Liability For Releasing Goods Without A Bill Of Lading

Legal Provisions and Case Analysis

Question:

Discuss about the Carriage of Goods by the Sea Regulations.

Backyard Poultry has appointed ABC line Limited to transport frozen chicken to a company in Hong Kong named Kai Bo Supermarket.

The bills of landing contains a “general paramount clause” which states that “The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply”.

The bill also contains a “law and jurisdictions clause” according to which “This Bill of Lading is subject to Hong Kong law and practice. Any dispute arising from this contract shall be submitted to the exclusive jurisdiction of the High Court in Hong Kong”.

ABC released the goods to a person who did not have a bill of lading and as a result Kai Bo supermarket had been subjected.

The issue in this case is to determine the rights of Kai Bo supermarket to sue ABC Line Ltd in a court in Australia.

In the case of The Superior Pescadores SYEMGAS FZCO AND OTHERS V SUPERIOR PESCADORES SA [2016] EWCA Civ 101 the question before the court was to consider whether the bill of lading provided for the application of The Hague Rules or the Hague-Visby Rules. The limit of liability to be applied to the party was to be determined by the question of which rule will be applicable.  The paramount clause in this case was the same which is provided in the given case study. It was held by the court in this case that the wording of the paramount clause provided for the incorporation of the Hague-Visby Rules rather than the Hague rules. In this case it had been stated by the court that the Hague-Visby Rules must not be treated as a separate convention as they are merely amendments of the Brussels Convention 1924.

It has been provided by Article 6 of the protocol that the protocol and the convention is to be interpreted and read together like single instrument. According to the judgment of this case The Hague Rules which have been amended by the Hague-Visby rules are only a protocol update and not a separate instrument. Thus in situation where the bill of landing has a clause stating “the Hague Rules as enacted in the country of shipment” and the country incorporates the Hague-Visby Rules, this rule will be applicable (Wilson 2010).

Liability for releasing goods without a bill of lading

As provided to the Carriage of Goods by Sea Act 1991 (COGSA 91) Australia the Hague-Visby rules. According to regulation 6 of the Carriage of Goods by Sea Regulations 1998 which has amended section 11(1) of the COGSA 91, the Act is applicable on all outward shipping from Australia.

In the given situation it has been provided that the bill of lading incorporates the same paramount clause which was present in the case of c. In this case the country or origin was Belgium which incorporates the Hague-Visby rules in the same way as Australia. Thus in the given situation it can be stated that the Hague-Visby will govern the relationship between the parties as the rules cannot be viewed differently from the Hague rules. In addition the COGSA 91 will be applicable in the given situation by the virtue of regulation of the COGSR 98. This is because the shipment has been shipped outward from Australia to Hong Kong. Thus in the given situation Kai Bo super markets have the right to sue ABC Line limited in Australia.

Conclusion

ABC line Limited can be sued by Kai BO in Australia by the virtue of COGSR 98 and COGSA 91.

The issue which has been identified in relation to the given situation is to determine the liability of ABC line limited for releasing the good without the presence of a bill of lading.

It is the duty of the carrier to ensure that they only release the good on the production of a valid Bill of Landing or else they may be subjected to liabilities. According to White (2014) it is a well established rule in Maritime law that the carrier has to deliver the goods at the destination when a valid bill of lading has been produced.  However in practice often the goods are delivered without the production of a proper BOL. The problem in relation to delivery of goods without BOL is a common problem in law of seas.

However it had been stated in the case of The Sormovskiy 3068 (1994) 2 LLR 266, that where the release of the goods in context has been done without the production of a valid BOL, there may be no liabilities imposed on the carrier if the act was done based on the custom of the port.

There are a few other defenses which may be availed by the carrier in case where the gods have been released without a bill of lading. These are that the time of filing a dispute has elapsed, no loss has been caused to the holder of the bill of lading because of and the delivery, the holder himself authorized the delivery, the delivery done without a BOL complies with statutory provisions or through customs (Baughen 2015).

Exceptions for liability for releasing goods without a bill of lading

The issue in relation to delivery without bill of lading is not dealt with the expressly by either The Hague or The Hague-Visby Rules.  Therefore the provisions in relation to delivery of goods without the bill of lading is dealt by provisions contained in domestic law (Davies & Dickey 2016).

