Bills of lading

Carriage ofCarriage of
Goods by seaGoods by sea

HistoryHistory
 No international rules or conventionsNo international rules or conventions
to govern Bills of Lading prior to 1924to govern Bills of Lading prior to 1924
 Common law and civil law – strictCommon law and civil law – strict
liability of the carrier (Ship owner)liability of the carrier (Ship owner)

Strict liability of ship ownerStrict liability of ship owner
 But freedom of contract consideredBut freedom of contract considered
paramountparamount
 Ship owning companies – CartelsShip owning companies – Cartels
 Exporters had no bargaining powerExporters had no bargaining power
 Ship owner dominated and contractedShip owner dominated and contracted
out of strict liabilityout of strict liability
 In practice strict liability never appliedIn practice strict liability never applied

 Due to non availability of internationalDue to non availability of international
rules or conventionsrules or conventions
 Due to the concept of freedom ofDue to the concept of freedom of
contractcontract
The Bills of Lading issued byThe Bills of Lading issued by
ship owners were different fromship owners were different from
company to company andcompany to company and
country to country.country to country.
There was no uniformity. TheThere was no uniformity. The
consignee did not know theconsignee did not know the

Position was not conducive toPosition was not conducive to
international tradeinternational trade
 Due to the above reasons Hague rulesDue to the above reasons Hague rules
were promulgated in 1924.were promulgated in 1924.
 Hague visby rules promulgated in 1968.Hague visby rules promulgated in 1968.
 Hamburg rules promulgated in 1978.Hamburg rules promulgated in 1978.

 Period prior to 1924 – strict liability ofPeriod prior to 1924 – strict liability of
the ship owner.the ship owner.
 Hague and Hague visby rules – faultHague and Hague visby rules – fault
based liability of the ship owner.based liability of the ship owner.
““The carrier shall be bound before and atThe carrier shall be bound before and at
the beginning of the voyage tothe beginning of the voyage to
exercise due diligence to-exercise due diligence to-
a)a) Make the ship seaworthy;Make the ship seaworthy;
b)b) Properly man, equip and supply theProperly man, equip and supply the
ship;ship;
c)c) Make the holds, refrigerating and coolMake the holds, refrigerating and cool
chambers, and all other parts of thechambers, and all other parts of the
ship in which goods are carried, fit andship in which goods are carried, fit and
safe for their reception, carriage andsafe for their reception, carriage and

Hamburg rules – presumed faultHamburg rules – presumed fault
liability of the ship owner.liability of the ship owner.
““The carrier is liable for loss resultingThe carrier is liable for loss resulting
from loss of or damage to the goods, asfrom loss of or damage to the goods, as
well as from delay in delivery, if thewell as from delay in delivery, if the
occurrence which caused the loss,occurrence which caused the loss,
damage or delay took place while thedamage or delay took place while the
goods were in his charge as defined ingoods were in his charge as defined in
article 4.”article 4.”

Bills of Lading in Sri LankaBills of Lading in Sri Lanka
Applicable RulesApplicable Rules
 Up to 1982 – Hague rulesUp to 1982 – Hague rules
 After 1982 – Hague visby rulesAfter 1982 – Hague visby rules
Please see the schedule to the CarriagePlease see the schedule to the Carriage
of Goods by Sea Act No. 21 of 1982of Goods by Sea Act No. 21 of 1982

