Post by niseag on Sept 13, 2009 8:09:54 GMT 4
Requirements for the issuance of maritime bills of lading
by non vessel owning carriers
Table of Contents
1. Concept 2
a) Carriers without power of control over the ship 2
b) Economical function of the NVOCC 3
c) Mandatory issuance of two bills of lading for the same cargo and itinerary 3
e) Erroneous issuance of NVOCC documents 5
f) Terminology 5
2. Allowable issuance of ocean bills of lading by NVOCCs 6
a) Anybody as carrier 6
b) Applicable law of transportation 7
c) Main contract/sub contract 8
3. Content and issuance of NVOCC documents 9
a) Itinerary/description of goods 9
b) On board note 10
4. Prerequisite and timing for issuance of “on board” note 10
a) Confirmation of loading on board only through carrier 10
b) Distinction between on board and receipt bill of lading 11
c) Indication of on board loading 12
5. NVOCC/Multimodal transport/ Through bill of lading 13
a) Dependency of the shipping document issued by the contracting carrier on the shipping document issued by the actual carrier 13
b) Terminology 15
6. Legal Relation of the Parties 16
a) Independence of shipping contracts 16
b) Independence of shipping documents 16
7. Transfer of rights related to bills of lading and the goods they represent 17
a) The bill of lading as a document of title 17
b) mediating indirect possession 18
c) Presentability of shipping documents, which evidence a place of receipt 20
Conclusion 21
1. Concept
a) Carriers without power of control over the ship
Non vessel owning carriers (hereafter: NVOCC) are businesses that do not own cargo vessels. However they assume responsibility for the carriage of goods from the port or point of receipt to the port or point of destination . NVOCCs provide not only simple maritime but also multimodal transportation. In the following the authors will analyze the conditions on which a NVOCC can enter into shipping contracts and issue "on board" bills of lading reflecting these contracts.
The term non vessel owning carrier also comprises charterers who have the power of control over the entire vessel via the charter contract concluded with the carrier. Hence it can remain undecided whether the charter is a time charter or a bare boat charter (i.e. the owner of the vessel provides the vessel without the crew); in both instances the charterer can determine which goods will be transported and the route to be taken.
The conclusion of shipping contracts and issuance of on board bills of lading by charterers does not require lengthy explanation. A charterer issuing an on board bill of lading confirms an event -i.e. the loading of the cargo on board the ship- that he commands due to his power of control over the ship. The shipper or freight forwarder can rely on the execution of the transportation, unless the shipowner withdraws the charterer's power of control due to latter’s failure to pay the charter.
In the following the authors will analyze exclusively the conclusion of maritime shipping contracts and issuance of ocean bills of lading by non-vessel owning carriers, who have no power of control over the entire vessel. Rather, these NVOCCs have to conclude contracts of carriage with maritime common carriers. Typically these contracts of carriage are plot charter contracts, which entitle the NVOCC to use container storage space, without even designating the exact location of the space within the ship's hull. In these instances the carrier concludes contracts of carriage with multiple shippers. The analysis will be loosely based on German law, however, the concepts addressed are easily detectable in other jurisdictions.
A NVOCC, as this term has been narrowed above, issuing a bill of lading, can only confirm the loading "on board" by a third party, that is the carrier who, beginning with the loading on board, begins to perform his obligations under the contract of carriage.
b) Economical function of the NVOCC
Normally a NVOCC, who does not charter an entire ship, concludes contracts of carriage with several shippers/freight forwarders concerning individual packages or containers. When the NVOCC has accumulated an appropriate number of orders, he concludes a contract of carriage with a carrier who actually will perform the transportation. The NVOCC makes money by obtaining a better price from the carrier than he (the NVOCC) charges his shippers.
c) Mandatory issuance of two bills of lading for the same cargo and itinerary
The NVOCC issues a bill of lading to each of his shippers; e.g. for one container he might issue 20 different bills of lading (in the following, this bill of lading will be referred to as the NVOCC or main bill of lading). On the other hand the NVOCC receives only one bill of lading (in the following, this B/L is referred to as a carrier bill of lading or master bill of lading) issued by the carrier covering all the cargo entrusted to him.
The NVOCC bill of lading designates the NVOCCs shippers as "shipper"; whereas the master bill of lading designates the NVOCC as "shipper". Only the master bill of lading empowers the holder to demand the cargo in the port of destination. Normally a shipping agent, who will redistribute the cargo to the holders of the NVOCC bills of lading, handles the presentation of this master bill of lading.
Since the NVOCC bills of lading do not contractually bind the carrier they are unsuitable to demand the cargo from the carrier. The shipper normally does not even know how many NVOCC bills of lading were issued and what the terms of the contract of carriage were, which underlie these bills of lading.
d) Outward impression of NVOCC bills of lading
Third parties, in particular consignees or banks, cannot deduct from a bill of lading whether it was issued by the owner of the ship, a charterer with power of control over the entire ship, or a NVOCC. Charterer, shipowner, and NVOCCs sign the bills of lading they issue as carrier. This is the consequence of the fact that an issuer of an ocean bill of lading need not disclose, what degree of control he may exercise in regards to the ship designated in the bill of lading under the heading "ocean vessel".
e) Erroneous issuance of NVOCC documents
The following analysis was prompted by report No. 3 published by Lloyds of London, dated October 15, 1999, relating the "biggest fraud in maritime history". The crime was committed by presenting NVOCC bills of lading not identical with the bill of lading issued by the actual carrier:
"The overwhelming majority of bills of lading issued for cargoes were fiction. The bills were processed as normal and the subsequent letters of credit eventually repaid. But the repayment were being funded by further credit on the back of more fraudulently described cargo."
The NVOCC issued bills of lading which deceptively reflected shipment of goods. Since the beneficiaries of the letters of credit, which used these fraudulent bills of lading, were in bankruptcy, the issue becomes relevant what type of bill of lading a NVOCC can issue.
To avoid any misconception: The authors do not attempt to qualify bills of lading according to the power of control the issuer exercises over the seaworthy vessel. Rather, the authors strives to scrutinize under which conditions a NVOCC can issue bills of lading, confirming the loading on board, even though the NVOCC does not have power of control over the entire vessel.
f) Terminology
If the forwarder does not perform the contract of carriage with his own vessel, he needs to procure shipping capacity through conclusion of appropriate sub contracts. This applies to the NVOCC as well as a charterer. This leads to multi level relations of carriers which German jurisprudence refers to as “carrier-chains”. In regards to labeling the parties involved, maritime legal literature employs "ambiguous terminology". Pruessmann/Rabe calls a time charterer who concludes in his name general cargo shipping contracts sub-carrier and the contract he concludes with the shipper a sub-shipping contract. It seems however clearer, to follow Herber’s recommendation and follow the terminology of the new § 437 HGB and hence use the term “actual carrier” and “contracting parties”. According to this terminology, a charterer who has the power of control over the entire ship is an actual carrier, a NVOCC who leases only parts of a ship is a “contracting carrier”. It seems correct to call the shipping contract concluded between NVOCC and the shipper/forwarder the main contract, since it was concluded prior to the contract between NVOCC and actual carrier. In other words: The contract between NVOCC and actual carrier is the sub contract with which the NVOCC fulfills the obligations he incurred towards the shipper/forwarder.
