7/6/2017
Bills of Lading
Effects on Logistics Providers
Geovenn C. Lim
Spica Services (M) Sdn Bhd
Presentation Outline
1. Introduction – SPICA Services
2. What is a Bill of Lading?
3. Other shipping documents
4. Applicable law (Domestic legislation, International Conventions)
5. Freight Forwarding Focus
Introduction
Who are we?
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• Marine claims services as correspondents in South East Asia.
• Diverse backgrounds such as mariners, surveyors and lawyers who
strive to provide timely and accurate advice on technical and legal
matters concerning a broad spectrum of risks.
Presentation Outline
1. Introduction – SPICA Services
2. What is a Bill of Lading?
3. Other shipping documents
4. Applicable law (Domestic legislation, International Conventions)
5. Freight Forwarding Focus
What is a Bill of Lading?
Bill of Lading (B/L)
Historical roots Current use Evolution
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What is a Bill of Lading?
Commercial document used in the sale, purchase, transport and
financing of cargo
3 main functions:
Conclusive document of receipt.
Document of title/“Negotiable” instrument.
Evidence of the contract of carriage.
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What is a Bill of Lading?
Commercial document used in the sale, purchase, transport and
financing of cargo
3 main functions:
Conclusive document of receipt.
Document of title/“Negotiable” instrument.
Evidence of the contract of carriage.
What is a Bill of Lading?
Conclusive document of receipt
B/L issued by the carrier to the shipper and consignee as acknowledgement that a
particular quantity of cargo has been received and shipped on a particular date in
apparent good order and condition bearing certain leading marks.
• Receipt as to Quantity
• Receipt as to Condition
• Receipt as to Leading Marks
What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Quantity
Representation of the weight/quantity of goods shipped.
Clause the B/L to avoid representations as to quantity being used as evidence
by adding indorsements such as “Weight, quantity unknown”.
Weight may be included “for the purposes of calculating freight only”.
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What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Condition
Representation as to the condition in which the cargo was shipped.
What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Condition
Cargo apparent condition judged by a reasonable outward inspection.
Reasonable knowledge and experience, not the standard of an expert
Appearance, packaging, smell and feel of the Cargo.
What is a Bill of Lading?
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What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Condition
Damages or abnormalities? Lodge protest against shipper, clause B/L or refuse delivery.
What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Condition
Very important! Once clean B/L issued, carrier deemed to have knowledge of the cargo and the
manner of packing. Carrier then becomes responsible for any damage during carriage.
Do not issue clean B/L against an indemnity. Commercial risk, may not be covered by insurance.
What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Leading Marks
“Leading marks” Identification or quality marks appearing on the cargo.
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What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Leading Marks
If the marks are essential to the cargo’s identity or description and wrongly represented in the B/L,
then the carrier is liable for the misrepresentation.
What is a Bill of Lading?
Conclusive document of receipt
• Receipt as to Leading Marks
However, note that there is no obligation for carrier to acknowledge in the B/L any quality marks
attached to the goods.
What is a Bill of Lading?
Typical clause:
“condition, weight, measure, marks, numbers, quality, contents and
value unknown”
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What is a Bill of Lading?
Commercial document used in the sale, purchase, transport and
financing of cargo
• 3 main functions:
Conclusive document of receipt.
Document of title/“Negotiable” instrument.
Evidence of the contract of carriage.
What is a Bill of Lading?
Document of title/“Negotiable” instrument.
• The “key to the warehouse” B/L to be presented in order to obtain
delivery.
• “To Order of Named Consignee”.
• “To Order of Shipper”.
• “To Order of Named Bank”.
What is a Bill of Lading?
Document of title/“Negotiable” instrument.
• The “key to the warehouse” B/L to be presented in order to obtain
delivery.
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What is a Bill of Lading?
Document of title/“Negotiable” instrument.
• “To Order of Named Consignee”.
• “To Order of Shipper”.
• “To Order of Named Bank”.
What is a Bill of Lading?
Commercial document used in the sale, purchase, transport and
financing of cargo
• 3 main functions:
Conclusive document of receipt.
Document of title/“Negotiable” instrument.
Evidence of the contract of carriage.