Applicability of English Law in respect of Bills of Lading after theApplicability of English Law in respect of Bills of Lading after the
Carriage of Goods by Sea Act No. 21 of 1982.Carriage of Goods by Sea Act No. 21 of 1982.
Can the English Law apply in respect of Bills of Lading where ActCan the English Law apply in respect of Bills of Lading where Act
No. 21 of 1982 is silent.No. 21 of 1982 is silent.
The Civil Law Ordinance No. 5 of 1852 section 2 states as follows:The Civil Law Ordinance No. 5 of 1852 section 2 states as follows:
““The law to be hereafter administered in Sri Lanka in respect ofThe law to be hereafter administered in Sri Lanka in respect of
all contracts or questions arising within the same relating toall contracts or questions arising within the same relating to
ship and to the property therein and to the owners thereof theship and to the property therein and to the owners thereof the
behaviors of the Master and mariners and their respectivebehaviors of the Master and mariners and their respective
rights, duties, and liabilities relating to therights, duties, and liabilities relating to the carriagecarriage ofof
passengers andpassengers and goods by ships ,goods by ships , to stoppage into stoppage in
transitive, to freight , demurrage, insurance,transitive, to freight , demurrage, insurance,
salvage, average, collision between ships, tosalvage, average, collision between ships, to bills ofbills of
LadingLading and generally toand generally to all maritime mattersall maritime matters shall beshall be
the same in respect of the said matters as would bethe same in respect of the said matters as would be
administered in England in the like case at theadministered in England in the like case at the
corresponding period, if the contract had beencorresponding period, if the contract had been
entered into or if the Act in respect of which any suchentered into or if the Act in respect of which any such
question shall have arisen had been done in England,question shall have arisen had been done in England,
unless in any case other provision is or shall beunless in any case other provision is or shall be
made by any enactment now in force in Sri Lanka ormade by any enactment now in force in Sri Lanka or

 We have a law in respect of Carriage ofWe have a law in respect of Carriage of
Goods by SeaGoods by Sea
 The above law covers most of the areasThe above law covers most of the areas
in respect of Bills of Ladingin respect of Bills of Lading
 If there is a lacuna could we make useIf there is a lacuna could we make use
of English law?of English law?
 The position was taken in a local caseThe position was taken in a local case
but not decided as the case was settledbut not decided as the case was settled

BILLS OF LADINGBILLS OF LADING
DEFINITIONDEFINITION::
A bill of lading is a document, which isA bill of lading is a document, which is
signed by the carrier or his agentsigned by the carrier or his agent
acknowledging that goods of the statedacknowledging that goods of the stated
kind, quantity and condition have beenkind, quantity and condition have been
received for shipment or shipped onreceived for shipment or shipped on
board a particular vessel, which isboard a particular vessel, which is
bound for a particular destination andbound for a particular destination and
stating the terms on which the goods arestating the terms on which the goods are
to carried.to carried.

The traditional Bill of lading, aThe traditional Bill of lading, a
key-shipping document, serveskey-shipping document, serves
several purposes:several purposes:

a) Evidence of a contract of carriagea) Evidence of a contract of carriage
b)b) Evidence of the receipt of goodsEvidence of the receipt of goods
c)c) Document of title to the goodsDocument of title to the goods

1.11.1 Evidence of a ContractEvidence of a Contract
of Carriageof Carriage
The bill of Lading acknowledges that theThe bill of Lading acknowledges that the
goods have been delivered to the carriergoods have been delivered to the carrier
for shipment to a stated destination andfor shipment to a stated destination and
repeats in detail or by reference therepeats in detail or by reference the
terms of the contract concluded when theterms of the contract concluded when the
space for the goods was booked. The billspace for the goods was booked. The bill
of lading is not the contract of carriageof lading is not the contract of carriage
itself – it is in law, however, the bestitself – it is in law, however, the best
available evidence of such a contract.available evidence of such a contract.

Thus in Sewell v. Burdick, ( 1884) 10Thus in Sewell v. Burdick, ( 1884) 10
App. Cas. 74, at p. 105, Lord BramwellApp. Cas. 74, at p. 105, Lord Bramwell
said:said:
““ To my mind there is no contract in it. ItTo my mind there is no contract in it. It
is a receipt for the goods, stating theis a receipt for the goods, stating the
terms on which they were delivered toterms on which they were delivered to
and received by, the ship, and thereforeand received by, the ship, and therefore
excellent evidence of those terms, but itexcellent evidence of those terms, but it
is not a contract. That has been madeis not a contract. That has been made
before the bill of lading was givenbefore the bill of lading was given ”.”.