2. Allowable issuance of ocean bills of lading by NVOCCs
a) Anybody as carrier
Anybody, regardless of whether owning or chartering a vessel, can be a carrier; anybody can issue shipping documents.
The main duty of a carrier consists of the unconditional and unlimited obligation to transport the goods from the port of loading to the port of destination (see § 407 HGB). The commitment to fulfill the transport obligation is the only and decisive criterion for a carrier.
Exemplarily, the Incoterms 2000 define a carrier as follows:
“”Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway or by a combination of such modes.”
According to this provision the decisive criterion is the commitment to transport the goods; hence anybody can be a carrier, independent of the status as legal entity, i.e. partnership, association, corporation, merchant or similar. Furthermore possession or ownership of the vessel is irrelevant . Hence the ICC recognized the presentability of documents issued by non-vessel owning carriers .
Herber comments in this regard:
The carrier need not be owner of the ship. Relevant is only the contractual obligation, which may be satisfied by use of a third party.
b) Applicable law of transportation
No special legal statutes govern the conclusion of shipping contracts by NVOCCs, since
a) NVOCCs act as carriers and
b) the bills of lading issued by NVOCCs are not different than those issued by ship owners.
The execution of a shipping obligation by a third party is no new development but has long been recognized in combined transports and through-shipping contracts.
It should be mentioned that NVOCCs are specifically regulated under US law . These provisions however deal exclusively with anti-trust aspects of ocean law and require foreign NVOCCs to designate a domestic process agent. These stipulations cause some shipowners doing business with the US to specifically mention in their shipping documents whether one of the parties involved is a NVOCC.
c) Main contract/sub contract
According to Herber's clarification , a NVOCC needs to conclude a contract with a carrier to fulfill his obligation towards the shipper. Both contracts are legally independent. They are only linked by the fact that the sub contract is concluded to fulfill the obligations under the main contract. Both contracts need not be identical. One may be a small consignments contract, the other may be a charter agreement. It is important however that the two contracts are identical regarding the following aspects:
• port of loading
• port of discharge
• date of the on board note.
If there is a discrepancy between the two contracts in these main points, the NVOCC will not be able to fulfill his obligations towards the shipper or freight forwarder. The risk of a discrepancy is particularly virulent when the NVOCC issues the following kinds of B/L:
-a bill of lading evidencing an itinerary not identical with the itinerary promised by the carrier; e.g. showing a different port of destination,
-a bill of lading evidencing loading on board, even though the carrier has not yet received the cargo on board,
-a bill of lading designating the cargo differently from its description in the bill of lading issued by the actual carrier. Cases have been reported where the consignee experienced difficulties with customs officials due to the different description of the cargo in the bill of lading issued by the NVOCC and the carrier. The consignee tries to dispose of the goods by virtue of he NVOCC bill of lading, whereas the shipping agent of the NVOCC can claim the goods only by virtue of the B/L issued by the actual carrier.
3. Content and issuance of NVOCC documents
a) Itinerary/description of goods
The admissibility of NVOCC bill of ladings does not modify the general requirement, that the statements contained in documents must be truthful. This is particularly true in regards to the vessel used and the designation of the itinerary.
In regards to the description of goods the NVOCC can rely on the statements made by the shipper or the freight forwarder and can limit his liability -like any other carrier- to the inspection of the cargo. Due to the containerization of shipping, an inspection is --under normal circumstances-- not feasible anyway. Article 31 II ii UCP 500 has recognized this fact by stipulating that documents are admissible even if containing the clauses like "shipper's load and count", or "said by shipper to contain".
b) On board note
A special problem arises when a bill of lading is issued evidencing the loading "on board" of the cargo. Only the actual carrier can make this statement, since the confirmation that the cargo is on board reflects a real and not a fictitious event. The ICC, generally allowing the issuance of bills of lading by NVOCCs, hence has stated the following:
"Furthermore, there have been instances where non carrier bill of lading have been noted as "shipped on board". Since a shipper or on board bill of lading is an acknowledgement by the ship owner that the goods are loaded on board ship and that shipment has already begun, then the accuracy of a bill of lading issued by a non carrier operation noted “Shipped on Board” is questionable” .
4. Prerequisite and timing for issuance of “on board” note
a) Confirmation of loading on board only through carrier
A NVOCC faces the problem that he can only confirm receipt of the goods; however, generally the consignee demands to receive an “on board” bill of lading. The NVOCC can only confirm the loading on board, once he has received an on board bill of lading issued by the main carrier. If the NVOCC violates this rule, issuing a on board bill of lading reflecting a date of loading on board identical with the date and time of departure as published in a timetable, he feigns the existence of a bill of lading, which does not exist and maybe never will. Upon receipt of the goods a NVOCC can only issue a received bill of lading; he can only amend this bill of lading to evidence on board loading of the goods, once the actual carrier himself has delivered to him a bill of lading evidencing the loading on board.
b) Distinction between on board and receipt bill of lading
A bill of lading can either be issued as a receipt bill of lading or as an on board bill of lading. In the first alternative it only evidences the receipt of the goods, leaving open when the goods will be loaded on board. In the second alternative the bill of lading evidences that the goods have been loaded on board of a specific ship as of a specific date. The on board bill of lading offers greater security for the shipper or consignee. Burton v. McCullough comments upon this as follows:
“On Board Ocean Bill of Lading
“On Board Ocean”, used when the goods are shipped by sea, means that the bill is issued when the goods are actually on the carrier itself, not simply at some dockside warehouse. The “on board” bill is thus more security for the bank, as it evidences that the goods are a step closer to actual arrival. “
In international trade and in particular with letters of credit, exclusively on board bills of lading are acceptable. According to the recently revised Incoterms , CIF requires the seller to present a shipping document which entitles the buyer, to claim the goods from the carrier in the port of destination …, and to sell the goods while they are still being shipped to a buyer through delivery of the shipping document or through communication with the carrier. Also, according to article 23 ERA 500,
“If a Credit call for a bill of lading covering a port-to-port shipment, banks will, unless otherwise stipulated in the Credit, accept a document, however named, which: …
Indicates that the goods have been loaded on board, or shipped on a named vessel. “
c) Indication of on board loading
According to Article 23 ii. UCP 500, indication of the loading on board is possible in two ways:
-“Loading on board a named vessel may be indicated by pre-printed wording on the bill of lading that the goods have been loaded on board a named vessel or shipped on a named vessel …” (Article 23 ii. UCP 500)
“Shipped on board in apparent good order and condition, weight, measure, marks, numbers, quality, contents and value unknown, for carriage to the Port of discharge or so near thereunto as the Vessel may safely get and lie always afloat to be delivered in the like good order and condition of the aforesaid.”
-Ex post facto notation of the on board loading in a bill of lading, which originally had only evidenced receipt.
