WHAT IS A STRAIGHT BILL OF LADING?

30 Comments

1. 

   anonymous

   June 3, 2010 at 2:06 pm

   AT writes:Kinh chao Anh Duc!!.Nho anh tra loi giup em cau nay nhe: Khi doc Dieu 21 UCP 600, em thay no khong co gi khac so voi dieu 20 UCP600. Nhung theo giai thich nhu tren cua anh thi khach hang van co the nhan hang khong can B/L goc trong truong hop yeu cau Sea waybill. Vay Sea Waybill khong can phat hanh ban goc dung khong anh?Neu vay, tai sao dieu 21, iv lai quy dinh ve so ban goc cua Sea waybill?Nho anh giai thich dum em thac mac nay?Em cam on anh nhieu lam!!!!!!

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2. 

   mroldmanvcb

   June 3, 2010 at 5:06 pm

   Hi AT,Câu hỏi của bạn chỉ đến sau 2 ngày sau khi Mr. Old Man nhận được Trade Services Update Volume 12, Issue 12, March – April 2010 mà Mr. Old Man là biên tập viên quốc gia của tạp chí này. Thật là trùng khớp! Tạp chí này có đăng bài viết “The Forgotten Corner of ISBP của Sheilar T. Shaffer (cũng là biên tập viên quốc gia). Điều thú vị ở đây là tác giả cũng đề cập vấn đề giống vấn đề của bạn. Thay vì trả lời, Mr. Old Man trích nguyên văn bài viết của Sheilar T. Shaffer để bạn tham khảo.Best regards,Mr. Old Man (Nguyen Huu Duc)P/s: Sheilar T. Shaffer is a very lovely expert in L/C operations!!!——————— The Forgotten Corner of ISBPBy Sheilar T. ShafferISBP has proved to be a valuable aid to LC users in documentation. From a critical perspective, there are still some areas that the current ISBP has not yet covered and clarified. As a banker handling documents everyday, I‘ve had some fleeting thoughts that might help uncover some forgotten corners of the ISBP, which I hope will contribute to the ultimate improvement of the ISBP.Episode 1. Seaway BillAs early as in 2003, UNCTAD’s survey report ’T he Use of Transport Documents in International Trade’ showed us the potential of a non-negotiable Seaway Bill, which could be a popular non-negotiable alternative to a bill of lading in cases where sale of goods in transit is not intended and documentary security is not required. In banking operations, we are also witnessing an increased demand for Seaway Bills in the LC requirement when the applicant applies for a credit with a full-amount deposit as the pledge. This sets forth a new task for document checkers: how to examine a Seaway Bill?Characteristics of a Seaway BillA Seaway Bill is covered by Article 21 of UCP 600, but absent in the ISBP Publication No.681. Making a comparison between UCP 600 Article 20(bill of lading) and Article 21(a seaway bill), one would be amazed by the similarity of these two types of documents except for the fact that a seaway bill is ’non-negotiable ’ as indicated in the title of UCP 600 Article 21.To paraphrase ’non-negotiable,’ one would assume a seaway bill has the important features below:(1) not qualified as a document of title;(2) not allowed to be transferred by endorsement or delivery;(3) not requiring the presentation of the original for delivery, or more precisely, delivery is made against the proper identification of the consignee, (as provided in CMI Uniformed Rules for Seaway Bills 1990 Article 7 (i)). Thus we could draw a further conclusion: a seaway bill is most equivalent to a straight B/L (a B/L made out to a named consignee) ; in contrast, the significant distinction lies in the fact that a seaway bill is not a document of title and the original bill never grants access to goods, while a straight B/L varies in this respect depending on the jurisdictions.Then how does this affect bankers in document examination?The Criteria for Examination of a Seaway BillWhether the criteria for examination of a document is effective or sufficient depends mainly on the transparency of the relative UCP article and the aid of ISBP provisions. In practice, when two separate UCP articles are highly similar to one another, for example, UCP 600 article 20 and article 21, and the ISBP doesn’t provide further clarification between them, there could be some confusion when examining the documents, especially when transport documents are involved.Considering a seaway bill, the major challenge for a banker is the determining the appropriate criteria with which to exam it. Since the seaway bill is absent in the ISBP; guidance for examination is merely UCP 600 article 21.As noted above, a seaway bill what reflects