It is usual for the shipper and ship owner (or hisIt is usual for the shipper and ship owner (or his
agent) to agree the significant terms of theagent) to agree the significant terms of the
contract – e.g. the cargo, the freight, thecontract – e.g. the cargo, the freight, the
freight, the port of shipment, and destinationfreight, the port of shipment, and destination
before the goods are loaded on board and thebefore the goods are loaded on board and the
bill of lading is issued. As to the other termsbill of lading is issued. As to the other terms
and conditions under which the goods areand conditions under which the goods are
carried, it is the practice for shippers to accept,carried, it is the practice for shippers to accept,
without amendment, the standard clauseswithout amendment, the standard clauses
printed on the carrier’s (long form) bill of lading.printed on the carrier’s (long form) bill of lading.
Where it can be proved that the bill of ladingWhere it can be proved that the bill of lading
differs in terms from the contract previouslydiffers in terms from the contract previously
agreed (orally or in writing) between theagreed (orally or in writing) between the
shipper and the carrier, the earlier terms willshipper and the carrier, the earlier terms will
stand supreme: s.s.Ardennes (cargo owners ) v.stand supreme: s.s.Ardennes (cargo owners ) v.

1.2 Evidence of the Receipt of Goods1.2 Evidence of the Receipt of Goods
Evidence of the receipt of the goods,Evidence of the receipt of the goods,
issued by the carrier and acknowledgingissued by the carrier and acknowledging
that he has received the goods, either onthat he has received the goods, either on
board a named vessel or in his custodyboard a named vessel or in his custody
for the purpose of placing them on boardfor the purpose of placing them on board
a vessel. As a general rule of law it cana vessel. As a general rule of law it can
be said, that the carrier must “be said, that the carrier must “ deliverdeliver
what he received as he received itwhat he received as he received it ””
unless relieved by the excepted perilsunless relieved by the excepted perils
(Gaskell et.al) 1987, p.240).(Gaskell et.al) 1987, p.240).

The Bill of Lading can be:The Bill of Lading can be:
a)    a)     ‘On board’‘On board’ – sometimes called ‘shipped’ Bill– sometimes called ‘shipped’ Bill
of Lading, whereby the carrier acknowledges thatof Lading, whereby the carrier acknowledges that
the goods are loaded on board and, at the samethe goods are loaded on board and, at the same
time, will note any apparent defect in either thetime, will note any apparent defect in either the
goods or their packaginggoods or their packaging

b)   b)    ‘Received for shipment’‘Received for shipment’ – this only states– this only states
that the goods have been received into thethat the goods have been received into the
carrier’s custody, may be at a warehouse orcarrier’s custody, may be at a warehouse or
inland container terminal. It does not confirm thatinland container terminal. It does not confirm that
the goods are on board the vessel for a particularthe goods are on board the vessel for a particular
sailing.sailing.

When the Hague-Visby Rules apply the shipper canWhen the Hague-Visby Rules apply the shipper can
demand a Bill of Lading to be issued to him showing “demand a Bill of Lading to be issued to him showing “
either the number of packages or pieces, or the quantity,either the number of packages or pieces, or the quantity,
or weight , as the case may be, as furnished in writing byor weight , as the case may be, as furnished in writing by
the shipper” (Art.3.3(b))the shipper” (Art.3.3(b))

The Bill of Lading is prima facie evidence f theThe Bill of Lading is prima facie evidence f the
receipt of the goods as they are described inreceipt of the goods as they are described in
the document.the document. This means that if the person whoThis means that if the person who
issued the Bill of Lading claims that the information isissued the Bill of Lading claims that the information is
incorrect, he has to prove the error.incorrect, he has to prove the error.

If the Bill of Lading has been transferred to aIf the Bill of Lading has been transferred to a
third party acting in good faith, proof to thethird party acting in good faith, proof to the
contrary is not admissiblecontrary is not admissible

1.3 Document of Title to the Goods1.3 Document of Title to the Goods
Document representing the goods and entitlingDocument representing the goods and entitling
the holder in due course to receive the goodsthe holder in due course to receive the goods
from the carrier on arrival of the vessel. The billfrom the carrier on arrival of the vessel. The bill
of lading also entitles the holder to make anyof lading also entitles the holder to make any
claim against the carrier under the contract ofclaim against the carrier under the contract of
carriage for loss or damage to the goods.carriage for loss or damage to the goods.
Possession of a Bill of Lading is equivalent inPossession of a Bill of Lading is equivalent in
law to possession of the goods. It enables thelaw to possession of the goods. It enables the
holder to obtain delivery of the goods at theholder to obtain delivery of the goods at the
port of destination and during the transit, itport of destination and during the transit, it
enables him to ‘deliver’ the goods by merelyenables him to ‘deliver’ the goods by merely
transferring the Bill of Ladingtransferring the Bill of Lading .. When the termWhen the term ““
negotiable”negotiable” is used in relation to a Bill ofis used in relation to a Bill of
Lading, it merely means transferable.Lading, it merely means transferable.