Example
“Received by the Carrier from the Shipper in apparent good order and condition (unless otherwise noted herein) the total number of quantity of Containers or other packages or units indicated in the box opposite entitled “Total No. of Containers/Packages received by the Carrier” for Carriage subject to all the terms and conditions hereof (INCLUDING THE TERMS AND CONDITIONS ON THE REVERSE HEREOF AND THE TERMS AND CONDITIONS OF THE CARRIER’S APLICABLE TARIFFS) from the Place of Receipt or the Port of Loading, whichever is applicable to the Port of Discharge or the Place of Delivery, whichever is applicable).
Hence follows: A NVOCC is not permitted to issue a bill of lading with pre-printed on board wording. At receipt of the goods he is limited to issuing a “received bill of lading” which he might amend only after he has received an on board bill of lading from the actual carrier. The parties have to pay particular attention to form and content of an on board notation, amending a received bill of lading. If the bill of lading indicates a place of receipt to taking in charge different from the port of loading, the on board notation must in addition to the date of loading also include the port of loading stipulated in the letter of credit and the name of the vessel on which the goods have been loaded (cf. article 23 a ii UCP 500). This provision gains importance, when the NVOCC received the goods in a location different from the port of loading.
5. NVOCC/Multimodal transport/ Through bill of lading
a) Dependency of the shipping document issued by the contracting carrier on the shipping document issued by the actual carrier
It is not a problem only particular to B/Ls issued by NVOCCs that the performance promised in the bill depends on the quality of the sub-contracts. The same factual and legal situation exists when multimodal shipping documents or through bills of lading are issued.
Multimodal transport:
A multimodal transport operator is contractually obligated to transport the goods, however, like a NVOCC he uses sub contractors as actual carriers.
The Unctad ICC Rules for Multimodal Transport Documents
(ICC Publication No. 481 ) define the following terms:
Multimodal Transport Contract means a single contract for the carriage of goods by at least two different modes of transport.
Multimodal transport operator (MTO) means any person who concludes a multimodal transport contract and assumes responsibility for the performance thereof as carrier.
Carrier means the person who actually performs, undertakes to perform the carriage or part thereof whether he is identical with the multimodal transport operator or not.
Decisive criterion for a multimodal transport is the conclusion of a uniform shipping contract which leaves open who will perform the actual carriage.
"The carrier, internationally referred to as MTO- can either perform the obligations himself
or act as a forwarder according to §§ 458 - 460 HGB and use sub contractors who are the actual carriers. "
The recently reformed German Transportation Act follows this definition.
The newly inserted §§ 452 to 452d HGB covering multimodal transportation provides that a carrier incurs the obligation to carry the goods over the entire itinerary and may fulfill this obligation by either effectuating the carriage himself or by utilizing sub-contractors.
Through Carriage
German jurisprudence distinguishes the following two kinds of through-carriage of goods:
Simple/true through contracts: In this case the first carrier obligates himself to deliver the goods in the port of destination against payment of the freight charges for the entire itinerary.
Non-genuine though contracts: In this case the first Carrier obligates himself to carry the goods only for part of the entire itinerary but promises to act as a forwarder. To get the cargo to its port of destination.
Bills of lading issued under this kind of contractual arrangement are not presentable under the Incoterms or an L/C since the carrier does not incur the liability to carry the goods himself for the whole itinerary.
In practice only the through bill of lading is relevant. Mostly it concerns shipping contracts covering two or more ocean shipments, since the port of loading or the port of destination are not being served by regular shipping lines.
b) Terminology
Shipping documents issued by NVOCC lines or through bills of lading are identical insofar as they evidence the obligation of the carrier to carry the goods either himself or with the help of sub-contractors. Consequently Herber states: The designation through shipping contract or multimodal shipping contract are equal from a civil law point of view.
6. Legal Relation of the Parties
a) Independence of shipping contracts
In all shipping contracts concluded the shipper only has a contractual relation with the NVOCC/MTO but not with their respective sub-contractors who are the actual carriers. Puttfarken extensively discusses the problems arising from the lack of a contractual relation between shipper and actual carrier, particularly in cases of loss/damage/ or wrongful dispatch. In his example the "Blue Kringel Line" acting as NVOCC issued a bill of lading covering the carriage of aluminum cable from Bilbao to Latakia, had only chartered the vessel to Piraeus where the cargo consequently was unloaded.
In maritime law all attempts to construe a liability of the actual carrier have so far failed ; however the recently introduced § 437 II HGB creates exactly this liability for all other modes of transportation.
b) Independence of shipping documents
The independence of the contractual relationships -.i.e. shipper and NVOCC/MTO on the one hand and NVOCC/MTO and actual carrier on the other hand- corresponds with the independence of the shipping documents issued. As mentioned supra 1 c), the shipper is mentioned as shipper in the NVOCC B/L, whereas the NVOCC/MTO is specified as the shipper in the master B/L. Hence results the risk for the original shipper of differing claims for possession in case the NVOCC does not hold the documents as a fiduciary for the shipper or if the two B/Ls differ in their content.
Pruessmann/Rabe suggested correctly, that B/Ls issued by the actual carrier should contain a tying clause requiring that it can only be used when presented concurrently with the B/L issued by the NVOCC/MTO. Otherwise a holder in due course can demand the goods from the actual carrier without being entitled to these goods by virtue of the NVOCC B/L.
7. Transfer of rights related to bills of lading and the goods they represent
a) The bill of lading as a document of title
aa) no effect of tradition without possession
The bill of lading represents the goods and normally is issued “to order”. Goods still being shipped can change ownership when buyer and seller agree on the transfer of ownership and endorsement plus delivery of the bill of lading (§§ 929 BGB, 650 HGB). The “effect of tradition” of a bill of lading begins when the carrier has received the goods and issued a bill of lading. Without receipt of goods, a bill of lading does not possess the effect of tradition. If the carrier receives the goods after issuance of a bill of lading, transfers of ownership will become valid ex post (see § 185 II BGB). Hence, regarding the transfer of goods which are subject to a bill of lading issued by a NVOCC, two phases have to be distinguished:
bb) Transfer of ownership between receipt of goods and loading on board
Upon receipt of the goods the NVOCC can only issue a simple received bill of lading. A holder of this bill can transfer ownership of the goods by agreement plus delivery of the indorsed bill of lading. This possibility however is rarely made use of, since received bills of lading are not admissible under an L/C.
cc) Transfer of ownership after the carrier has received the goods
After conclusion of a shipping contract between NVOCC and main carrier and delivery of the goods to the main carrier, the main carrier becomes direct possessor and the NVOCC becomes the indirect possessor of the goods. This relationship is referred to as pyramid of possession.
Hence: a NVOCC bill of lading can evidence a claim for possession only as long as the NVOCC fiduciarily holds the bill of lading issued by the actual carrier. Prüßmann/Raabe draw a comparison to a parallel legal situation: a through bill of lading loses its qualification when a bona fide purchaser acquires the sub bill of lading without being authorized under the through bill of lading.
