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Gard News 185 -

The Hong Kong Commercial Court has recently had to consider the nature of straight bills of lading.

Straight bills
A straight bill of lading is a bill of lading which bears the name of the consignee, as opposed to the so-called “to order” bill of lading.

An article in Gard News issue No. 178 reviewed the position of straight bill of lading under English law in light of the House of Lords’ decision in the RAFAELA S case.1

It is typical for a bill of lading to contain an attestation clause:
In witness whereof, the carrier by its agents has signed three (3) original Bills of Lading all of this tenor and date, one of which being accomplished the others to stand void. One of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or delivery order.

This was the case with the RAFAELA S. In Gard News 178, readers were warned of the potential risk in delivering goods without presentation of a “straight” bill containing such an attestation.

Hong Kong
The issue of straight bills of lading has recently come up in two related actions decided by the Commercial Court in Hong Kong.2

The facts in the two Hong Kong cases are slightly different from those in the RAFAELA S, while being identical to each other in the following aspects. The bills of lading in both actions incorporated only the first limb of the full attestation clause (“In witness whereof, the carrier by its agents has signed three (3) original Bills of Lading all of this tenor and date, one of which being accomplished the others to stand void”) but did not mention that one of the bills must be surrendered in exchange for the goods. In each action the defendant carrier argued that such a clause did not impose upon the carrier the contractual obligation to deliver the goods upon production of an original bill of lading and that the usual presentation rule in “to order” bills of lading should not apply to straight bills.

The decision
The Hong Kong Court (Stone J) disagreed and relied on the previous English authority of the RAFAELA S and the Singapore Court of Appeal decision in Voss v APL.3 The court thought there should not be one rule for “order” bills and one rule for “straight” bills, and emphatically declined the proposition that straight bills should be treated as akin to sea waybills. The Singapore Court in the Voss case had also indicated that the rule requiring presentation of a straight bill as a pre-requisite for obtaining delivery had the advantage of simplicity of application and certainty, and would prevent confusion and avoid shipowners and their agents having to decide whether a bill of lading is a straight bill or an order bill.

It remains to be tested if clearer wording in the contract indicating that the original bill of lading is not required to be presented before delivery of goods will have a different effect to invalidate the usual presentation rule.

However, the defendant carrier succeeded in his defence on a different ground. He was able to rely on an exemption clause on the bill of lading to exclude liabilities after discharge of the goods.

These two Hong Kong cases are now under appeal. If the higher court reaches a different decision on the main issues then Gard News will let readers know. Any readers who are interested can refer to the Hong Kong judgments in full at the Hong Kong Department of Justice website: http://legalref.judiciary.gov.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=

1 MacWilliam Co Inc v The Mediterranean Shipping Co SA [2005] 1 Lloyd’s Rep 347.
2 Carewins Development (China) Limited v Bright Fortune Shipping Ltd and Carewins Development (China) Limited v Hecny Shipping Limited, HCCL 49 & 50/2004, 27th July 2006.
3 [2002] 2 Lloyds’s Rep 707. See article “Straight bills of lading – Not so straightforward” in Gard News issue No. 169.

Straight bills under Chinese law

Readers will recall that the article “Delivery of cargo carried under straight bills of lading – Developments in China” in Gard News issue No. 176 reported on a decision of the Chinese judiciary that in cases where the Maritime Code of the People’s Republic of China (PRC) was applicable, the Chinese courts should adopt the principle that cargo carried under bills of lading, including straight bills, should only be delivered against production of the original bill. That decision, however, is relevant to cases where Chinese law applies, and in a recent case the Chinese courts held that US law applied, which resulted in the carrier avoiding liability for delivering cargo without production of a straight bill. For further details see article “Chinese court applies US law in straight bill of lading case” in Gard News issue No. 182.



Gard News 185, February/April 2007

Any comments to this article can be e-mailed to the Gard News Editor.

Gard News is published quarterly by Gard AS, Arendal, Norway.