the nature of port-to-port shipment has requirements most equivalent to that of a bill of lading in UCP provisions. In other words, examining a seaway bill is conducted in the same way as examining a bill of lading. Under these circumstances , some problems may arise, in part due to the ambiguous criteria for examing a seaway bill and because of the ’however- named-principle ’ of transport documents.One consequence we find in the beneficiaries’ presentations is that they present a bill of lading in lieu of a seaway bill. Under the ’however-named-principle,’ a transport document entitled ’bill of lading’ might be acceptable provided that it complies with the provisions of a seaway bill , i.e., UCP 600 article 21. Even though these are fundamentally different types of documents in light of function or in the industry practice, bankers may find no reasons to dishonour merely based on UCP600 article 21. On the other hand, accepting a BL in lieu of a Seaway Bill is contrary to the real intention of the issuing bank and it is not a correct reflection of the transaction arrangement. In the case of a short sea voyage, it would cause unnecessary delay in delivery of goods, as production of an original is usually a condition for delivery with a BL but not in the case of a seaway bill.Another consequence is, however, quite the reverse. Bankers may rely on ISBP para.91-114 (relative to a BL) to reject a seaway bill ! This often occurs when the document indicates some particulars that go beyond the framework of article 21 (a seaway bill) . Based on the similarity of article 20 and article 21, some bankers may turn to the paragraphs of the ISBP (associated with BL ) to seek the criteria for a seaway bill.We came across an LC that required a seaway bill made out to order of the is suing bank.The presented seaway bill indicated ’consigned to xxx (the issuing bank).’Was this acceptable? (note that article 21 doesn’t give further stipulations about the consignee.)If it is treated as equivalent to a BL, it should be refused based on ISBP para.101, which states that if a credit requires goods to be consigned to the order of a named party, the bill of lading must not show that the goods are consigned straight to the named party. But this approach, in my view, contradicts the nature of a seaway bill. A banker with some common sense would not forget that a seaway bill is ’non-negotiable,’ and not a ’document of title.’ In this respect, ISBP para 162 provides that ’transport documents which are not documents of title should not be issued ’to order’ or ’to order of’“ a named party… Such a document showing goods consigned to that party, without mention of ’to order’ or ’to order of’ is acceptable. Likewise, ISBP para 143 and 162 spell out the same position on transport documents that are non-negotiable and not documents of title.Looking forwardThe seaway bill has become increasingly common during recent years. However, it seems that the seaway bill is a forgotten entity in the existing ISBP, which doesn’t adequately ensure the certainty attached to this type of transport document. To encourage the appropriate use of a seaway bill rather than a bill of lading in cases where sale of goods in transit is not envisaged and documentary security is not required, it seems that a seaway bill needs its own criteria for examination, even though its governing principle (UCP 600 article 21) gives it similar characteristics to a BL. In particular, what we expect is a particular provision for a seaway bill in the ISBP, which should reflect (a) the nature of port-to-port shipment and (b) the characteristics of ’non-negotiable. ’ Thus, we imagine that it should combined the characteristics of a bill of lading and a sort of an airway bill.

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3. 

   mroldmanvcb

   June 3, 2010 at 5:06 pm

   Hi AT,Mr. Old Man không an tâm nếu không tự mình trả lời câu hỏi của bạn. Seaway Bill vẫn phải phát hành bản gốc, đặc biệt khi LC yêu cầu như thế, bởi có bản gốc mới có bản sao và khách hàng chỉ nhận được hàng khi được nhận diện đúng là người nhận hàng được ghi trong Seaway Bill gốc. Bạn cũng lưu ý thêm rằng chính vì đặc điểm này mà các ngân hàng thường chỉ chấp nhận phát hành LC với chứng từ yêu cầu là Seaway Bill thay vì BL khi người mở LC ký quỹ 100% giá trị LC.Regards,Mr. Old Man