The Bill of Lading is like a cloakroomThe Bill of Lading is like a cloakroom
ticket- it is the ’key to the goods’. Theticket- it is the ’key to the goods’. The
holder must present it before delivery,holder must present it before delivery,
and surrender it afterwards. The carrierand surrender it afterwards. The carrier
has the corresponding duty not to deliverhas the corresponding duty not to deliver
without presentation and the right to getwithout presentation and the right to get
the Bill of Lading in return as his receiptthe Bill of Lading in return as his receipt
of having carried out his duty to deliver.of having carried out his duty to deliver.
The carrier must always exercise care toThe carrier must always exercise care to
deliver to the right person, and will bedeliver to the right person, and will be
liable for damages if he is negligent inliable for damages if he is negligent in
this respect.this respect.

Information Appearing on the BillInformation Appearing on the Bill
of Ladingof Lading
Information relating to the goods-Information relating to the goods-
A Bill of Lading usually containsA Bill of Lading usually contains
information regarding the quantity,information regarding the quantity,
condition and Marks of the Cargo.condition and Marks of the Cargo.
National legislation based on theNational legislation based on the
International Conventions for theInternational Conventions for the
unification of certain rules relating tounification of certain rules relating to
Bills of Lading also require that certainBills of Lading also require that certain
information appears on the face of theinformation appears on the face of the
Bill of Lading such as.Bill of Lading such as.

 Either the No of packages or items or theEither the No of packages or items or the
quantity or weight as the case may be asquantity or weight as the case may be as
furnished in writing by the shipperfurnished in writing by the shipper
 The apparent order and condition of theThe apparent order and condition of the
goods,goods, "taken on board the following goods in"taken on board the following goods in
apparent good order and condition"apparent good order and condition" If theIf the
goods are not in good condition the carriergoods are not in good condition the carrier
must state so on the face of the Bill of Lading.must state so on the face of the Bill of Lading.
 The distinctive marks intended to identify theThe distinctive marks intended to identify the
cargo given prior to loading. These markscargo given prior to loading. These marks
must be stamped or otherwise shown clearlymust be stamped or otherwise shown clearly
that they would remain legible until the end ofthat they would remain legible until the end of
the voyage.the voyage.

Information relating to theInformation relating to the
parties -parties -
CarrierCarrier
The name of the carrier isThe name of the carrier is
generally found at the top of thegenerally found at the top of the
Bill of Lading. The carrier mayBill of Lading. The carrier may
be the actual owner of the shipbe the actual owner of the ship
or a Time or Demise Charterer.or a Time or Demise Charterer.

Name of the shipName of the ship
This enables theThis enables the
Shipper/Receiver to identify theShipper/Receiver to identify the
owner of the ship. This could beowner of the ship. This could be
important in the event theimportant in the event the
shipper/receiver will have toshipper/receiver will have to
make a claim against themake a claim against the
shipowner for loss/damage toshipowner for loss/damage to
cargo in certain circumstances.cargo in certain circumstances.

ShipperShipper
The Bill of Lading normallyThe Bill of Lading normally
contains the name and address ofcontains the name and address of
the shipper. This information isthe shipper. This information is
particularly important if the Bill ofparticularly important if the Bill of
Landing does not contain anyLanding does not contain any
information about the consigneeinformation about the consignee
and in such event the carrier mayand in such event the carrier may
be able to contact the shipper inbe able to contact the shipper in
the event of a casualty.the event of a casualty.