What is a Bill of Lading?
Evidence of the contract of carriage.
• Contains the details, terms, conditions and warranties which the cargo and
the carriage of the same are to be carried out.
• Sets out the responsibilities, obligations, liabilities and rights of the
shipper/consignee and carrier.
• If there are other orally agreed terms, which the B/L does not reflect, the
burden is on the shipper to prove it.
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Cargo Insurance
Limitation of Liability
General Exclusions and Time Bar
Law and Jurisdiction
Customer’s Obligation and
Liability
Presentation Outline
1. Introduction – SPICA Services
2. What is a Bill of Lading?
3. Other shipping documents
4. Applicable law (Domestic legislation, International Conventions)
5. Freight Forwarding Focus
What is a Bill of Lading?
Bill of Lading (B/L)
Historical roots Current use Evolution
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What is a Bill of Lading?
Bill of Lading (B/L)
Historical roots Current use Evolution
-Short Form B/L
-Conclusive document of receipt.
-Way bills
Document of title/“Negotiable” instrument. -House Bills
-Multimodal Bills
Evidence of the contract of carriage. -Mate’s receipt
-Ship’s delivery order
Other Shipping Documents
Other Shipping Documents
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Other Shipping Documents
Short Form B/L
• 1 page, front face only
• Carrier’s STCs incorporated
• +ve Generic, Fast to issue
• -ve Unfamiliarity with the STCs of a particular carrier
*Carriage subject to Carrier’s STCs
Other Shipping Documents
Way Bill
• “Non-negotiable”.
• No presentation required, only
verification of identity.
• Retains the characteristics of a
document of receipt and evidence of
the contract of carriage.
Other Shipping Documents
Straight Bill
• Exactly the same as traditional B/L except being “Negotiable”.
• Not issued to order, presentation still required.
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Other Shipping Documents
Mate’s Receipt
• Receipt issued for goods loaded, before Bill of
Lading is issued
Ship’s Delivery Orders
• Issued by the carrier to the consignee in
exchange for the B/L
• Not a document of title
Presentation Outline
1. Introduction – SPICA Services
2. What is a Bill of Lading?
3. Other shipping documents
4. Applicable law (Domestic legislation, International Conventions)
5. Freight Forwarding Focus
Applicable Law (Domestic Legislation)
• Civil Law Act 1956
• Bill of Lading Act 1855
• Sales of Goods Act 1957
• Carriage of Goods by Sea Act 1950
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Applicable Law (Domestic Legislation)
Civil Law Act 1956
For matters with respect to “…principals and agents, carriers by air, land and sea, marine insurance, … and
with respect to mercantile law generally”
•Section 5(1) Peninsular Malaysia except for Malacca and Penang
• Applicable law would be English law till 1956 unless other provision or law applies.
•Section 5(2) Malacca, Penang, Sabah, Sarawak
• Applicable law would be English law as it stands unless other provision or law applies.
Applicable Law (Domestic Legislation)
Why the application of English Law matters.
• Bill of Lading Act 1855 application to Peninsular Malaysia except for Malacca and Penang,
Sabah, Sarawak.
• Bill of Lading Act 1855 sets out when Rights of Suit vest in the Consignee/Endorsee of a B/L.
• Privity of contract. Rights of suit exercisable only by parties to a contract.
Legal Action
Shipper
Legal Action
Sales Contract Carriage Contract
Consignee Carrier
No Contract until B/L • If the Court
transferred, property OR implies a contract
passes • Negligence
• Bailment
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Applicable Law (Domestic Legislation)
Bill of Lading Act 1855
• Section 1
“Every Consignee of Goods named in a Bill of Lading, and every Endorsee of a Bill of Lading to whom the
Property in the Goods therein mentioned shall pass, upon or by reason of such Consignment or
Endorsement, shall have transferred to and vested in him all Rights of Suit, and be subject to the same
Liabilities in respect of such Goods as if the Contract contained in the Bill of Lading had been made with
himself.”