Franken described the legal situation appropriately as follows:
No profound reason is discernible why the main B/L, i.e. the B/L covering the whole itinerary, should be affected by a B/L issued by an actual carrier. As long as the actual carrier holds the goods on behalf of the CTO, he will not transfer the shipping documents to an unauthorized third party.
b) mediating indirect possession
The holder of a bill of lading issued by a NVOCC who uses a common carrier or a multi transport operator (MTO) can transfer ownership to the goods represented by the bill of lading only if the NVOCC holds the bill of lading issued by the actual carrier as a fiduciary for his shipper. One prerequisite in this regard is that the bill of lading issued by the NVOCC and the bill of lading issued by the actual carrier are identical as to port of loading, itinerary and port of dispatch.
This requirement is not met in the following instances:
-the NVOCC or a MTO issues a bill of lading even though the actual carrier has not loaded the goods on board. This qualification does not change even if the NVOCC or MTO has already chartered containers on the carrier's vessel.
-the NVOCC does not conclude a shipping contract with an actual carrier or the shipping contract concluded deviates in essential points, as e.g different port of loading, different port of dispatch.
Example:
A NVOCC concludes a shipping contract covering the port to port loading from Helsinki via Rotterdam to Singapore and issues the following bill of lading:
-Port of loading: Helsinki
-Ocean Vessel: MS VIRGO (ship of the actual carrier)
-Port of Transshipment: Rotterdam
-Port of Discharge: Singapore
-Date of Issuance: February 1, 2000
-Date of on board note: February 1, 2000
To effectuate the shipment the NVOCC concludes a shipping contract with the ship owner of MS VIRGO covering the shipping of the goods from Helsinki to Rotterdam via truck or feeder vessel, loading the goods on board in Rotterdam. The bill of lading issued in this case reads:
Place of receipt: Helsinki
Ocean Vessel: MS VIRGO
Port of Loading: Rotterdam
Port of Discharge: Singapore
Date of issuance: February 4, 2000
date of on board note: February 10, 2000, evidencing loading on board of
MS VIRGO in Rotterdam.
The bill of lading issued by the NVOCC is a fraud, since it evidences a fictitious loading on board, which in reality occurred later, (i.e. February 10 instead of February 1) in a different location (I.E. Rotterdam instead of Helsinki). These defects cannot be considered cured due to the fact that the actual carrier received the goods later and shipped them to Singapore. Regardless of the inaccurate on board note, the incurable defect consists of evidencing a maritime shipment between Helsinki and Rotterdam, which did not take place. According to the majority view, a bill of lading, designating as the beginning of the itinerary a place of receipt, is not considered, a maritime bill of lading for the shipment between place of receipt and place of loading, since it remains open, whether the goods were shipped by truck, rail, or feeder ship between the place of receipt and the place of loading.
c) Presentability of shipping documents, which evidence a place of receipt
Combined transport documents (i.e. truck feeder vessel/ocean vessel) are not considered maritime bills of lading in regards to the shipment between port of receipt and place of loading. These documents can only be presented under a letter of credit if the L/C requires a shipping document covering two different types of transport (Article 26 UCP 500) . It is in Germany and internationally without any doubt that a shipping document evidencing a place of receipt is not presentable under an L.C. Hence, the ICC Banking Commission accurately found that the requirement in an L/C asking for "on board ocean gill of lading and shipment from any port of Ireland to Huanpu, Guangzhou, China, with transshipment being allowed" is not met by a bill of lading evidencing: "Dublin as place of receipt and Tilbury for Loading on board a named vessel". Such a document is not presentable since it does not explain how the goods were shipped from Dublin to Tilbury/England, i.e. ferry, feeder vessel or plane. The reasoning in the answer to case 283 reads as follows:
"Shipment ... means loading on board when used in connection with an ocean bill of lading. Therefore, it was necessary for the ocean bill of lading, to evidence an Irish port as port of lading in order to be in compliance with the terms of the credit. This was not the case; therefore, the bill of lading was not compliant.
In this case the NVOCC could only have issued a combined transport document .
Conclusion
Carriers without transport capacity can issue bills of lading. Not only NVOCCs but also MTOs do so. The general rules of the applicable maritime law apply, according to German law §§ 557 seq. HGB and since August 1, 1998 the new rules of §§ 452 - 452 d HGB which apply if in multimodal transport an ocean vessel covers part of the route.
These are the consequences:
Upon receipt a MTO or an NVOCC can only issue a bill of lading evidencing receipt of the goods.
- A NVOCC can only issue a on board bill of lading after the following two requirements have been met:
a) He has concluded a shipping contract with an actual carrier; and
b) The NVOCC has received an on board bill of lading from the
actual carrier.
The bill of lading issued by the NVOCC or MTO have to be identical in regards to the essential data as e.g. itinerary from the port of loading to the port of dispatch, date of the on board note, since otherwise the danger arises, that diverging claims for possession are created or that the MTO or NVOCC document is worthless.
The NVOCC has to hold the on board bill of lading issued by the actual carrier as a fiduciary for the holder of the bill of lading he, the NVOCC, had issued, since he has to possess the goods on his behalf.
A NVOCC/MTO who issues a ocean bill of lading which deviates in regards to on board note and date from the bill of lading issued by the actual is liable according to §§ 823, 826 BGB, if the document he issued need to be presented in sales contracts stipulating either cash against documents or presentation of the documents with a bank which has opened an L/C to his benefit.
Incorrectly dating the on board loading can be considered a deceptive act since according to Article 23 a ii UCP 500 the date of the on board note is deemed to be the date of loading. Hence this date is relevant for the determination whether the shipper has met the latest date of shipment or the expiry date.
It seems necessary that a NVOCC/MTO issue internal guidelines for employees to ensure that his bill of lading is identical to the actual carrier's bill of lading.
The following excerpt from a Hamburgan ship owner might serve as an example:
"Clean" and "Shipped on Board" VOCC B/L
Whenever "clean" and "shipped on board" Bs/L are issued by the Agent, the underlying VOCC B/L must be identical.
Special and Additional Clauses on VOCC B/L
All special and additional clauses must also be shown identically in the XY B/L. This refers especially to transshipment cargo/containers, unpacked items, reefer containers and special cargo.
VOCC as this term is used above is the vessel owning carrier, i.e. the actual carrier. Appropriately the bill of lading issued by the actual carrier is characterized as underlying since it is the bases for the NVOCC's bill of lading. The NVOCC needs to conclude a shipping contract with an actual carrier in order to perform the obligations he himself incurred. Without this back-to-back transaction that is identical as to the shipping data the obligation of the NVOCC remains unfulfilled.
Upon receipt of the goods a NVOCC is only permitted to issue a received bill of lading, which normally is useless to the forwarder since typically in international shipping transactions he has to provide a on board bill of lading.
A NVOCC can modify his received bill of lading only after he has received an on board bill of lading from the actual carrier.
