Can I take ownership of cargo

Can I take ownership of cargo..

The shipping and freight industry sure is an interesting place with very different issues cropping up all the time.. Here’s one more case study that’s happened recently..

bagged cargo in container - Can I take ownership of cargo

Scenario :

  1. Shipper ABC books cargo with a shipping line via a Forwarder
  2. Cargo is packed and container is shipped
  3. Bill of lading shows Shipper ABC as Shipper and XYZ as Consignee
  4. Shipper ABC has done the customs formalities for the exports, but port dues not paid
  5. Container reaches destination
  6. But the shipper ABC hasn’t taken release of his bill of lading at origin or destination
  7. Forwarder tries to contact ABC, but the shipper is missing.. ABC has also not paid the Forwarder the freight..
  8. The forwarder had already paid the freight to the line in anticipation that ABC would pay them the freight when they come to collect the bill of lading
  9. The bill of lading is a Straight Bill of Lading – shipped by a direct shipper to a direct consignee with no TO ORDER or TO ORDER OF BANK notations
  10. The shipping line office at the destination port have tried to contact the consignee and he is also missing and there is no one at the physical address provided for the shipper or consignee
  11. The full container is now sitting at the destination port and incurring port storage and line demurrage
  12. To safeguard his interest, the Forwarder pays all the local dues to the port and shipping line and collects the Original Bill of Lading (3)
  13. As per Commercial invoice submitted, the cargo is of good value

Question here is :

To recover his losses, can the forwarder place a lien, claim ownership of the cargo and sell the cargo to someone else..?? He has all 3 original bills of lading released to him by the shipping line, but consigned to XYZ..

One of the functions of a bill of lading is “Document of Title”.. Does the fact that he possesses all 3 Original bills of lading allow him to claim ownership under this pretext, especially since the owners of the cargo are absconding or untraceable and it is a Straight Bill of Lading..

What are his choices to recoup his losses (Freight, Local charges bends, Port Storage and Line Demurrage)..??

Comments appreciated..

 

What did you think of the above article..?? Comment below..

24 comments on “Can I take ownership of cargo

  1. Rehan says:

    requested for solution for one case..Fwdr booking 10 containers for Shipper ABC which is consigned to XYZ and now the consignee not taking delivery at destination…Forwarder received the freight n released the B/L to shipper.. now is the forwarder liable or responsible for consignee not taking delivery at destination..

  2. Sameek agarwal says:

    Sir, we have exported 2 FCL of spices, the forwarder insists that he has sent the Original HBL through Registered post. The post contains the copy of HBL and not original. The forwarder is in no mood to co-operate. What should we do to safeguard our interest and the delivery of materials to the original consignee.

  3. roberto says:

    cnee abandoned the goods at Port due to financial problems
    cargo is now sitting for more than 18 months shipping line did not auction the goods within stipulated time or notified the shipper for 18 months and is now asking shipper to pay all detention & demurrage charges amounting to a huge sum
    what is the course of action to the shipper who has lost the goods , freight and also the demurrage/detention charges etc suddenly after this long time
    is the jurisdiction at port of discharge or port of loading ?

  4. Mike Weimer says:

    My question is if the forwarder is acting as an NVOCC, doesnt he have full ownership of the cargo? Since the booking with the actual line is done from the NVOCC foreign office in to the NVOCC in the destination country. The only documents that would show the actual customers name and ownership would be the house bill of lading which is issued by the NVOCC and holds all 3 original house bills.

    In a situation that i have seen before the NVOCC or forwarder could not wait for auctions since cargo did not go on Customs G.O. for sale of cargo as shipment was indeed cleared through customs, customer just did not want to pay to retrive cargo and cargo sat for some time at the pier collecting storage and demurrage charges etc. The NVOCC had to pay the shipping line all charges due, the port required payment for storage as well. what happens in this case? Can the NVOCC pay the storage charges, pickup the container, empty the goods in a warehouse, return the empty container to the pier and hold the cargo at the warehouse to minimize exposure? and of course he would need to keep an eye on the amount already spent and the amount that the cargo is worth as the cargo would have to be sold or auctioned off before you end up at a loss.

    Can this be done? or would it violate any law.

  5. Bradley Schwab says:

    From an American law student’s perspective, the forwarder would be out of luck. That is, unless he abandons the goods and a subsequent auction covered the forwarder’s ocean carriage costs. From what I understand, these types of shady shipments were the impetus for the back-to-back BOL concept.