Applicable Law (Domestic Legislation)
Sale of Goods Act 1957
• Section 18, Section 23(1) Unascertained goods (i.e. bulk cargo)
• Section 25 (1)
• specific goods/subsequently appropriated goods
• seller may reserve the right of disposal of the goods until certain conditions are fulfilled. In
such case, notwithstanding the delivery of the goods to the buyer or to a carrier or other
bailee for the purpose of transmission to the buyer, the property in the goods does not pass to
the buyer until the conditions imposed by the seller are fulfilled.
Section 25 (2)
• Where goods are shipped and by the bill of lading the goods are deliverable to the order of
the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.”
Applicable Law (Domestic Legislation)
Other ways to sue
• English Carriage of Goods by Sea Act 1992
• Implied contract
• Negligence
• Bailment
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Legal Action
Shipper
Legal Action
Sales Contract Carriage Contract
Consignee Carrier
No Contract until B/L • If the Court
transferred, property OR implies a contract
passes • Negligence
• Bailment
Applicable Law (Domestic Legislation)
Key Takeaway
Consignee/Endorsee can only sue when property passes. In situations where property passes
independently of the transfer of the B/L, Consignee/Endorsee may not have right to sue.
Seek advice if there are claims! Check and see if the party trying to sue you has the right to sue you.
Applicable Law
(International Conventions)
Sea Land (Road) Land (Rail) Air
Hague Rules 1924 CMR 1956 COTIF (CMI) 1980 Warsaw Convention 1929
Hague-Visby Rules 1968 CMR 1956: Protocol 1978 COTIF (CMI) 1980: Protocol Warsaw/Hague Rules 1955
1990
Hague-Visby Rules 1968: COTIF (CMI) 1999 Guadalajara Convention
SDR Protocol 1979 1961
Hamburg Rules 1978 SMGS Montreal Protocol 4
Rotterdam Rules 2009 Montreal Convention 1999
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Applicable Law
(International Conventions)
Typical Contents
• Application
• Responsibilities and Liabilities
• Time bar
• Notice
• Rights and Immunities
• Limitation
• Choice of law & Jurisdiction
Carriage of Goods by Sea Act 1950 (Act 527)
Incorporating the Hague Rules 1924
(“COGSA”)
COGSA - Application
• Applies to Peninsular Malaysia only.
• Outward carriage of goods by sea from any Malaysian port to any port whether
in or outside Malaysia.
• “Tackle to tackle” “CY to CY”
• Applies to B/Ls or similar documents of title (i.e. Traditional B/L, Short Form,
Straight Bill)
• Special conditions applicable only to cabotage and sailing ships.
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COGSA - Responsibilities and Liabilities
Carrier’s responsibilities (Art III Rule 1 & 2)
• Seaworthy Ship
• Properly Man, equip and supply the ship
• Ensure areas of ship where goods are carried are fit and safe for their reception, carriage and
preservation.
• Properly and carefully load, handle, stow, carry, keep, care for and discharge the goods.
Responsibility to use due diligence (reasonable care). Burden of proving the exercise of due diligence shall
be on the carrier or other person claiming exemption for damage caused by unseaworthiness.
COGSA - Responsibilities and Liabilities
Carrier’s responsibilities (Art III Rule 3)
• Issue B/L showing : -
a) the leading marks necessary for identification of the goods,
b) either the number of packages or prices, or the quantity, or weight,
c) the apparent order and conditions of the goods.
• General responsibility Delivery cargo upon presentation of the B/L
COGSA - Responsibilities and Liabilities
COGSA to prevail (Article III Rule 8)
“Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from
liability for loss or damage to or in connection with goods arising from negligence, fault or failure in the
duties and obligations provided in this Article or lessening such liability otherwise than as provided in
these Rules, shall be null and void and of no effect.”
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COGSA - Responsibilities and Liabilities
Shipper’s/Consignee’s responsibilities
• Deliver the cargo to be carried and to take delivery of the cargo
• Indemnify Carrier for inaccuracies
• Not to ship dangerous goods
• Written Notice to be given port of discharge before or at the time of taking delivery, if loss or damage
not apparent then within 3 days.