Information relating to theInformation relating to the
VoyageVoyage
The Bill of Lading would indicate theThe Bill of Lading would indicate the
name of the Port of loading and thename of the Port of loading and the
name of the port of discharge.name of the port of discharge.
Endorsement of the Bill of LadingEndorsement of the Bill of Lading
Goods shipped under a Bill of LadingGoods shipped under a Bill of Lading
may be deliverable to a namedmay be deliverable to a named
person to the order of a person or toperson to the order of a person or to
the Bearer.the Bearer.

The named Bill of LadingThe named Bill of Lading
A Bill of Lading is named when theA Bill of Lading is named when the
name and the address of thename and the address of the
Consignee is given (The shipperConsignee is given (The shipper
may also be named as themay also be named as the
Consignee) and the phrase "Consignee) and the phrase "TOTO
ORDERORDER" usually appearing on the" usually appearing on the
Bill of Lading is deleted. In thisBill of Lading is deleted. In this
case the goods can only becase the goods can only be
delivered to the named person.delivered to the named person.
This form of Bill of Lading isThis form of Bill of Lading is
normally usednormally used

for non-commercial shipment suchfor non-commercial shipment such
as cargo carried under bi-lateralas cargo carried under bi-lateral
agreements betweenagreements between
governments, shipments made bygovernments, shipments made by
one branch of a Company toone branch of a Company to
another or shipments of goodsanother or shipments of goods
bought overseas by the samebought overseas by the same
Company. The legal consequenceCompany. The legal consequence
of the Consignee being named isof the Consignee being named is
that such Bill of Lading cannot bethat such Bill of Lading cannot be
endorsed to another and is thusendorsed to another and is thus
non-negotiable.non-negotiable.

Named Bill of Lading is alsoNamed Bill of Lading is also
referred to as a straight Bill ofreferred to as a straight Bill of
LadingLading
In the recent case of “In the recent case of “ Rafaela sRafaela s” 2003” 2003
Vol. II page 114 of Lloyd ReportsVol. II page 114 of Lloyd Reports
The Court of Appeal of England holdsThe Court of Appeal of England holds
““a straight Bill of Lading otherwise in thea straight Bill of Lading otherwise in the
form of a classic Bill of Lading, shouldform of a classic Bill of Lading, should
be viewed as a Bill of Lading within thebe viewed as a Bill of Lading within the
meaning of the Hague Rulesmeaning of the Hague Rules
notwithstanding that it was nonnotwithstanding that it was non
negotiable……”negotiable……”

The Order Bill of LadingThe Order Bill of Lading
The order Bill of Lading is drawn to theThe order Bill of Lading is drawn to the
order of the shipper, the consignee or theorder of the shipper, the consignee or the
Bank. This Bill of Lading contains theBank. This Bill of Lading contains the
phrase "phrase "To the Order of ……..To the Order of …….. " followed" followed
by the name of the beneficiary. Toby the name of the beneficiary. To
endorse this form of Bill of Lading, theendorse this form of Bill of Lading, the
beneficiary may write on the reverse sidebeneficiary may write on the reverse side
of the Bill of Lading "of the Bill of Lading "Deliver to the OrderDeliver to the Order
of ……….."of ……….." followed by the newfollowed by the new
Beneficiary and signed. This is calledBeneficiary and signed. This is called
endorsement in full. The person to whomendorsement in full. The person to whom
it is endorsed may be the final receiver orit is endorsed may be the final receiver or
an intermediary Beneficiary.an intermediary Beneficiary.

Bearer Bill of LadingBearer Bill of Lading
In the Bearer Bill of Lading theIn the Bearer Bill of Lading the
statement "statement "To the Order of ……"To the Order of ……"
is replaced by the statement "is replaced by the statement "toto
BearerBearer". Any holder of the Bill of". Any holder of the Bill of
Lading can thus take delivery ofLading can thus take delivery of
the goods. The Bearer Bill ofthe goods. The Bearer Bill of
Lading may pose a risk to theLading may pose a risk to the
shipper as anyone who obtainsshipper as anyone who obtains
the Bill of Lading throughthe Bill of Lading through
fraudulent means can also obtainfraudulent means can also obtain
delivery of the goods.delivery of the goods.