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4. 

   anonymous

   June 3, 2010 at 11:06 pm

   Anonymous writes:Hi Anh Duc,Cam on rat nhieu vi da tra loi nhanh cho em. .Tren thuc te khi em nhan duoc Sea WayBill thi tren chung tu nay thuong the hien so ban goc duoc phat hanh la 0, va em cung da kiem tra viec nay voi hang tau thi ho noi voi em rang ho khong bao gio phat hanh Sea Waybill ban goc ca. Va em cam thay viec phat hanh ban goc Sea Waybill la khong can thiet..Do do em van cam thay ko hieu tai sao lai quy dinh viec phat hanh ban goc Sea Waybill?.

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5. 

   mroldmanvcb

   June 4, 2010 at 6:06 am

   Hi AT,Dieu ban phan anh la hoan toan dung voi thuc te vi thuc te viec xuat trinh seaway bill goc de nhan hang hau nhu khong can thiet boi chi can nhan dien dung nguoi nhan hang la hang tau giao hang. Tuy nhien, trong giao dich LC neu LC yeu cau xuat trinh ban goc Seaway Bill thi ban goc Seaway Bill phai duoc xuat trinh de phu hop voi dieu kien LC. Again, ban luu y dung bao gio chap nhan phat hanh LC yeu cau Seaway Bill tru phi ky quy 100%.

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6. 

   anonymous

   June 4, 2010 at 5:06 pm

   UN writes:Hi anh Duc.Khi doc case nay em co mot thac mac sau nho anh giai thich dum.L/C yeu cau 3/3 ocean B/L consigned to applicant xuat trinh cho ngan hang, theo nhu anh giai thich thi day la straight B/L, neu la straight B/L applicant cung co the nhan hang ma khong can phai xuat trinh B/L goc dung khong anh?Nhu vay, truong hop nay ngan hang phat hanh van phai chiu rui ro giong nhu sea waybill. Khi mo L/C duoi dang nay, cung phai yeu khach hang ky quy 100%.Cam on anh rat nhieu.

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7. 

   mroldmanvcb

   June 4, 2010 at 5:06 pm

   Đúng như vây. Có một quan điểm chung cho rằng việc giao hàng theo vận đơn có thể chuyển nhượng (negotiable BL) đòi hỏi người nhận hàng phải xuất trình vận đơn gốc được ký hậu hợp thức, nhưng đối với vận đơn đích danh hãng tàu có thể giao hàng cho người nhận hàng (consignee) có tên trên vận đơn mà không yêu cầu phải xuất trình vận đơn gốc miễn là người nhận hàng được nhận diện đúng là người nhận hàng nêu trên vận đơn. Để tránh rắc rối, nhiều hãng tàu còn cẩn thận ghi trên vận đơn đích danh rằng hãng tàu được phép giao hàng cho người nhận hàng mà không cần xuất trình vận đơn gốc.Có yêu cầu khách hàng ký quỹ 100% hay không là tùy ngân hàng và mức độ uy tín của khách hàng, nhưng có điều chắc chắn rằng anh ta sẽ nhận được hàng mà không cần phải có vận đơn gốc và có thể anh ta sẽ chây ì không chịu chuyển tiền ký quỹ để thanh toán LC (nếu LC mở bằng vốn tự có) hoặc không chịu nhận nợ vay nếu bằng vốn vay ngân hàng. Một ngân hàng khôn ngoan luôn biết nắm dao đằng chuôi thay vì đằng lưỡi.