COGSA – Rights and Immunities
Exemptions/Defences (Article IV rule 2)
a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the
navigation or in the management of the ship;
b) Fire, unless caused by the actual fault or privity of the carrier;
c) Perils, dangers and accidents of the sea or other navigable waters;
d) Act of God;
e) Insufficiency of packing;
f) Insufficiency or inadequacy of marks;
g) Latent defects not discoverable by due diligence;
COGSA – Rights and Immunities
Exemptions/Defences (Article IV rule 2)
h) Any other cause arising without the actual fault or privity of the carrier, or without the fault
or neglect of the agents or servants of the carrier, but the burden of proof shall be on the
person claiming the benefit of this exception to show that neither the actual fault or privity
of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to
the loss or damage.
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COGSA – Rights and Immunities
Package Limitation of Liability (Article IV Rule 5)
“Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in
connection with goods in an amount exceeding £100 per package or unit, or the equivalent of that sum in
other currency, unless the nature and value of such goods have been declared by the shipper before
shipment and inserted in the bill of lading.”
Value = £100 in Gold Quantity/Packages stated
on the face of the B/L
COGSA – Rights and Immunities
Time Bar (Article III rule 6)
“In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage
unless suit is brought within one year after delivery of the goods or the date when the goods should
have been delivered.”
• “Delivery”
• Inland transport
• Section 29 Contracts Act 1950
Air Carriage – General Principals
- Air carriage (aircraft, airport, deemed air carriage)
- Highest Common convention to apply
- Does not apply to mere agents
- Presumption and bar to sue if no notice given, unless in cases of fraud.
- Jurisdiction
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Air Carriage – Quick Summary
Convention Limitation Break Limitation Notice Time Bar Defences
Warsaw Limits liability to 250 francs • Non-compliance to In writing 2 years • Loss did not occur during flight or
Convention 1929 per kilogram/Declared Sum documentary requirements 7 days from receipt of goods around airport
• Wilful misconduct • Carrier took all necessary
• Liable for agents conduct measures to avoid damage, or
taking such measures were
impossible
• Contributory negligence of shipper
Warsaw/Hague Limits liability to 250 francs Act or omission of the carrier, his In writing 2 years
Rules 1955 per kilogram/Declared Sum servants or agents, done with Loss: 14 days from date of
intent to cause damage or receipt
17SDR/kg Montreal Protocol recklessly and with knowledge
No.4 that damage would probably Delay: 21 days from date the
result; provided that, in the case cargo was delivered to
of such act or omission of a carrier
servant or agent, it is also proved
that he was acting within the
scope of his employment.
Montreal 19 SDR/kg or shipper’s None In writing 2 years • Inherent defect, quality or vice of
Convention 1999 higher declared value Loss: 14 days from date of cargo
receipt • Defective packaging not by carrier
No limits if damage done • Act of war or armed conflict
intentionally or carrier acts Delay: 21 days from date the • Act of public authority
recklessly. cargo was delivered to • Contributory negligence of shipper
carrier
Federation of Malaysia Freight Forwarders STCs
Application
• Incorporated by reference but would be superseded in so far as portions that are in conflict
with domestic legislation/international conventions.
• Applies to legs of the carriage where no other law applies.
Delivery
• Failure to take delivery/documentary title not yet passed, customer to indemnify.
• General Lien exercisable 30 days after arrival of goods.
• To carry out carriage as per customer’s complete and clear instructions.
• Can subcontract whole/part of the carriage
Federation of Malaysia Freight Forwarders STCs
Customer’s obligations and liability
• Duty to truthfully and accurately declare particulars, if not, liable for damages, costs,
expenses/ indemnity against 3rd parties.
• Imposition of late payment penalty.
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Federation of Malaysia Freight Forwarders STCs
Notice and time
• Immediate if cargo damaged on arrival, 6 days if damage not apparent.
• If liable as principal, customer to provide evidence of negligence within 21 days.
• Goods deemed to have been delivered without damage if no written notice within 14 days.
• Non-delivery, 90 day presumption of loss.
Limitation
• RM2,800 per shipping unit OR RM5.00 per gross kg. Maximum liability not to exceed
RM100,000.
• Liability arising only for failure to exercise reasonable care as a freight forwarding agent.
Federation of Malaysia Freight Forwarders STCs
Governing law and jurisdiction
• Proceedings in Malaysia, Malaysian law to apply.
