Tanker Bills of Lading

Bills of lading are governed by international conventions evolving over time. The legal complexity, the number of parties involved as well as the arcane nature of the business mean that you need to be comfortable with the ins and outs. In this article, Riverlake’s experts give you a practical approach.

A bill of lading has three main purposes

— Firstly, a bill of lading is a receipt of cargo issued by the carrier to the shipper of the goods. In the tanker industry, this is usually a “shipped” bill of lading, recording the fact that the cargo has been loaded onto a designated vessel.

— Secondly, the bill of lading provides evidence of the terms of the transportation contract. It is common to describe the bill of lading as evidencing the terms of carriage.

— Thirdly, the bill of lading is a title of goods. This is often the cause of issues as the bill of lading bears within it the concept of “negotiability”. As a document of title of the goods, it also serves as a guarantee for the seller and/or financier to secure payment of amounts due to them.

Modern bills of lading are frequently governed by the “Conventions of Carriage” or the so-called “COGSA”, i.e., the laws on transport of goods at sea of various countries which have incorporated one of the Conventions of Carriage in their national law.

In respect of tanker trades, the transport conventions refer to the Hague-Visby rules. The first convention was signed in Brussels in 1924 and is referred to as the Hague Rules. It was amended by the 1968 Protocol signed in The Hague and since then referred to as the Hague-Visby Rules. The most recent amendment was made by the 1979 Protocol.

This Convention has been further developed and some States have decided to ratify the Hamburg Rules (United Nations Convention on The Carriage Of Goods By Sea, 1978), entered into force on 1 November 1992 and most recently the United Nations adopted the Rotterdam Rules (2008) which have not yet entered into force.

The parties to a bill of lading contract are:

— the CARRIER – The party who undertakes to carry the cargo. Such a party will either be the registered owner, the charterer in the case of a bareboat charter, or the operator (usually in the case of a time charter) of the vessel.

— the SHIPPER – the entity that presents the cargo for shipment.

— the NOTIFY PARTY – this entity is typically identified on the bill of lading.

— the CONSIGNEE – usually the consignee identified on the bill of lading. 

— the ENDORSEE – the owner of the goods when they are handed over by the shipper.

Working with bills of lading necessarily involves familiarity with the bankers documentary credit practice. This practice is closely codified in the International Chamber of Shipping (ICC) document, Uniform Customs and Practice for Documentary Credits No. 600 (UCP 600) – 2010 revision.

A bill of lading invariably requires a signature on behalf of the carrier. The master is conventionally the person required to sign. This requirement can sometimes delay the departure of the vessel from the loading port. Now practice often provides that an agent signs on behalf of the carrier. This arrangement is commonly referred to as EDP, the Early Departure Procedure. This said, the carrier MUST ensure that the bill of lading truly and correctly reflects what has been loaded.

The widespread practice in international shipping is to have 3 original bills of lading signed. The signature is often followed by a statement that these multiple originals have been signed and that when one of them is “Accomplished”, the others become null and void.

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