Through Bill of LadingThrough Bill of Lading
This is a term that is normallyThis is a term that is normally
used to refer to a Bill of Ladingused to refer to a Bill of Lading
containing a contract of carriagecontaining a contract of carriage
that is in stages. The separatethat is in stages. The separate
stages would be performed bystages would be performed by
different carriers by the process ofdifferent carriers by the process of
trans shipment. In practice, thetrans shipment. In practice, the
through Bill of Lading wouldthrough Bill of Lading would
usually have 2 characteristicsusually have 2 characteristics
which may distinguishwhich may distinguish

it from other Bills of Lading i.eit from other Bills of Lading i.e
 Contain a clause giving the carrierContain a clause giving the carrier
the right to transship cargo.the right to transship cargo.
 Contain a statement that the cargoContain a statement that the cargo
would be transshipped at awould be transshipped at a
particular port i.e.,particular port i.e.,
Port of loadingPort of loading : Colombo: Colombo
Port of transshipmentPort of transshipment : Bombay: Bombay
Port of dischargePort of discharge : Rotterdam: Rotterdam

In this instance goods will beIn this instance goods will be
loaded at Colombo andloaded at Colombo and
transferred to the second shiptransferred to the second ship
at Bombay and discharged byat Bombay and discharged by
the second ship at Rotterdam.the second ship at Rotterdam.
The first carrier issues theThe first carrier issues the
through Bill of Lading.through Bill of Lading.
Consignee/Receiver obtainsConsignee/Receiver obtains
delivery on through Bill ofdelivery on through Bill of
Lading.Lading.

Received for Shipment Bill ofReceived for Shipment Bill of
LadingLading
This is a Bill of Lading issued to aThis is a Bill of Lading issued to a
shipper when he delivers goodsshipper when he delivers goods
into the custody of the ship ownerinto the custody of the ship owner
or its Agent, prior to the carryingor its Agent, prior to the carrying
ship has arrived at the Port ofship has arrived at the Port of
loading or it has arrived and notloading or it has arrived and not
ready to receive goods. It is someready to receive goods. It is some
times called a Custody Bill oftimes called a Custody Bill of
Lading.Lading.

Shipped on Board Bill of LadingShipped on Board Bill of Lading
A Bill of Lading issued after the goodsA Bill of Lading issued after the goods
have actually been loaded into the ship ishave actually been loaded into the ship is
described as a shipped on Board Bill ofdescribed as a shipped on Board Bill of
Lading. If a received for shipment bill ofLading. If a received for shipment bill of
lading has been previously given, it mustlading has been previously given, it must
be surrendered in exchange for orbe surrendered in exchange for or
completed into acompleted into a "Shipped on Board"Shipped on Board
Bill of Lading"Bill of Lading" endorsing upon it theendorsing upon it the
name of the ship into which the goods arename of the ship into which the goods are
loaded and the date of shipment.loaded and the date of shipment.

Direct Bill of LadingDirect Bill of Lading
This is a Bill of Lading, coveringThis is a Bill of Lading, covering
the carriage of goods in onethe carriage of goods in one
ship direct from one port toship direct from one port to
another.another.

The Clean Bill of Lading and theThe Clean Bill of Lading and the
letter of Indemnityletter of Indemnity
Bills of Lading containing particulars of theBills of Lading containing particulars of the
goods such as the apparent condition,goods such as the apparent condition,
quantity, weight, numbers etc., and thequantity, weight, numbers etc., and the
particulars of the goods are filled in by theparticulars of the goods are filled in by the
shipper. In theory the Bill of Lading has toshipper. In theory the Bill of Lading has to
be completed by the carrier according tobe completed by the carrier according to
the particulars provided by the shipper orthe particulars provided by the shipper or
his representative who would later send ithis representative who would later send it
to the carrier for verification and signature.to the carrier for verification and signature.
The Bill of Lading has a printed statementThe Bill of Lading has a printed statement
that the goods are shipped in apparentthat the goods are shipped in apparent
good order.good order.

