RELEASE OF GOODS WITHOUT ORIGINAL BILL OF LADING

SHEILAR'S QUESTION
Dear Nguyen and Abrar,
Long time no seeing! Hope you are all well.
I've recently come across a frustrating case which I hope you could give me some comment if possible:
One of our customers (exporter) presented several sets of discrepant documents through us to issuing banks in Spain last month, which happened to involve the same Spanish applicant, i.e. Axxx Ltd. We received refusal advices as expected and we believe the documents are still hold by the issuing banks up to date. However, the customer told me that when they checked the container information on line, they found their cargo under the above documents had been delivered, and they guessed it could have been delivered to the Axxx Ltd … …
Is it possible ? (the transport documents above are all ocean bills of lading, consigned to "order of Axxx Ltd", which I believe is not a straight bill and therefore need to present the originals to take the delivery.)
By the way, do you have some experience with Spanish banks , which I hope would follow the international practice to deal with the discrepant documents? If the issuing banks did not release documents to the applicant, then it is possible that it was the forwarder that delivered the cargo to the applicant without production of the original B/L?
Looking forward to your reply
Sheilar
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ABRAR’S ANSWER
Hi Sheilar
A difficult one to answer, but then I do not have much experience in shipping logistics, as to whether a forwarder would be able to facilitate release without the original B/Ls. Theoretically if the B/Ls are blank endorsed and consigned to order, or to order of a named consignee, it should not be possible for a carrier to release the cargo without production of an original B/L. Incidentally, excepting waybills this practice also seems to prevail for straight consigned B/Ls.
However, it is not inconceivable that the issuing bank has released the B/Ls against a Trust Receipt or the like, whereby under the Trust Receipt agreement between the issuing bank and the applicant, the applicant is able to clear goods and make an onward sale,etc.
Regardless, such arrangement should not concern the beneficiary, who is entitled to payment, or the documents (representing title to the goods) to be kept at beneficiary’s disposal, until they are paid for. Provided the full set of B/Ls were directed through the bank, having released the documents, the issuing bank would immediately become financially liable to the beneficiary, and have case to answer. The carrier may also have a case to answer if delivery was made without an original “To order” B/L being presented
Kind regards
Abrar
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SHEILAR’S FURTHER QUESTION
Thank you, Abrar.
When I consider this case, I think there are two possibilities that may facilitate the applicant to obtain the cargo: i) the issuing bank's improper release of the documents or issuance of bank's shipping guarantee (but this assumption seemed not so likely, because these 4 sets of documents involved 2 different Spanish banks, it is not so reasonable that the 2 Spanish banks all improperly released documents after refusal; Moreover, bank's shipping guarantee are often issued when cargo has arrived earlier than the documents, which are not so fit for this case, i.e. shipment from China to Spain is time-consuming, usually needs more than 20 days.
However, what most concerned me is the another possibility, i.e. the forwarder's illegal release of the cargo. When I read Bob Ronai's article on Forwarde's bill of lading in DCI last year, it seems that the B/Ls we have seen in banking presentations are mostly issued by the forwarders, who issue its own B/Ls for its export shippers while claiming the consolidated cargos from carrier with surrender of "master B/L" which indicates forwarder as the shipper and forwarder's agent as the consignee…… I have heard quite a lot of story that under FOB trade term, the applicant can easily obtain the cargo from its desinated forwarder.
My further question is that when the cargo is found to be released to the applicant, how can we know it was released against the issuing bank's release of B/Ls or due to the forwarder's illegal release without production of original B/Ls? Can we suggest the beneficiary to make formal query to the forwarder about the status of the cargo so that they can definately know whether the cargo has been released and how been released? (if this is workable, perhaps I can find a clue for the solution.)
What do you think about this?
Sheilar
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MR. OLD MAN’S ANSWER
Dear Sheilar,
Sorry for my late reply.
The goods under a full set of original B/L made out to the order of the isuing bank can only be released to the applicant against either (i) an original B/L duly endorsed or (ii) where the goods arrive earlier than the documents, a shipping guarantee issued by the issuing bank .
Please contact the carrier to determine whether the goods have been released and how they have been released. If there are evidences that the goods have been released against (i) or (ii) as above, ask the issuing bank honour and threaten to take legal action if the issuing bank refuses to honour.
Where the carrier has erred in delivering the goods, i.e., delivery without original B/L or shipping guarantee, they must bear full consequences and fully compensate the shipper/holder in due course of the bill of lading.
Best regards,
Nguyen Huu Duc
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FROM SHEILAR
Dear Nguyen ,
Thank you for your information. The latest news was that the forwarder replied the beneficiary that the cargo "is still at the port of discharge." What does it mean? Of course, we did not believe that the cargo remained there (the goods arrived in Spain more than one month ago and the beneficiary did not received any advice from shipping line for claim of freight payment in case the consignee did not take the cargo within the time limit, note that the B/Ls marked "freight to collect".).
But what we get from this reply is that now one thing for sure : the issuing bank has not yet released the documents to the applicant. If you agree with my assumption above, I think what we (as a presenting bank) can do next is very little, to advise the issuing bank to hold documents or return them is wholly the beneficiary's own decision.
In addition, as a banker I really feel the shipping industry is really so isolated from us. For example, I happen to find that all these 4 sets of B/Ls are consigned to "order of applicant" and bearing a clause in the small print of the B/Ls "if required by the carrier, one of the original bills of lading duly endorsed must be surrendered in exchange for the goods or delivery order". What do you think of this type of B/L, whether "consigned to order of applicant "and bearing the clause of "if required by the carrier…." would justify the forwarder to deliver the cargo to the applicant without surrender of an original B/L? (If this is what forwarders always do in the reality, then I can understand why bankers protest such clauses in B/Ls.)
Best regards
Sheilar
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MR. OLD MAN’S ANSWER
Dear Sheilar,
It is understood by the majority that the clause “if required by the carrier, one of the original bills of lading duly endorsed must be surrendered in exchange for the goods or delivery order" may allow the carrier to release the goods without surrender of a duly endorsed original B/L if the carrier does not so require. However, the majority has opined that such a clause does not make the B/L discrepant.
As far as I know there has been no clear statement from ICC Banking Commission on this c
lause.
Some prudent banks would stipulate in the L/C that B/Ls indicating that goods may be released without presentation of original B/L are not acceptable.
What to do now? If the applicant does not want to take delivery of the goods and the goods are still at the port of discharge, the beneficiary should try asking the carrier to carry the goods back to the port of loading (of course, with the costs for the beneficiary’s account). If the carrier refuses to carry the goods back and/or confirms that goods have been delivered to the applicant, the beneficiary may sue either the applicant for non-payment or the carrier for release of the goods without surrender of a duly endorsed B/L (?)
Best regards,
Nguyen Huu Duc