriers' control over original bills.
Additionally, the United States, Canada, and the UK allow consignees to collect goods under straight bills of lading (non-negotiable) without presenting originals, relying instead on identity verification and arrival notices. Exporters using straight bills must ensure consignee details are accurate and unchanging to mitigate risks.
3. Preventive Measures for Exporters
To minimize exposure, exporters should adopt proactive strategies:
a) Favor Secure Trade Terms
Opt for CIF (Cost, Insurance, and Freight) or CFR (Cost and Freight) terms over FOB (Free On Board). Under FOB, importers appoint freight forwarders, reducing exporters' control and increasing risks. CIF/CFR terms allow exporters to select reputable carriers and forwarders.
b) Vet Freight Forwarders Rigorously
If FOB terms are unavoidable, verify that the importer-designated forwarder is licensed by China's Ministry of Commerce. Avoid unapproved or overseas forwarder branches to prevent disputes.
c) Enforce Operational Protocols
For FOB shipments, ensure forwarders issue bills approved by Chinese authorities and retain cargo control. Demand written guarantees requiring original bills for release, with liability for violations.
d) Secure Export Credit Insurance
Insurance coverage compensates losses from unlawful releases, providing a financial safety net.
e) Strengthen Risk Awareness
Understand destination-specific regulations and contractual nuances to close loopholes before shipment.
4. Response Strategies for Unlawful Releases
If goods are released improperly:
a) Verify Cargo Status
Check carrier tracking systems to confirm if containers were discharged and moved inland.
b) Issue Legal Notices
Engage maritime lawyers to demand compensation from liable forwarders via formal letters.
c) Initiate Litigation
If unresolved, file lawsuits with evidence (communications, invoices) in maritime courts.
d) Pursue Mediation
Courts may facilitate settlements. Insist on full compensation for goods, lost tax rebates, and interest.
5. Conclusion
In international trade, protecting ownership rights is paramount. By recognizing risks, implementing safeguards, and responding decisively to violations, exporters can secure their operations against the costly consequences of unlawful cargo releases.