Disregard of the above mentioned principles creates the risk, that buyers in international shipping transactions will in the future demand --in addition to the agreed upon shipping documents-- proof of the loading on board for the itinerary issued by the actual carrier.
by non vessel owning carriers
Table of Contents
1. Concept 2
a) Carriers without power of control over the ship 2
b) Economical function of the NVOCC 3
c) Mandatory issuance of two bills of lading for the same cargo and itinerary 3
e) Erroneous issuance of NVOCC documents 5
f) Terminology 5
2. Allowable issuance of ocean bills of lading by NVOCCs 6
a) Anybody as carrier 6
b) Applicable law of transportation 7
c) Main contract/sub contract 8
3. Content and issuance of NVOCC documents 9
a) Itinerary/description of goods 9
b) On board note 10
4. Prerequisite and timing for issuance of “on board” note 10
a) Confirmation of loading on board only through carrier 10
b) Distinction between on board and receipt bill of lading 11
c) Indication of on board loading 12
5. NVOCC/Multimodal transport/ Through bill of lading 13
a) Dependency of the shipping document issued by the contracting carrier on the shipping document issued by the actual carrier 13
b) Terminology 15
6. Legal Relation of the Parties 16
a) Independence of shipping contracts 16
b) Independence of shipping documents 16
7. Transfer of rights related to bills of lading and the goods they represent 17
a) The bill of lading as a document of title 17
b) mediating indirect possession 18
c) Presentability of shipping documents, which evidence a place of receipt 20
Conclusion 21
1. Concept
a) Carriers without power of control over the ship
Non vessel owning carriers (hereafter: NVOCC) are businesses that do not own cargo vessels. However they assume responsibility for the carriage of goods from the port or point of receipt to the port or point of destination . NVOCCs provide not only simple maritime but also multimodal transportation. In the following the authors will analyze the conditions on which a NVOCC can enter into shipping contracts and issue "on board" bills of lading reflecting these contracts.
The term non vessel owning carrier also comprises charterers who have the power of control over the entire vessel via the charter contract concluded with the carrier. Hence it can remain undecided whether the charter is a time charter or a bare boat charter (i.e. the owner of the vessel provides the vessel without the crew); in both instances the charterer can determine which goods will be transported and the route to be taken.
The conclusion of shipping contracts and issuance of on board bills of lading by charterers does not require lengthy explanation. A charterer issuing an on board bill of lading confirms an event -i.e. the loading of the cargo on board the ship- that he commands due to his power of control over the ship. The shipper or freight forwarder can rely on the execution of the transportation, unless the shipowner withdraws the charterer's power of control due to latter’s failure to pay the charter.
In the following the authors will analyze exclusively the conclusion of maritime shipping contracts and issuance of ocean bills of lading by non-vessel owning carriers, who have no power of control over the entire vessel. Rather, these NVOCCs have to conclude contracts of carriage with maritime common carriers. Typically these contracts of carriage are plot charter contracts, which entitle the NVOCC to use container storage space, without even designating the exact location of the space within the ship's hull. In these instances the carrier concludes contracts of carriage with multiple shippers. The analysis will be loosely based on German law, however, the concepts addressed are easily detectable in other jurisdictions.
A NVOCC, as this term has been narrowed above, issuing a bill of lading, can only confirm the loading "on board" by a third party, that is the carrier who, beginning with the loading on board, begins to perform his obligations under the contract of carriage.
b) Economical function of the NVOCC
Normally a NVOCC, who does not charter an entire ship, concludes contracts of carriage with several shippers/freight forwarders concerning individual packages or containers. When the NVOCC has accumulated an appropriate number of orders, he concludes a contract of carriage with a carrier who actually will perform the transportation. The NVOCC makes money by obtaining a better price from the carrier than he (the NVOCC) charges his shippers.
c) Mandatory issuance of two bills of lading for the same cargo and itinerary
The NVOCC issues a bill of lading to each of his shippers; e.g. for one container he might issue 20 different bills of lading (in the following, this bill of lading will be referred to as the NVOCC or main bill of lading). On the other hand the NVOCC receives only one bill of lading (in the following, this B/L is referred to as a carrier bill of lading or master bill of lading) issued by the carrier covering all the cargo entrusted to him.
The NVOCC bill of lading designates the NVOCCs shippers as "shipper"; whereas the master bill of lading designates the NVOCC as "shipper". Only the master bill of lading empowers the holder to demand the cargo in the port of destination. Normally a shipping agent, who will redistribute the cargo to the holders of the NVOCC bills of lading, handles the presentation of this master bill of lading.
Since the NVOCC bills of lading do not contractually bind the carrier they are unsuitable to demand the cargo from the carrier. The shipper normally does not even know how many NVOCC bills of lading were issued and what the terms of the contract of carriage were, which underlie these bills of lading.
d) Outward impression of NVOCC bills of lading
Third parties, in particular consignees or banks, cannot deduct from a bill of lading whether it was issued by the owner of the ship, a charterer with power of control over the entire ship, or a NVOCC. Charterer, shipowner, and NVOCCs sign the bills of lading they issue as carrier. This is the consequence of the fact that an issuer of an ocean bill of lading need not disclose, what degree of control he may exercise in regards to the ship designated in the bill of lading under the heading "ocean vessel".
e) Erroneous issuance of NVOCC documents
The following analysis was prompted by report No. 3 published by Lloyds of London, dated October 15, 1999, relating the "biggest fraud in maritime history". The crime was committed by presenting NVOCC bills of lading not identical with the bill of lading issued by the actual carrier:
"The overwhelming majority of bills of lading issued for cargoes were fiction. The bills were processed as normal and the subsequent letters of credit eventually repaid. But the repayment were being funded by further credit on the back of more fraudulently described cargo."
The NVOCC issued bills of lading which deceptively reflected shipment of goods. Since the beneficiaries of the letters of credit, which used these fraudulent bills of lading, were in bankruptcy, the issue becomes relevant what type of bill of lading a NVOCC can issue.
To avoid any misconception: The authors do not attempt to qualify bills of lading according to the power of control the issuer exercises over the seaworthy vessel. Rather, the authors strives to scrutinize under which conditions a NVOCC can issue bills of lading, confirming the loading on board, even though the NVOCC does not have power of control over the entire vessel.
f) Terminology
If the forwarder does not perform the contract of carriage with his own vessel, he needs to procure shipping capacity through conclusion of appropriate sub contracts. This applies to the NVOCC as well as a charterer. This leads to multi level relations of carriers which German jurisprudence refers to as “carrier-chains”. In regards to labeling the parties involved, maritime legal literature employs "ambiguous terminology". Pruessmann/Rabe calls a time charterer who concludes in his name general cargo shipping contracts sub-carrier and the contract he concludes with the shipper a sub-shipping contract. It seems however clearer, to follow Herber’s recommendation and follow the terminology of the new § 437 HGB and hence use the term “actual carrier” and “contracting parties”. According to this terminology, a charterer who has the power of control over the entire ship is an actual carrier, a NVOCC who leases only parts of a ship is a “contracting carrier”. It seems correct to call the shipping contract concluded between NVOCC and the shipper/forwarder the main contract, since it was concluded prior to the contract between NVOCC and actual carrier. In other words: The contract between NVOCC and actual carrier is the sub contract with which the NVOCC fulfills the obligations he incurred towards the shipper/forwarder.