The Clean Bill of LadingThe Clean Bill of Lading
If the carrier has not contradictedIf the carrier has not contradicted
the particulars inserted by thethe particulars inserted by the
shipper or made any adverseshipper or made any adverse
comment on the Bill of Ladingcomment on the Bill of Lading
regarding the goods, the Bill ofregarding the goods, the Bill of
Lading would be considered to be aLading would be considered to be a
Clean Bill of Lading. A Clean Bill ofClean Bill of Lading. A Clean Bill of
Lading would thus mean that, theLading would thus mean that, the
carrier who had an opportunity tocarrier who had an opportunity to
inspect the goods prior to loadinginspect the goods prior to loading
agrees with the Shipper'sagrees with the Shipper's
description and confirms that thedescription and confirms that the
goods are in good order.goods are in good order.

Letter of IndemnityLetter of Indemnity
 L/C transactionL/C transaction
 Necessity to present clean B/L to bankNecessity to present clean B/L to bank
 Fraudulent practice of issuing letters ofFraudulent practice of issuing letters of
indemnity to carrier and obtaining cleanindemnity to carrier and obtaining clean
B/LB/L
 Fraud on consigneeFraud on consignee
 If carrier does not honour the courtsIf carrier does not honour the courts
have refused to enforce as fraud onhave refused to enforce as fraud on
consigneeconsignee
 Present practice of bank guaranteePresent practice of bank guarantee

Condition in B/L on the application ofCondition in B/L on the application of
General AverageGeneral Average
 Ship owners will not issue a B/L without aShip owners will not issue a B/L without a
clause attracting General Averageclause attracting General Average
 Standard clause –Standard clause –
““General Average to be adjusted at any portGeneral Average to be adjusted at any port
or place at the carrier’s option, and to beor place at the carrier’s option, and to be
settled according to the York-Antwerp Rules,settled according to the York-Antwerp Rules,
1974, this covering all goods, whether1974, this covering all goods, whether
carried on or under deck. The amendedcarried on or under deck. The amended
Jason Clause to be considered asJason Clause to be considered as
incorporated herein. Such security includingincorporated herein. Such security including
a cash deposit as the carrier may deema cash deposit as the carrier may deem
sufficient to cover the estimated contributionsufficient to cover the estimated contribution
by the goods and any salvage and specialby the goods and any salvage and special
charges thereon, shall, if required, becharges thereon, shall, if required, be
submitted to the carrier prior to delivery ofsubmitted to the carrier prior to delivery of

General AverageGeneral Average
““There is a General Average Act when,There is a General Average Act when,
and only when, any extra ordinaryand only when, any extra ordinary
sacrifice or expendituresacrifice or expenditure is intentionallyis intentionally
and reasonably made or incurred for theand reasonably made or incurred for the
common safety for the purpose ofcommon safety for the purpose of
preserving from peril the propertypreserving from peril the property
involved in a common maritimeinvolved in a common maritime
adventure.”adventure.”

Principle behind General Average –Principle behind General Average –
 EveryEvery voyagevoyage is anis an adventureadventure..
 All interests (Cargo, ship and freight) shouldAll interests (Cargo, ship and freight) should
contribute to make the adventure a successcontribute to make the adventure a success
 One of the most controversial areas in lawOne of the most controversial areas in law
 Judicial pronouncements are available toJudicial pronouncements are available to
definedefine
““PerilPeril”, “”, “General Average ActsGeneral Average Acts ”, “”, “sacrificesacrifice”,”,
““expenditureexpenditure”, “”, “Voluntary ActVoluntary Act ”, “”, “IntentionalIntentional

Unfortunately, things are notUnfortunately, things are not
always as simple as this. Thealways as simple as this. The
carrier may find reason to disagreecarrier may find reason to disagree
with the particulars indicated on thewith the particulars indicated on the
Bill of Lading by the shipper suchBill of Lading by the shipper such
as:as:
--The goods may not be in apparentThe goods may not be in apparent
good order or condition at the timegood order or condition at the time
they were loaded on board the ship.they were loaded on board the ship.
-The Carrier and Shipper may-The Carrier and Shipper may
disagree about the quantity ofdisagree about the quantity of
goods loaded on board.goods loaded on board.