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8. 

   anonymous

   June 13, 2010 at 11:06 pm

   Sheilar writes:Hi Mr. Old Man,I'm ver surprised and honoured to see that my writing appearing in your space!But I can not read those comment.(in Vietnamese?) Sheilar

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9. 

   anonymous

   June 14, 2010 at 12:06 am

   Sheilar writes:Also nice to know you are named "Old Man"!?"old" in Chinese means "experienced and of expertise"!Sheilar

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10. 

    mroldmanvcb

    June 14, 2010 at 1:06 am

    Hi Sheilar,Mr. Old Man is my nick name used for my blogs. You and I have ever exchanged ideas with each other in http://www.letterofcreditforum.com and in TSU of which I am one of the country editors like you.Sorry for quoting your article without your permission.It's too late. Good night!!!Best regards,Nguyen Huu Duc (Mr. Old Man)

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11. 

    anonymous

    June 18, 2010 at 6:06 pm

    Zac writes:Hi Mr Old Man, Plse enlighten me with the concept of switch BLs. I believe there are inherent risks involved such as frauds. If you have, would you mind sharing a few cases you know to help my understanding?In event where a cargo shipment is made to carry from port 1 to port 2 by sea carrier, and then from port 2 to port 3 by another sea carrier. In this case, if BL's destination show port 3, then switching BL isn't required, right? But if shows port 2, then as financing bank, how should I be more vigilant since BL switching is needed (my cust is the charterer)?I hope its not too much for the weekend.Appreciate your advice.

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12. 

    mroldmanvcb

    June 19, 2010 at 8:06 am

    Hi Zac,I’m afraid that my explanation will not good enough to meet your requirement, hence, I quote here below an article of P&I regarding Switch Bill of Lading which I hope it can be helpful.Regards,Mr. Old Man———–Switch bills of ladingThe practice of issuing switch bills of lading is increasing.What are they, why are they issued, and what are the risks?A "Switch bill of Lading" is issued by, or on behalf of, the carrier in substitution for the bill of lading issued at the time of shipment.There are number of reasons why switch bills are issued. The common link is that, from the point of view of the holder of the bills, the first set of bills is unsuitable under one of the sale and purchase contracts for the goods in question. Carriers often feel under commercial pressure to issue switch bills in order to satisfy the requirements of the customers. Examples of reasons why switch bills are issued are that:- the original bill names a discharge port which is subsequently changed (e.g. because the receiver has an option or the good are resold) and new bills arerequired naming the new discharge port: a seller of the goods in a chain of contracts does not wish the name of the original shipper to appear on the bill of lading, and so a new set is issued, sometimes naming the seller as the shipper. A variation on this is where party does not wish the true port of loading to be named on the bill; the first set of bills may be held up in the country of shipment, or the ship may arrive at the discharge port in advance of the first set of bills. A second set may therefore be issued in order to expedite payment, or to ensure that delivery can take place against an original bill; shipment of goods may originally have been in small parcels, and the buyer of those goods may require one bill of lading covering all of the parcels to facilitate his on sale. The converse may also happen i.e. one bill is issued for a bulk shipment which is then to be split.Where switch bills are issued, the first set should be surrendered to the carrier in exchange for the new set. There is usually no objection to this practice. However, the switch bills may contain misrepresentations e.g., as to the true port of loading. If a receiver suffers loss as a result of this, then the carrier and his agent may be at risk.In practice the switch bill set is often issued not against surrender of the first, set, but against a letter of indemnity. That may happen in any of the examples given above, and clearly will be the case where the first set has been delayed. Switch bills of lading issued in these circumstances may leave the carrier and his agents extremely exposed. The switch bills may be negotiated to a buyer who expects the goods to be delivered to him. The shipper holding the first set might not yet be paid by his buyer. The carrier may therefore be faced with claims from the shipper holding the first set of bills, and from the holders of the second set. The carrier will probably deliver the goods to one of these parties, and be liable to compensate the other. Any indemnity which the carrier has obtained may well be worthless.In a recent case decided by the High Court of Singapore (Samsung Corporation v Devon Industries Sdn Bhd [1996] 1 SLR 469) a vessel had loaded a total cargo of 10,500 MT of soya bean oil. It appeared that the goods had been shipped by a number of different shippers in small parcels. The plaintiffs were the holders of bills of lading covering two parcels of 1,000 MT and 1,500 MT respectively. They tendered the shipping documents to the defendant buyers, who did not pay for the goods. The buyer was also the charterer of the vessel, and arranged for the shipowners to issue what were described as "global" bills of lading naming the buyer as the shipper. The defendants were able to negotiate those bills of lading, and were paid for the cargo (which they had not themselves paid for). In an action brought by the seller to recover the original first set of bills held by the buyer, the court said that the ship agent (combined with the buyer) had unlawfully issued a second set of bills of lading in abject disregard of the sellers' interests. The buyer had acted fraudulently, with the co- operation of the ship agent.Although the court did not expressly address the liability of the shipowners, or their agents, for having issued the second set of bills, there is little doubt that the owners and their agents would have faced claims from the holders of either the first set or the second set. There is no mention in the report of this case of whether the second set was issued against a letter of indemnity from the buyer/charterer, but the buyer was in dire financial straits, and so any letter of indemnity is likely to have been worthless. In any event, a letter of indemnity given in these circumstances may well be null and void.