    What the forwarder should have done is issue a House Bill to the shipper with the shipper’s consignee and just copy the terms of the Master Bill issued by the carrier. In the Master Bill, the forwarder should always designate his own destination agent as the consignee for this exact situation.

  6. Stan Odissey says:

    Of course Manaadiar, there is no guarantee but just the chance!

  7. Stan Odissey says:

    my point of view, the auction at destination will be the most legal way to solve the problem.

    1. Manaadiar says:

      Agree with you Stan.. The forwarder must try and see if he will get any monies back from the auction to recoup his costs.. But that is if the shipping line will allow it as they still have to recover their storage and demurrage costs..

  8. Stan Odissey says:

    Dear Lijo Philip,
    Agree with you and it’s equal that I wrote before but more widely detailed.
    I see two points that can be a bit problematic for FW. First of all as you correctly mentioned FW should “convince/persuade the shipping line” but in fact it’s not so easy as the Line finds it as some fraud action. FW has to be a very good client for the Line. Second one is what will the forwarder do if the shipper will come back after 2 months of reasonable absence and pay all charges? He will found that his cargo was stolen and will start the legal action against FW and against Line who made amendments of shipper without their permission.
    As I have also mentioned FW can wait for the Auction at destination in order to try to cover their costs and I agree with errol fynn saying “Finally if actual consignee does NOT comply with all the Customs and Port clearance procedures, before a certain time frame, the Customs officials then put the goods up for Auction at a fixed price which would include their taxes ,shipping lines ,Forwarders and Port costs.There is no guarantee that all parties would receive the full claims.”

  9. Lijo Philip says:

    Hello Hariesh, first of all salutes for this excellent portal. Very impressive and hope will be kept updated regularly.

    In this above case, forwarder being the booking party, should be able to amend the shipper on the B/L to show themselves. As the OB/L still remains uncollected, if the forwarder manages to convince/persuade the shipping line about the absconding shipper, some lines would amend the shipper without any endorsement from the original shipper on the B/L.

    This will transfer ownership of the cargo on forwarder’s name.
    In this way, fwdr should be able to sell / resell cargo to another consignee ensuring their costs are recovered.

    Because the B/L is not ‘To Order’ and is a straight consigned B/L – subject to destination customs manifest amendment B/L can be amended. Line might ask for an NOC from the original consignee on the B/L and an acceptance letter from the new consignee of all the destination costs, det/dem charges etc.

    @Errol Fynn
    My reasoning for your questions
    1. Why were Original Forwarders bills of Lading Not issued ??
    A. Many times shipments on L/C do not allow house B/L, specially for FCL cargo. Also it depends on the fwdr, there are many fwdrs who are very small and do not have presence at all the destiantion around the world.

    2. Do not do business with unknown people or from the street.
    A. In today’s market / economic scenario, every fwdr tries to optimise business. Doing a credit check on all the new customers can help in figuring out who are worth taking a risk.

    3. An Original ocean bill of lading should have been issued by the Forwarder showing themselves as shipper and consignee and that would have safe guarded them from any possible losses.
    A. As explained in point 1.

  10. Mihee says:

    Yes, If you have three origianl BLs, you can ask shipping line to issue switch bill… new consignee as their own company.

  11. A Clive says:

    Good day Hariesh
    The document of title in this case I would imagine to be of entitlement and not ownership. The FWDER does not own the cargo but may be entitled to part of the proceeds as we know from the SOF but of course he would have to prove entitlement via the courts of law .

  12. Anant Sharma says:

    This is an interesting article, as consignment already reached destination, the situation is tricky . The forwarder has to make thorough efforts to trace supplier / customer to pay dues and collect the BL. A legal notice is to be sent out to Supplier / customer at disclosed address on BL for not taking delivery.

    The forwarder should request custom authorities to inspect the cargo in said container to ascertain value of cargo through shipping line.
    Later they can proceed about ownership, waiting for auction period for disposal of cargo to claim dues etc.,

  13. Errol Fynn says:

    In my opinion goods can only be released to the nominated consignee as indicated on the ocean bill of lading.The Forwarder on record booked the cargo via the shipping line but All THE SHIPPING DOCUMENTS ,do not reflect any of the forwarders details so legally I still believe the forwarder does not have a legal
    claim as being the owner.The shipping line would only be in a position to release the cargo to the Forwarder once the “Consignee ” presents or provides the shipping line with an official letter authorising release of cargo to the “new owner”If a “document of title” is meant to be in the hands of any Tom Dick and Harry then the shipping line would be inundated with law suits from the real owner
    of the goods.