Limitation of actionsLimitation of actions
Section 6Section 6 of the Hague Visby Rules stateof the Hague Visby Rules state
as follows:as follows:
““subject to paragraph 6 bis thesubject to paragraph 6 bis the carriercarrier
and the shipand the ship shall in any event beshall in any event be
discharged from all liability whatsoeverdischarged from all liability whatsoever
in respect of the goods, unless suit isin respect of the goods, unless suit is
broughtbrought within one yearwithin one year of their deliveryof their delivery
or of the date when they should haveor of the date when they should have
been delivered. This period maybeen delivered. This period may
however be extended if the parties sohowever be extended if the parties so
agree after the cause of action hasagree after the cause of action has

According to the Hague Visby Rules (CarriageAccording to the Hague Visby Rules (Carriage
of Goods by Sea Act 21 of 1982) if action isof Goods by Sea Act 21 of 1982) if action is
not instituted within one year against thenot instituted within one year against the shipship
or carrieror carrier they will be discharged fromthey will be discharged from
liability.liability.
Consider the position whereConsider the position where
 Carrier supplies cargo damaged duringCarrier supplies cargo damaged during
voyage (supplied not in accordance with B/L)voyage (supplied not in accordance with B/L)
 No action filed by consignee within one yearNo action filed by consignee within one year
from deliveryfrom delivery
 After 1 ½ years from the delivery of the cargoAfter 1 ½ years from the delivery of the cargo
carrier sues consignee for non payment oncarrier sues consignee for non payment on
general averagegeneral average

Hamburg Rules Article 20Hamburg Rules Article 20
““Any action relating to carriage of goodsAny action relating to carriage of goods
under this convention is time bared ifunder this convention is time bared if
judicial or arbitral proceedings have notjudicial or arbitral proceedings have not
been instituted within a period of twobeen instituted within a period of two
years.years.
The limitation period commences on theThe limitation period commences on the
day on which the carrier has deliveredday on which the carrier has delivered
the goods or part thereof or in casesthe goods or part thereof or in cases
where no goods have been delivered onwhere no goods have been delivered on
the last day on which the goods shouldthe last day on which the goods should
have been delivered”have been delivered”

Remedies when carrier has notRemedies when carrier has not
delivered cargo in terms of the B/L.delivered cargo in terms of the B/L.
 Action in the District CourtAction in the District Court
 Action in personam in the Admiralty CourtAction in personam in the Admiralty Court
 In rem action in the Admiralty courtIn rem action in the Admiralty court

Action in the District CourtAction in the District Court
 Time consumingTime consuming
 Action filed against the ship owner orAction filed against the ship owner or
charterer – Difficulty of enforcement -charterer – Difficulty of enforcement -
they may not have assetsthey may not have assets

Action in personam in theAction in personam in the
Admiralty CourtAdmiralty Court
 In the Admiralty Court two types ofIn the Admiralty Court two types of
actionsactions
1)1) Action in personamAction in personam
2)2) Action in remAction in rem

 Action in personamAction in personam
Normally filed against the ship owningNormally filed against the ship owning
companycompany
Reasons for not filing action against shipReasons for not filing action against ship
owning companyowning company
i)i) Ship owners flag outShip owners flag out
ii)ii) Reasons for ship owners to flag outReasons for ship owners to flag out
iii)iii) Ship registry of the flag of convenienceShip registry of the flag of convenience
require a link between the ship ownerrequire a link between the ship owner
and the country of registrationand the country of registration
iv)iv) The company (ship owning company)The company (ship owning company)
created for the purpose of registrationcreated for the purpose of registration
generally do not have assetsgenerally do not have assets

Action in remAction in rem
 First step after filing papers is to move forFirst step after filing papers is to move for
arrest of shiparrest of ship
 Ship is available as an assetShip is available as an asset
 In the alternative the ship owner will provideIn the alternative the ship owner will provide
security by way of a bank guaranteesecurity by way of a bank guarantee
Due to the above reasons the mostDue to the above reasons the most
effective remedy to enforce a claimeffective remedy to enforce a claim
against a carrier is to file an action inagainst a carrier is to file an action in
rem in the Admiralty Court.rem in the Admiralty Court.

Bills of lading

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