How many original bills of lading must I surrender to get release of cargo..??


How many original bills of lading must I surrender to get release of cargo..??

This question popped up on my comments and emails quite a few times since the beginning of this year and therefore I decided to write this short note to answer it..

Before I get to the answer to the above question, let me refresh your memory as to what is a bill of lading and what are the functions of a bill of lading..

Bill of Lading (abbreviated to B/L or BL) is one of the MOST important documents in the whole shipping and freight chain..

A bill of lading has 3 basic purposes or roles..

  1. Evidence of Contract of Carriage
  2. Receipt of Goods and
  3. Document of Title to the goods

Functions of Bill of Lading

The answer to the above question lies in identifying :-

  1. What type of bill of lading was issued
  2. How many originals were issued

When I say type of bill of lading I refer to a bill of lading being issued as a

  • Straight Bill of Lading or
  • Seaway Bill of Lading or
  • Negotiable Bill of Lading

There is a big difference between these 3 types of bills of lading and it is therefore important to identify the type of bill of lading issued and understand how each of it works before understanding how many original bills of lading are required for release of cargo..

Quoting from my previous article about “What is a Bill of Lading“,

1) When a B/L is issued in Original(s) to a “named” consignee it is referred to as a “Straight B/L” and a straight B/L is a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT..

Release of cargo at destination may be issued ONLY to the named consignee and ONLY upon surrender of at least 1 of the original bills issued..

This B/L satisfies roles 1 & 2 above fully and does not satisfy role 3 (Document of Title) as the document is not negotiable or transferable..

2) When a B/L is issued to a “named” consignee but without any originals it maybe considered as a “Seaway B/L“.. This B/L is also a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT..

A Seaway B/L is usually issued

  1. for inter company shipments like from ACME Company Hollywood to ACME Company in the Middle of the Australian Outback or
  2. where the shipment takes place between two different companies but there are no negotiations required between the two either directly or via bank for release of the cargo and
  3. the shipper doesn’t need to submit an original B/L to anyone to secure his payment

Since no originals are issued in the case of a Seaway B/L no surrender is required and the release may also be termed as an Express Release and is mentioned as such on the body of the B/L and manifest..

This B/L satisfies roles 1 & 2 above and does not satisfy role 3 (Document of Title) as the document is not negotiable or transferable..

3) When a B/L issued is in Original(s) and consigned “TO ORDER” or “TO ORDER OF SHIPPER” or “TO ORDER OF XYZ BANK” it is termed as “Negotiable B/L or Order Bill“..

What is a bill of ladingOne of the most important aspects of a B/L is that it can be used as a negotiable instrument for payments between a buyer and seller using Letter of Credits.. You can read how a Letter of Credit works here..

A negotiable B/L must be treated like gold and due care must be taken not to lose it.. There are several cumbersome procedures to be followed if an original B/L is lost..

Another notable feature of this type of B/L is that it contains the Terms and Conditions of the Carrier on the 1st Page of the B/L..

The 1st page is what we all commonly refer to as the “back of the B/L”..

Seaway bills issued by some carriers do not have these Terms and Conditions on the back (also known as “blank back short form B/L“)..

Destination port agent may issue release of cargo only after at least 1 of the issued originals are surrendered and after checking the endorsements on the back of the B/L as it is possible for this type of B/L to be endorsed or transferred to another company.. This B/L satisfies all of the above 3 roles..

Read the permutation and combination regarding the consignee in one of my previous articles..

Ok now to the question “How many original bills of lading must I surrender to get release of cargo..??

 

There are only two types of bills of lading that involve the issuance of original bills and they are Straight Bill of Lading and Negotiable Bill of Lading..

In either case, the ruling is the same as shown below in the screen grab of a Hapag Lloyd bill of lading..

This shows how many bills of lading are required for the release of a cargo (wherein a Negotiable Bill of Lading or Straight Bill of Lading has been issued)..

original bill of lading and release of cargo

If you look at the highlighted parts, you can see that release of cargo (delivery order) will be granted to the authorised consignee after presentation of 1 of the number of original bills of lading issued..

But there are also cases wherein the shipping line might require the surrender of all the issued originals, specially in cases where they maybe making some exceptions on the endorsements required on the bill  of lading..

Standard number of original bills of lading issued seems to be 3 Originals, so assuming 3 originals have been issued, upon surrender of a duly endorsed original bill of lading, the other 2 becomes null and void..

So the answer to the question “How many original bills of lading must I surrender to get release of cargo..??

  • if it is a Negotiable Bill of Lading, AT LEAST one duly endorsed original bill of lading
  • if it is a Straight Bill of Lading, AT LEAST one original bill of lading

In the case of a Straight Bill of Lading however, there are several opinions and cases relating to whether ANY (whether 1 or more) original bill of lading is required for the release of cargo, depending on the country and which COGSA has been used..

For example the US COGSA does not require the presentation of the original straight bill of lading for release of cargo whereas certain Scandinavian and Chinese jurisdictions require same.. UK COGSA has also been shown to be fickle in this aspect..



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