2. Allowable issuance of ocean bills of lading by NVOCCs
a) Anybody as carrier
Anybody, regardless of whether owning or chartering a vessel, can be a carrier; anybody can issue shipping documents.
The main duty of a carrier consists of the unconditional and unlimited obligation to transport the goods from the port of loading to the port of destination (see § 407 HGB). The commitment to fulfill the transport obligation is the only and decisive criterion for a carrier.
Exemplarily, the Incoterms 2000 define a carrier as follows:
“”Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway or by a combination of such modes.”
According to this provision the decisive criterion is the commitment to transport the goods; hence anybody can be a carrier, independent of the status as legal entity, i.e. partnership, association, corporation, merchant or similar. Furthermore possession or ownership of the vessel is irrelevant . Hence the ICC recognized the presentability of documents issued by non-vessel owning carriers .
Herber comments in this regard:
The carrier need not be owner of the ship. Relevant is only the contractual obligation, which may be satisfied by use of a third party.
b) Applicable law of transportation
No special legal statutes govern the conclusion of shipping contracts by NVOCCs, since
a) NVOCCs act as carriers and
b) the bills of lading issued by NVOCCs are not different than those issued by ship owners.
The execution of a shipping obligation by a third party is no new development but has long been recognized in combined transports and through-shipping contracts.
It should be mentioned that NVOCCs are specifically regulated under US law . These provisions however deal exclusively with anti-trust aspects of ocean law and require foreign NVOCCs to designate a domestic process agent. These stipulations cause some shipowners doing business with the US to specifically mention in their shipping documents whether one of the parties involved is a NVOCC.
c) Main contract/sub contract
According to Herber's clarification , a NVOCC needs to conclude a contract with a carrier to fulfill his obligation towards the shipper. Both contracts are legally independent. They are only linked by the fact that the sub contract is concluded to fulfill the obligations under the main contract. Both contracts need not be identical. One may be a small consignments contract, the other may be a charter agreement. It is important however that the two contracts are identical regarding the following aspects:
• port of loading
• port of discharge
• date of the on board note.
If there is a discrepancy between the two contracts in these main points, the NVOCC will not be able to fulfill his obligations towards the shipper or freight forwarder. The risk of a discrepancy is particularly virulent when the NVOCC issues the following kinds of B/L:
-a bill of lading evidencing an itinerary not identical with the itinerary promised by the carrier; e.g. showing a different port of destination,
-a bill of lading evidencing loading on board, even though the carrier has not yet received the cargo on board,
-a bill of lading designating the cargo differently from its description in the bill of lading issued by the actual carrier. Cases have been reported where the consignee experienced difficulties with customs officials due to the different description of the cargo in the bill of lading issued by the NVOCC and the carrier. The consignee tries to dispose of the goods by virtue of he NVOCC bill of lading, whereas the shipping agent of the NVOCC can claim the goods only by virtue of the B/L issued by the actual carrier.
3. Content and issuance of NVOCC documents
a) Itinerary/description of goods
The admissibility of NVOCC bill of ladings does not modify the general requirement, that the statements contained in documents must be truthful. This is particularly true in regards to the vessel used and the designation of the itinerary.
In regards to the description of goods the NVOCC can rely on the statements made by the shipper or the freight forwarder and can limit his liability -like any other carrier- to the inspection of the cargo. Due to the containerization of shipping, an inspection is --under normal circumstances-- not feasible anyway. Article 31 II ii UCP 500 has recognized this fact by stipulating that documents are admissible even if containing the clauses like "shipper's load and count", or "said by shipper to contain".
b) On board note
A special problem arises when a bill of lading is issued evidencing the loading "on board" of the cargo. Only the actual carrier can make this statement, since the confirmation that the cargo is on board reflects a real and not a fictitious event. The ICC, generally allowing the issuance of bills of lading by NVOCCs, hence has stated the following:
"Furthermore, there have been instances where non carrier bill of lading have been noted as "shipped on board". Since a shipper or on board bill of lading is an acknowledgement by the ship owner that the goods are loaded on board ship and that shipment has already begun, then the accuracy of a bill of lading issued by a non carrier operation noted “Shipped on Board” is questionable” .
4. Prerequisite and timing for issuance of “on board” note
a) Confirmation of loading on board only through carrier
A NVOCC faces the problem that he can only confirm receipt of the goods; however, generally the consignee demands to receive an “on board” bill of lading. The NVOCC can only confirm the loading on board, once he has received an on board bill of lading issued by the main carrier. If the NVOCC violates this rule, issuing a on board bill of lading reflecting a date of loading on board identical with the date and time of departure as published in a timetable, he feigns the existence of a bill of lading, which does not exist and maybe never will. Upon receipt of the goods a NVOCC can only issue a received bill of lading; he can only amend this bill of lading to evidence on board loading of the goods, once the actual carrier himself has delivered to him a bill of lading evidencing the loading on board.
b) Distinction between on board and receipt bill of lading
A bill of lading can either be issued as a receipt bill of lading or as an on board bill of lading. In the first alternative it only evidences the receipt of the goods, leaving open when the goods will be loaded on board. In the second alternative the bill of lading evidences that the goods have been loaded on board of a specific ship as of a specific date. The on board bill of lading offers greater security for the shipper or consignee. Burton v. McCullough comments upon this as follows:
“On Board Ocean Bill of Lading
“On Board Ocean”, used when the goods are shipped by sea, means that the bill is issued when the goods are actually on the carrier itself, not simply at some dockside warehouse. The “on board” bill is thus more security for the bank, as it evidences that the goods are a step closer to actual arrival. “
In international trade and in particular with letters of credit, exclusively on board bills of lading are acceptable. According to the recently revised Incoterms , CIF requires the seller to present a shipping document which entitles the buyer, to claim the goods from the carrier in the port of destination …, and to sell the goods while they are still being shipped to a buyer through delivery of the shipping document or through communication with the carrier. Also, according to article 23 ERA 500,
“If a Credit call for a bill of lading covering a port-to-port shipment, banks will, unless otherwise stipulated in the Credit, accept a document, however named, which: …
Indicates that the goods have been loaded on board, or shipped on a named vessel. “
c) Indication of on board loading
According to Article 23 ii. UCP 500, indication of the loading on board is possible in two ways:
-“Loading on board a named vessel may be indicated by pre-printed wording on the bill of lading that the goods have been loaded on board a named vessel or shipped on a named vessel …” (Article 23 ii. UCP 500)
“Shipped on board in apparent good order and condition, weight, measure, marks, numbers, quality, contents and value unknown, for carriage to the Port of discharge or so near thereunto as the Vessel may safely get and lie always afloat to be delivered in the like good order and condition of the aforesaid.”
-Ex post facto notation of the on board loading in a bill of lading, which originally had only evidenced receipt.