  14. Manaadiar says:

    Thanks Errol, Stan, Clive and Sam for your comments.. But what about the bill of lading as Document of Title..?? What do you think about the forwarders right to claim the cargo as his own as the bill of lading is a Straight Bill of Lading..??

  15. Stan Odissey says:

    Dear Gentlemans,
    I think there is no much more that can be said in this matter.
    All points are clearly described.

  16. errol fynn says:

    I will answer the questions as follows,
    A.Yes the forwarder can place a lien on the goods in consultation with the shipping line and his legal advisors as quickly as possible..
    B.Although the Forwarder has the 3 Original Ocean bills of Lading in his possession ,he cannot legally claim ownership of the goods simply because of the fact that they are not the “Consignee” and goods can only be released physically
    by the shipping line to the nominated Consignee.
    C.Yes,its true in certain countries the Customs authorities may not accept a manifest corrector especially after the goods have been discharged from the vessel and lying at the harbour not claimed.The customs could look at such shipment suspiciously.
    D.Finally if actual consignee does NOT comply with all the Customs and Port
    clearance procedures, before a certain time frame, the Customs officials then put the goods up for Auction at a fixed price which would include their taxes ,shipping lines ,Forwarders and Port costs.There is no guarantee that all parties would receive the full claims.
    E.This lesson teaches us the following.
    1.Why were Original Forwarders bills of Lading Not issued ??
    2.Do not do business with unknown people or from the street.
    3.An Original ocean bill of lading should have been issued by the Forwarder
    showing themselves as shipper and consignee and that would have safe guarded them from any possible losses.

    1. Dmitriy says:

      You write: An Original ocean bill of lading should have been issued by the Forwarder
      showing themselves as shipper and consignee and that would have safe guarded them from any possible losses.

      Cant undestand, how its possible, that forwarder may issue a bill of lading itself?

  17. Stan Odissey says:

    Sam kurian, Hello
    I mean freight forwarder who places a booking in the Line. They usually give shipping & release instructions, so they also in right to give instruction to correct cnee in the bl. Of course they should confirm that they will pay all customs penalty arrised due to manifest corrector

  18. A Clive says:

    Good day Hariesh
    Compliments on an exceptional Shipping blog . I thoroughly enjoy it even though I am working ‘out of retirement’ . I have introduced your blog to newly recruited personnel in the Shipping Industry and I recommend that your current readers / bloggers encourage their fellow personnel and friends to visit (and learn).

    From the statements of facts (sof) the F’WDER has every right tp place a lien on the cargo so that he may recoup funds outlayed however it has to be done via a court of law starting with the port / country of origin and working via the Shipping Line to ensure Port Authorities and Customs at destination port / country are aware of the legal process. If banks are involved through establishments of credits then they may be used as allies and would strengthen the f’wder’s case of claim and also against fraudulent behaviour 9intended or not)

  19. Sam kurian says:

    As the forwarder not a party on the bill of lading, believe the shipping line won’t change the consignee or shipper with thier request even OBL surrendered. As per normal practise customs dept at destination will ask for shippers requsition letter for manifest amendment to new consignee. Forwarder can move legally either to shipper or consignee at destination if they signed a forwarding contract.

  20. This is a very interesting question. I’d be interested to know whether it would be legal to assume ownership of the cargo considering the circumstances.

  21. Stan Odissey says:

    Manaadiar, Good day,

    As for the Line (if FW is a agreement/booking party) there is no metter what a problem FW has with the shipper, so FW can find new Buyer, instruct Line to do manifest corrector for the new CNEE, the cargo will be released but….
    what will the forwarder do if the shipper will return in 2 months reasonable absence and pay all charges?
    I think if there is no legal agreement beetween shipper and their forwarder where are highlighted relevant points so just one way is to keep bol till the moment once owner paid all charges to them and additional charges at destination or till the moment once Line auctioned the cargo at destination to cover the terminal storage. In second case losses of the FW is freight and THCL.

    1. hassan says:

      Dear Mr Hariesh

      the person who made booking , he obligate for all payment to shipping line, so in this case , i think the shipper who made the booking with his name as a shipper , so why the freight for wording pay all payment , it was chance to less his losses
      in the straight master b/l , the FF cant own the cargo
      also if it is order or to order , who can endorsement the b/l to FF
      it is fraud Case

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