Consider this scenario: cargo has arrived at port, but the consignee cannot produce the original bill of lading. Should the carrier risk releasing goods without documentation, potentially facing legal consequences? Or insist on waiting for the bill while accumulating demurrage charges? As one of the most critical documents in international trade, the issuance, delivery, and disputes surrounding bills of lading directly impact the rights of carriers, shippers, and consignees.
I. Bill of Lading Issuance: Legal Obligations and Breach Risks
Both the Hague-Visby Rules and China's Maritime Code explicitly require carriers to issue bills of lading upon shippers' request. This is not optional but a mandatory legal obligation. Refusal to issue a bill may constitute breach of contract. The UK Supreme Court in The Nanfri case established that a shipowner's refusal to issue a freight prepaid bill of lading amounted to fundamental breach of charter. Carriers must fully understand this legal duty to avoid contractual liabilities.
II. Legal Effects: The Bill as Evidence of Rights and Obligations
A bill of lading serves not only as a receipt but also as the legal basis for rights and obligations between carriers, consignees, and holders. Article 78 of China's Maritime Code specifies that these relationships are determined by the bill's terms. This means any violation of bill provisions may lead to legal consequences. Particularly for carriers, releasing goods without original bills exposes them to significant legal risks, including potential breach claims.
III. Delivery Without Original Bills: Liability Boundaries and Contractual Terms
In practice, delivery without original bills occurs frequently. How should carriers navigate these situations?
- Risks of delivery without bills: Releasing goods without original bills violates contractual obligations. Judicial guidelines clarify that unless parties agree to electronic release or follow shipper instructions, unauthorized delivery makes carriers liable for compensation. Charterers also cannot legally instruct carriers to deliver without proper documentation.
- Limitations of exemption clauses: While carriers may theoretically limit liability through clear contractual language (e.g., "all responsibilities terminate once goods leave the hook"), such broad clauses typically don't cover intentional misconduct like willful misdelivery or destruction of cargo.
- Distinguishing "delivery" from "discharge": Legal delivery occurs when goods become freely disposable to consignees, whereas physical discharge to docks or trucks doesn't constitute final delivery. Loss of control during discharge may breach carriers' duty of care.
IV. Practical Scenarios: Lost Bills and Demurrage Allocation
How should carriers handle common operational challenges?
- Lost bills: Unless charters specify otherwise, carriers aren't obligated to deliver without original bills. However, established precedents support releasing goods against reliable letters of indemnity, making this a manageable risk when proper safeguards exist.
- Demurrage liability: Laytime and demurrage generally continue unless exceptions apply (e.g., wrongful lien exercises). Unreasonable refusal to deliver may expose carriers to off-hire claims or damages.
V. Risk Management: Charter Terms and Indemnity Instruments
Effective prevention strategies include:
- Precise charter clauses: Clearly define bill-related processes and liabilities in contracts to minimize disputes.
- Judicious use of indemnities: Only accept letters of indemnity from creditworthy parties, as unreliable counterparts may render such instruments ineffective.
Given the complex legal and operational dimensions of bill of lading disputes, carriers must maintain thorough legal awareness, draft robust contracts, and implement prudent risk controls to protect their interests.