• If proceedings outside Malaysia, Malaysian law to apply.
• Arbitration
Presentation Outline
1. Introduction – SPICA Services
2. What is a Bill of Lading?
3. Other shipping documents
4. Applicable law (Domestic legislation, International Conventions)
5. Freight Forwarding Focus
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Freight Forwarding Focus
1. Customer must prove his loss
• Must provide documents/evidence to support his claims.
• Only financial losses that have legal consequences would be covered by insurance. Any claims
paid on a commercial basis would not be settled by insurance.
Freight Forwarding Focus
2. Customer must have suffered a loss that is not too remote.
• Certain losses are too remote.
• Certain losses may not attract liability as there are defences under the relevant law or
convention.
Freight Forwarding Focus
3. Ascertain value of loss and applicable limitation as soon as possible.
• Check declared value
• Ask client to provide you a breakdown
• Arrange for survey
• Identify where the loss occurred
• Ascertain whether limitation applies and limitation amount
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Freight Forwarding Focus
4. Ensure that you are dealing with the proper claimant
• Only the party that has the right to sue can bring a claim against you. That party cannot simply
sue the party that caused the damage.
• Ask your client to claim against his cargo insurance. Then, his cargo insurance would bring a
subrogated claim against the proper party (who may or may not be you).
Freight Forwarding Focus
5. Establishing the terms of cargo contracts
• Although B/L is evidence of the contact of carriage, it might not encapsulate the complete
carriage terms.
• Negotiated additional terms of carriage must be reduced to writing.
• Draw your client’s attention to applicable STCs.
Freight Forwarding Focus
6. Establish your role in the carriage of cargo. Were you the actual carrier, forwarding agent,
customs and handling agent? Principal or agent?
• Role will determine which law and convention (and limitation) will apply.
• If you acted as the actual carrier (i.e. you assumed liability for the carriage, or carried the
goods in exchange for freight) as opposed to simply arranging for carriage of the goods as an
agent, then for all intents and purposes, you become the carrier. Then, depending on the
mode of carriage, certain laws and conventions would apply. You will also be the proper party
to be sued.
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Freight Forwarding Focus
Questions:
What does the carriage document state? Did you issue the carriage document?
Did you undertake to carry the cargo? Or did you agree to arrange for the carriage
of the cargo?
All-in door to door service provided?
Note your duty to act with reasonable skill and care when arranging transport.
Freight Forwarding Focus
7. Recourse against sub-contractor who has caused damage.
• The claim you bring against your sub-contractor would be similar to that which your client
brings against you.
• Always check whether your sub-contractor has liability insurance. If they intend to sub-
contract, check whether that contractor has liability insurance.
Freight Forwarding Focus
8. Procedure of lodging a claim.
• Give your sub contractor written notice.
• Ask for documents
• Request for time extension if necessary.
• Threaten to issue legal proceedings if necessary
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Freight Forwarding Focus
9. Recovery in full may not be possible.
• Wwould depend on the applicable legal regime, international convention and/or STCs.
• Typically, claims are subject to limitation and recovery in full will not be possible.
Freight Forwarding Focus
10. Preserve and compile documents immediately.
Examples:
• Contract with client or documents evidencing the contract or the terms.
• Contract with subcontractor or documents evidencing the contract or the terms.
• Correspondence between parties.
• Reports (survey, police, customs…) and pictures.
Freight Forwarding Focus
11. Telex release beware
Telex release is a situation where B/Ls are surrendered at the port of loading. As such, no B/L
needs to presented to obtain delivery of the cargo. Always check to see if the B/Ls are
surrendered properly and that confirmation the telex release is successful is obtained. This will
prevent issues at the port of discharge.
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Freight Forwarding Focus
12. KISS – Keep Insurance specialists on Speed-Dial
Call your insurance provider to ask questions not just when you have claims.
Bills of Lading
Effects on Logistics Providers
SPICA SERVICES (M) SDN BHD
M-03 & M-04, Mezzanine Floor, Wisma Lyl,
Jalan 51a/223, 46100 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Tel : +603 7947 7446 Fax : +603 7947 7441
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