Example
“Received by the Carrier from the Shipper in apparent good order and condition (unless otherwise noted herein) the total number of quantity of Containers or other packages or units indicated in the box opposite entitled “Total No. of Containers/Packages received by the Carrier” for Carriage subject to all the terms and conditions hereof (INCLUDING THE TERMS AND CONDITIONS ON THE REVERSE HEREOF AND THE TERMS AND CONDITIONS OF THE CARRIER’S APLICABLE TARIFFS) from the Place of Receipt or the Port of Loading, whichever is applicable to the Port of Discharge or the Place of Delivery, whichever is applicable).
Hence follows: A NVOCC is not permitted to issue a bill of lading with pre-printed on board wording. At receipt of the goods he is limited to issuing a “received bill of lading” which he might amend only after he has received an on board bill of lading from the actual carrier. The parties have to pay particular attention to form and content of an on board notation, amending a received bill of lading. If the bill of lading indicates a place of receipt to taking in charge different from the port of loading, the on board notation must in addition to the date of loading also include the port of loading stipulated in the letter of credit and the name of the vessel on which the goods have been loaded (cf. article 23 a ii UCP 500). This provision gains importance, when the NVOCC received the goods in a location different from the port of loading.
5. NVOCC/Multimodal transport/ Through bill of lading
a) Dependency of the shipping document issued by the contracting carrier on the shipping document issued by the actual carrier
It is not a problem only particular to B/Ls issued by NVOCCs that the performance promised in the bill depends on the quality of the sub-contracts. The same factual and legal situation exists when multimodal shipping documents or through bills of lading are issued.
Multimodal transport:
A multimodal transport operator is contractually obligated to transport the goods, however, like a NVOCC he uses sub contractors as actual carriers.
The Unctad ICC Rules for Multimodal Transport Documents
(ICC Publication No. 481 ) define the following terms:
Multimodal Transport Contract means a single contract for the carriage of goods by at least two different modes of transport.
Multimodal transport operator (MTO) means any person who concludes a multimodal transport contract and assumes responsibility for the performance thereof as carrier.
Carrier means the person who actually performs, undertakes to perform the carriage or part thereof whether he is identical with the multimodal transport operator or not.
Decisive criterion for a multimodal transport is the conclusion of a uniform shipping contract which leaves open who will perform the actual carriage.
"The carrier, internationally referred to as MTO- can either perform the obligations himself
or act as a forwarder according to §§ 458 - 460 HGB and use sub contractors who are the actual carriers. "
The recently reformed German Transportation Act follows this definition.
The newly inserted §§ 452 to 452d HGB covering multimodal transportation provides that a carrier incurs the obligation to carry the goods over the entire itinerary and may fulfill this obligation by either effectuating the carriage himself or by utilizing sub-contractors.
Through Carriage
German jurisprudence distinguishes the following two kinds of through-carriage of goods:
Simple/true through contracts: In this case the first carrier obligates himself to deliver the goods in the port of destination against payment of the freight charges for the entire itinerary.
Non-genuine though contracts: In this case the first Carrier obligates himself to carry the goods only for part of the entire itinerary but promises to act as a forwarder. To get the cargo to its port of destination.
Bills of lading issued under this kind of contractual arrangement are not presentable under the Incoterms or an L/C since the carrier does not incur the liability to carry the goods himself for the whole itinerary.
In practice only the through bill of lading is relevant. Mostly it concerns shipping contracts covering two or more ocean shipments, since the port of loading or the port of destination are not being served by regular shipping lines.
b) Terminology
Shipping documents issued by NVOCC lines or through bills of lading are identical insofar as they evidence the obligation of the carrier to carry the goods either himself or with the help of sub-contractors. Consequently Herber states: The designation through shipping contract or multimodal shipping contract are equal from a civil law point of view.
6. Legal Relation of the Parties
a) Independence of shipping contracts
In all shipping contracts concluded the shipper only has a contractual relation with the NVOCC/MTO but not with their respective sub-contractors who are the actual carriers. Puttfarken extensively discusses the problems arising from the lack of a contractual relation between shipper and actual carrier, particularly in cases of loss/damage/ or wrongful dispatch. In his example the "Blue Kringel Line" acting as NVOCC issued a bill of lading covering the carriage of aluminum cable from Bilbao to Latakia, had only chartered the vessel to Piraeus where the cargo consequently was unloaded.
In maritime law all attempts to construe a liability of the actual carrier have so far failed ; however the recently introduced § 437 II HGB creates exactly this liability for all other modes of transportation.
b) Independence of shipping documents
The independence of the contractual relationships -.i.e. shipper and NVOCC/MTO on the one hand and NVOCC/MTO and actual carrier on the other hand- corresponds with the independence of the shipping documents issued. As mentioned supra 1 c), the shipper is mentioned as shipper in the NVOCC B/L, whereas the NVOCC/MTO is specified as the shipper in the master B/L. Hence results the risk for the original shipper of differing claims for possession in case the NVOCC does not hold the documents as a fiduciary for the shipper or if the two B/Ls differ in their content.
Pruessmann/Rabe suggested correctly, that B/Ls issued by the actual carrier should contain a tying clause requiring that it can only be used when presented concurrently with the B/L issued by the NVOCC/MTO. Otherwise a holder in due course can demand the goods from the actual carrier without being entitled to these goods by virtue of the NVOCC B/L.
7. Transfer of rights related to bills of lading and the goods they represent
a) The bill of lading as a document of title
aa) no effect of tradition without possession
The bill of lading represents the goods and normally is issued “to order”. Goods still being shipped can change ownership when buyer and seller agree on the transfer of ownership and endorsement plus delivery of the bill of lading (§§ 929 BGB, 650 HGB). The “effect of tradition” of a bill of lading begins when the carrier has received the goods and issued a bill of lading. Without receipt of goods, a bill of lading does not possess the effect of tradition. If the carrier receives the goods after issuance of a bill of lading, transfers of ownership will become valid ex post (see § 185 II BGB). Hence, regarding the transfer of goods which are subject to a bill of lading issued by a NVOCC, two phases have to be distinguished:
bb) Transfer of ownership between receipt of goods and loading on board
Upon receipt of the goods the NVOCC can only issue a simple received bill of lading. A holder of this bill can transfer ownership of the goods by agreement plus delivery of the indorsed bill of lading. This possibility however is rarely made use of, since received bills of lading are not admissible under an L/C.
cc) Transfer of ownership after the carrier has received the goods
After conclusion of a shipping contract between NVOCC and main carrier and delivery of the goods to the main carrier, the main carrier becomes direct possessor and the NVOCC becomes the indirect possessor of the goods. This relationship is referred to as pyramid of possession.
Hence: a NVOCC bill of lading can evidence a claim for possession only as long as the NVOCC fiduciarily holds the bill of lading issued by the actual carrier. Prüßmann/Raabe draw a comparison to a parallel legal situation: a through bill of lading loses its qualification when a bona fide purchaser acquires the sub bill of lading without being authorized under the through bill of lading.