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13. 

    anonymous

    June 19, 2010 at 9:06 pm

    Anonymous writes:Thank you, Mr Old Man. May I know the source of your article?Second, based on your trade experience, besides surrendering the original BL in exchange for 2nd set, what is the common practice that shipowner/agent takes to protect/indemnify themselves against unlawful buyers/charterers since it could be risky (eg. the case above)? As financing banks, we are also concerned since we have a financial interest in the said cargo. Sorry that I have to write here as I do not know how to start a new post.

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14. 

    mroldmanvcb

    June 20, 2010 at 3:06 pm

    1) It may be available here: http://www.marinacivil.com/articulos/articulo.asp?ida=28602) Perhaps the LOI referred to in the article is issued by the buyer. If I were a carrier/shipowner, I would require the buyer to provide a LOI issued by a first class bank to cover the risks arising from issuing 2nd set without obtaining the 1st set.

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15. 

    anonymous

    July 5, 2010 at 11:07 am

    Anonymous writes:Dear Mr. Old ManPls help me with the case. We received the B/L with the phrase "Freight payable at Antwerp by Cross – Trades Shipping Services B.V." while L/C call for B/L marked "freight prepaid". Is this acceptable? thanks for yr advice.

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16. 

    mroldmanvcb

    July 5, 2010 at 2:07 pm

    It is a discrepancy. Freight prepaid means that freight has been paid in advance by the shipper. B/L indicating "Freight payable at Antwerp…" does not prove that freight has been prepaid, hence, the B/L is discrepant.

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17. 

    anonymous

    July 5, 2010 at 5:07 pm

    Mich writes:Mr Old Man. Please advise where can I find your message box to direct new questions to. Meanwhile, I have a question. I received a export LC where BL called for is made out to order of applicant (buyer). My client also request to follow export LC, so import BL is made out to order of applicant (buyer). I understand while this will complies as conditions for negotiation under export LC, would there be risks involved (eg fraud) as far as my bank is concerned?

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18. 

    mroldmanvcb

    July 6, 2010 at 8:07 am

    Hi Mich,Just click Mr. Old Man’s avatar in your friend list, you’ll see the message box to Mr. Old Man. Click this box to compose your question and then send it to Mr. Old Man. Risks to the beneficiary in the case of B/L being made out to the order of the applicant may include:- Risk of non-payment or payment delay:This occurs when 1/3 original B/L made out to the order of the applicant is forwarded directly to the applicant and the presentation made by the beneficiary is not complying with the credit terms and conditions. An unworthy applicant that has taken delivery of the goods can make use of this loophole to make no payment or delay payment obligations.- Risk of non-endorsement:If the documents presented under the L/C are not complying and eventually the applicant refuses to take up, the applicant is not obligated to and may not endorse the B/L back to the beneficiary or to the order of the new buyer as requested by the beneficiary. These above risks can be avoided if the beneficiary ensures that the documents presented are complying. The issuing bank must honour a complying presentation whether the B/L is issued to the order of the applicant or the issuing bank.Abundant caution does not harm. Never accept to send one set of the original BLs made to the order of the applicant directly to the applicant.Best regards,Mr. Old Man

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19. 

    anonymous

    July 15, 2010 at 10:07 am

    thu writes:Dear Mr Old Man. we received insurance docs showing "covering risk from Philippine port to Danang port, Philippine". is it a discrepancy? thanks for yr advice.

