The Bill of lading (BoL) has been the most important commercial document in the international carriage of goods by sea. However, although it has served well in the past, the document in its present state has been the subject of criticism. It is true that in recent years and with the advancement of technology, in particular the production of faster ships, specialised containers and the appearance of multi-modal transporters, alternatives to the BoL seem more attractive for certain types of goods.
First, the key functions performed by the bill of lading that render it essential, should be identified. The bill is a symbol of the goods in transit[1] and its possession entitles the lawful holder with control over them.[2] The bill also transmits all rights relating to the goods to the rightful holder. It evidences a contract of carriage by sea, by recording factual information[3] and communicating said information to subsequent transferees. Moreover, it acts as a proof of receipt for the carrier who receives it upon surrendering the goods.[4] Per Lord Justice Bowen, in Sanders Brothers v Maclean & Co, [5] the bill of lading is “a key which in the hands of a rightful owner is intended to unlock the door of the warehouse, floating or fixed, in which the goods may chance to be.”[6]
Bills of lading facilitate trade, as the holder is able use the bill as a security instrument, and is also able to trade the bill while the goods are on transit. A practice that is very common in the trade of commodities. It can be argued therefore that it is the bill’s role as a document of title that allows the BoL to play such a central part in international trade. Bills of lading may also be the basis for a letter of credit as a means of financing international sales contracts. It can be said therefore, that they also maintain a transferability function. Indeed, the bill of lading has become the cornerstone of sea carriage by virtue of these key functions.
An issue with the transferability function of BoLs is of course, malpractice. The main example being issuing of bills of lading in several originals and making out clean bills in exchange for a letter of indemnity or bank guarantees to complete delivery. Such malpractices could very well be leading businesses to look for alternatives. The alternatives, consist mainly of new forms of transport documents, aimed in solving the BoL’s impediments. Such an alternative, for instance a sea waybill would not however maintain the same legal status as a BoL.[7]
The greatest deficiency of the bill of lading is its paper nature. The speed of carriage of goods has increased so that ships are more liable to arrive at a discharge port before the necessary paperwork does. In a case of a contract of carriage, should delivery occur without a request to produce the bill of lading, the carrier will be in breach of contract.[8] However, should the bill of lading be unavailable at the time of delivery, there may still be a solution. In that case, other documentation given by the shipper can be provided by the consignee, or an indemnity may be paid, entitling the buyer to obtain the goods. As a response to this issue, there is a growing trend to modernize the BoL by exploiting the electronic transmission of information. The advantages in setting up a central electronic database for example that allows for the electronic manipulation and exchange of BoLs may prove to be significant in addressing the ‘bill’s current drawbacks. This could also be done in a decentralised platform using the block-chain technology. Nevertheless, BoLs are still widely used in any trade requiring the sale of goods during the voyage, mainly bulk cargo, such as oil, grain, ore and coal.
Considering the broad use of a BoL, mainly for its key function as a document of title, it appears we would be correct in recognising the bill’s denial to conform with the times and to catch up with the advancement of technology. However, the notion that it has lost its effectiveness to the extent that several business are in need of an alternative would seem incorrect, as all commercial needs are still being satisfied, albeit at a slower and less efficient than possible pace.
[1] The Delfini [1990] Lloyd’s Rep 252, 268
[2] s.2(1) COGSA 1992
[3] The Ardennes [1951] 1 KB 55, 59-60, per Goddard, LJ “It is, I think, well settled that a bill of lading is not in itself the contract between the shipowner and the shipper of goods, though it has been said to be excellent evidence of its terms”
[4] Art.4 Hague Visby Rules
[5] (1883) 11 QBD 327
[6] See n.4. at 341, as affirmed in J I MacWilliam Company Inc (Respondents) v. Mediterranean Shipping Company S A (Appellants) [2005] UKHL 11
[7] s.1(3) & s.5 COGSA 1992
[8]See n.1