In the case of Kuwait Petroleum Corp. v. O & D Oil Carriers (The Houda) [1994] 2 Lloyd’s Rep. 541 at 550 to 552, 556 it had been stated by Leggatt LJ that were delivery is made by the carrier without the production of bill of lading it accounts to a breach of contract even in situation where it has been made to the person who was entitled to the possession.

In the case of Hai Tong Bank Ltd. V. Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114 it had been stated by the court that where delivery has been made by the carrier without the production of a bill of lading then the carrier would deemed to have the liability for violation of the contract terms and conversion of goods.

In the case of Yuehai v. Cangma [1996] it had been held by the court that the liability where goods have been delivered without a proper bill of lading is a contractual liability rather than a tortuous liability.

In the given situation it has been provided that ABC Line Limited has released  the goods which had been shipped by Backyard Poultry, without a bill of lading. The goods have been released to a person who represented himself as the agent of the coassignee Kai Bo Supermarket. However it has been discovered that the another person has appeared with the bill of lading representing himself as the agent of the coassignee. It has been provided by the principles of The Houda case, that a carrier does not have the right to release the goods to the coassignee where there has been no production of the BOL. Thus in the given situation it was the duty of ABC Line ltd to not release the goods without the bill of lading even where the person who represented himself as the agent of Kai Bo Supermarket was their actual agent.

Applying the principles of the case of Hai Tong Bank Ltd. V. Rambler Cycle Co. Ltd which states that the where delivery has been made by the carrier without the production of a bill of lading then the carrier would deemed to have the liability for violation of the contract terms and conversion of goods it can be derived that ABC Line Ltd has violated the terms of the contract by releasing the goods without the bill of lading. Thus they have to be subjected to contractual liability and would have to pay damages to Kai Bo Supermarket. Their contractual liability can further be confirmed through the application of the Yuehai v. Cangma case where it was made clear that the situation where goods have been delivered without a proper bill of lading is a contractual liability rather than a tortuous liability. Thus in the court of law if the case is trialed then ABC Line Ltd would have to pay damages to Kai Bo Supermarket for the loss incurred by them.

The exceptions which are provided against the liability of releasing goods without a Bill of lading would not be applicable in this case. As per The Sormovskiy 3068 case as there was no such custom in the industry where goods could be released without a bill of lading the exception would not be applied in the given situation. In addition it is also not provided that the co assigner  has in any situation authorized the release of goods without the production of a proper bill of lading. In this case further there is a clear relationship between the loss incurred by Kai Bo Supermarket and the act of ABC line Ltd to release the goods without the BOL. If the goods were not released without the BOL then Kai Bo Supermarket would have not incurred losses in relation to another contract when they had with a different company to supply such goods to them. Thus the defense of lack of causation will also not be applicable in this case and ABC line limited would be held liable for the breach of their contractual duties under the existing legal provisions. Further there was no statutory authorization for releasing the goods without the bill of landing and therefore no defense is available to ABC Line Ltd.

Conclusion

Thus from the above discussion it can be concluded that if the matter is trialed before the court then ABC line Ltd would be subjected to contractual liability and will have to pay damages to Kai Bo Supermarket.

References

Baughen, S 2015, Shipping law, 6th edn, Routledge, London, pp. 3–14

Carriage of Goods by Sea Act 1991

Carriage of Goods by Sea Regulations 1998

Davies, M & Dickey, A 2016, Shipping law, 4th edn, Lawbook Co., New South Wales, pp. 203–366.

Hai Tong Bank Ltd. V. Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114

Kuwait Petroleum Corp. v. O & D Oil Carriers (The Houda) [1994] 2 Lloyd’s Rep. 541 at 550 to 552, 556

SYEMGAS FZCO AND OTHERS V SUPERIOR PESCADORES SA [2016] EWCA Civ 101

The Sormovskiy 3068 (1994) 2 LLR 266

White, M 2014, Australian maritime law, 3rd edn, Federation Press, Sydney, pp. 161–233

Wilson, JF 2010, Carriage of goods by sea, 7th edn, Pearson Education Limited, Essex, pp. 215–229

Yuehai v. Cangma [1996]