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20. 

    mroldmanvcb

    July 15, 2010 at 11:07 am

    Check if the insurance document covers the risks defined in the L/C. If the L/C requires "all risks" coverage, the insurance document must evidence "all risks" clause or notation or Institute Cargo Clauses (A).

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21. 

    anonymous

    July 15, 2010 at 1:07 pm

    thu writes:dear mr Old Man! I would like to clarify the case of Insurance docs as follows: + Insurance docs showing voyage from Philippine port to Danang port, Philippine". We point out the discrepancy "Port of discharge differs from L/C" as Danang Port should be in Vietnam, not Philippine+ Ben bank do not agree with the disc stated as they explain "there is only one port by the name Danang which is situated in Vietnam. the country name alongside the POD has only been mistyped"in yr opinion, is it a discrepancy?

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22. 

    mroldmanvcb

    July 15, 2010 at 5:07 pm

    I see a case where BL shows POD as,for example, Danang port (Vietnam is not indicated) whereas L/C requires any port of Vietnam. The BL is acceptable as Danang port is a port of Vietnam. For your case, it's true that it's a mistyping error. You can raise the discrepancy, but I'm afraid you will lose the case if it is brought to court.

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23. 

    anonymous

    August 25, 2010 at 5:08 pm

    Phuong writes:Anh Duc oi, cho em hoi chut: + LC yeu cau chung tu: "full set or ocean bill of lading…."+ B/L xuat trinh co cau: This Bill of lading issued in 03 originals and 14 copies.Như vậy anh có hiểu là khách hàng phải xuất trình 03 originals và 14 copies không? Hay chỉ cần xuất trình 03 originals là OK? Thank you,Một fan hâm mộ Mr Old Man

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24. 

    mroldmanvcb

    August 25, 2010 at 10:08 pm

    Nếu BL thể hiện một bộ đầy đủ gồm 3 bản gốc và 14 bản copy thì tất cả bản gốc và bản copy phải được xuất trình.Để tránh tranh chấp, khi LC yêu cầu BL thì nên ghi rõ số lượng, ví dụ, full set of 3/3 original ocean bills of lading, hoặc full set (including 3 original and 3 non-negotiable copies) of clean on board ocean bills of lading.

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25. 

    anonymous

    August 26, 2010 at 9:08 am

    Phuong writes:Em cam on anh.Phuong VCB

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26. 

    anonymous

    July 29, 2011 at 10:07 am

    Nhu writes:Dear Mr Old Man,L/c required inspection cert issued by INTERTEK, the presented inspection cert. was issued by INTERTEK VIETNAM LTD. In Your opinion, is this discrepancy?thanks for your opinion.

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27. 

    anonymous

    August 10, 2011 at 3:08 am

    Bithi Rashid writes:What is Fumigation Certificate and For wehat it is necessary and why it is necessary?ThanksBithi

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28. 

    mroldmanvcb

    August 10, 2011 at 6:08 am

    For a quick reply, the following answer is quoted fromwww.vietforward.com:QuoteFumigation certificateFumigation certificate is required as proof that the goods and packing materials (e.g. wooden crates, wood, wool etc), have been fumigated or sterilized. Certificates contain details such as purpose of treatment, articles concerned, temperature range used, chemicals and concentration used etc. For example, in our case, our products are handicrafts (bamboo, rattan and sea grass baskets). We'll ask one Fumigation Company to apply the treatment to our products and carton boxes to ensure that they used are free of insect or fungus infestation. Please note that in some countries like Australia, fumigation treatment is not required for air shipment, but required for sea shipment. So, please check with your clients, customs broker or the local customs service.Unquote

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29. 

    nehabithi

    August 10, 2011 at 4:08 pm

    Dear Old man,Thanks for your reply. Can I get more details about Fumigation.ThanksBithi Rashid

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30. 

    mroldmanvcb

    August 11, 2011 at 11:08 pm

    Sorry but I think you can get more details about Fumigation by looking up on websites. Just google "fumigation" and you'll find various sources of information about fumigation/fumigation certificate.

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