Franken described the legal situation appropriately as follows:
No profound reason is discernible why the main B/L, i.e. the B/L covering the whole itinerary, should be affected by a B/L issued by an actual carrier. As long as the actual carrier holds the goods on behalf of the CTO, he will not transfer the shipping documents to an unauthorized third party.
b) mediating indirect possession
The holder of a bill of lading issued by a NVOCC who uses a common carrier or a multi transport operator (MTO) can transfer ownership to the goods represented by the bill of lading only if the NVOCC holds the bill of lading issued by the actual carrier as a fiduciary for his shipper. One prerequisite in this regard is that the bill of lading issued by the NVOCC and the bill of lading issued by the actual carrier are identical as to port of loading, itinerary and port of dispatch.
This requirement is not met in the following instances:
-the NVOCC or a MTO issues a bill of lading even though the actual carrier has not loaded the goods on board. This qualification does not change even if the NVOCC or MTO has already chartered containers on the carrier's vessel.
-the NVOCC does not conclude a shipping contract with an actual carrier or the shipping contract concluded deviates in essential points, as e.g different port of loading, different port of dispatch.
Example:
A NVOCC concludes a shipping contract covering the port to port loading from Helsinki via Rotterdam to Singapore and issues the following bill of lading:
-Port of loading: Helsinki
-Ocean Vessel: MS VIRGO (ship of the actual carrier)
-Port of Transshipment: Rotterdam
-Port of Discharge: Singapore
-Date of Issuance: February 1, 2000
-Date of on board note: February 1, 2000
To effectuate the shipment the NVOCC concludes a shipping contract with the ship owner of MS VIRGO covering the shipping of the goods from Helsinki to Rotterdam via truck or feeder vessel, loading the goods on board in Rotterdam. The bill of lading issued in this case reads:
Place of receipt: Helsinki
Ocean Vessel: MS VIRGO
Port of Loading: Rotterdam
Port of Discharge: Singapore
Date of issuance: February 4, 2000
date of on board note: February 10, 2000, evidencing loading on board of
MS VIRGO in Rotterdam.
The bill of lading issued by the NVOCC is a fraud, since it evidences a fictitious loading on board, which in reality occurred later, (i.e. February 10 instead of February 1) in a different location (I.E. Rotterdam instead of Helsinki). These defects cannot be considered cured due to the fact that the actual carrier received the goods later and shipped them to Singapore. Regardless of the inaccurate on board note, the incurable defect consists of evidencing a maritime shipment between Helsinki and Rotterdam, which did not take place. According to the majority view, a bill of lading, designating as the beginning of the itinerary a place of receipt, is not considered, a maritime bill of lading for the shipment between place of receipt and place of loading, since it remains open, whether the goods were shipped by truck, rail, or feeder ship between the place of receipt and the place of loading.
c) Presentability of shipping documents, which evidence a place of receipt
Combined transport documents (i.e. truck feeder vessel/ocean vessel) are not considered maritime bills of lading in regards to the shipment between port of receipt and place of loading. These documents can only be presented under a letter of credit if the L/C requires a shipping document covering two different types of transport (Article 26 UCP 500) . It is in Germany and internationally without any doubt that a shipping document evidencing a place of receipt is not presentable under an L.C. Hence, the ICC Banking Commission accurately found that the requirement in an L/C asking for "on board ocean gill of lading and shipment from any port of Ireland to Huanpu, Guangzhou, China, with transshipment being allowed" is not met by a bill of lading evidencing: "Dublin as place of receipt and Tilbury for Loading on board a named vessel". Such a document is not presentable since it does not explain how the goods were shipped from Dublin to Tilbury/England, i.e. ferry, feeder vessel or plane. The reasoning in the answer to case 283 reads as follows:
"Shipment ... means loading on board when used in connection with an ocean bill of lading. Therefore, it was necessary for the ocean bill of lading, to evidence an Irish port as port of lading in order to be in compliance with the terms of the credit. This was not the case; therefore, the bill of lading was not compliant.
In this case the NVOCC could only have issued a combined transport document .
Conclusion
Carriers without transport capacity can issue bills of lading. Not only NVOCCs but also MTOs do so. The general rules of the applicable maritime law apply, according to German law §§ 557 seq. HGB and since August 1, 1998 the new rules of §§ 452 - 452 d HGB which apply if in multimodal transport an ocean vessel covers part of the route.
These are the consequences:
Upon receipt a MTO or an NVOCC can only issue a bill of lading evidencing receipt of the goods.
- A NVOCC can only issue a on board bill of lading after the following two requirements have been met:
a) He has concluded a shipping contract with an actual carrier; and
b) The NVOCC has received an on board bill of lading from the
actual carrier.
The bill of lading issued by the NVOCC or MTO have to be identical in regards to the essential data as e.g. itinerary from the port of loading to the port of dispatch, date of the on board note, since otherwise the danger arises, that diverging claims for possession are created or that the MTO or NVOCC document is worthless.
The NVOCC has to hold the on board bill of lading issued by the actual carrier as a fiduciary for the holder of the bill of lading he, the NVOCC, had issued, since he has to possess the goods on his behalf.
A NVOCC/MTO who issues a ocean bill of lading which deviates in regards to on board note and date from the bill of lading issued by the actual is liable according to §§ 823, 826 BGB, if the document he issued need to be presented in sales contracts stipulating either cash against documents or presentation of the documents with a bank which has opened an L/C to his benefit.
Incorrectly dating the on board loading can be considered a deceptive act since according to Article 23 a ii UCP 500 the date of the on board note is deemed to be the date of loading. Hence this date is relevant for the determination whether the shipper has met the latest date of shipment or the expiry date.
It seems necessary that a NVOCC/MTO issue internal guidelines for employees to ensure that his bill of lading is identical to the actual carrier's bill of lading.
The following excerpt from a Hamburgan ship owner might serve as an example:
"Clean" and "Shipped on Board" VOCC B/L
Whenever "clean" and "shipped on board" Bs/L are issued by the Agent, the underlying VOCC B/L must be identical.
Special and Additional Clauses on VOCC B/L
All special and additional clauses must also be shown identically in the XY B/L. This refers especially to transshipment cargo/containers, unpacked items, reefer containers and special cargo.
VOCC as this term is used above is the vessel owning carrier, i.e. the actual carrier. Appropriately the bill of lading issued by the actual carrier is characterized as underlying since it is the bases for the NVOCC's bill of lading. The NVOCC needs to conclude a shipping contract with an actual carrier in order to perform the obligations he himself incurred. Without this back-to-back transaction that is identical as to the shipping data the obligation of the NVOCC remains unfulfilled.
Upon receipt of the goods a NVOCC is only permitted to issue a received bill of lading, which normally is useless to the forwarder since typically in international shipping transactions he has to provide a on board bill of lading.
A NVOCC can modify his received bill of lading only after he has received an on board bill of lading from the actual carrier.
Disregard of the above mentioned principles creates the risk, that buyers in international shipping transactions will in the future demand --in addition to the agreed upon shipping documents-- proof of the loading on board for the itinerary issued by the actual carrier.
