RIGHTS UNDER BILLS OF LADING: TRAWLING THROUGH SINGAPORE WATERS

Citation(2006) 18 SAcLJ 629
Date01 December 2006
Published date01 December 2006

This paper examines the Singapore case law on the proprietary and possessory rights of bill of lading holders and the transfer of contractual rights under the Bills of Lading Act (Cap 384, 1994 Rev Ed).

I. Introduction

1 As Singapore is a major international shipping hub, it is not surprising that many important and some arcane issues of shipping law have exercised the Singapore courts. In dealing with some of these issues, the Singapore courts have broken new ground, particularly in relation to the enforcement of rights under a bill of lading which has been described as one of the pillars of international trade.1 Undoubtedly, the three functions of the bill of lading as a document of title,2 a receipt for goods and evidence of the contract of carriage are responsible for its importance in international trade.3

2 At this juncture, it is relevant to point out that rights under a bill of lading derive from its contractual aspects and from it being a

document of title.4 As the negotiable bill of lading is a document of title to the goods described in it, its indorsement and transfer passes the property or other interest in the goods if such is the intention underlying the indorsement and transfer.5 Where the indorsement and transfer of such a bill of lading are accomplished in compliance with the statutory requirements, which are set out in the Bills of Lading Act (Cap 384, 1994 Rev Ed) (“BLA”), the indorsee obtains contractual rights against the carrier.

3 This paper trawls the plethora of cases decided by the Singapore courts to highlight those which deal with the contractual, possessory and proprietary rights arising from the issuance and transfer of a bill of lading. These rights will be examined under two broad heads, namely, (a) rights of shippers; and (b) rights of transferees.

II. Rights of shippers

4 Writing in 1954, Devlin J (as he then was) observed that the contract of carriage is always concluded before the bill of lading, which evidences its terms, is actually issued.6 It is axiomatic that the shipper’s contractual rights depend on the particular terms of the contract of carriage, for example whether the carrier has agreed to undertake the tasks of loading and stowing the cargo.7 The shipper loses his contractual

rights of suit against the carrier when the bill of lading issued to the shipper has been indorsed and transferred to another person in circumstances such that the other person becomes a lawful holder of the bill of lading. This is due to the operation of s 2(1) read with s 2(5)(a) of the BLA.8

5 It is not the intention of this paper to consider the shipper’s right to require the carrier to perform the contract of carriage in accordance with its terms (whether they be standard terms or particular one-off terms).9 This paper examines the general contractual rights accruing to the shipper upon the issuance of the bill of lading to him and these rights are considered below.

A. Right to rely on bill of lading as a contractual document

6 The shipper has the right to rely on the bill of lading as evidence of the contract of carriage. In the words of Wee Chong Jin CJ in National Jaya (Pte) Ltd v Hong Tat Marine Shipping Pte Ltd,10“the bill of lading issued by [a shipowner] and accepted by [a shipper] is evidence of the contract of carriage of goods by sea entered into by the parties”.

7 In this regard, while the bill of lading constitutes the best evidence11 of the terms of the contract of carriage as between the shipowner and the shipper, it remains open to the parties to show that the terms of the contract of carriage are not found in the bill of lading as it is generally the case that the bill of lading is issued after the making of the contract of carriage.12

8 The fact that the bill of lading is not immediately issued at the time of the shipment does not prevent the bill of lading from being relied on as evidencing the terms of the contract of carriage. The case in point is Rapiscan Asia Pte Ltd v Global Container Freight Pte Ltd13 where Rajendran J held that when parties entered into a contract of carriage in the expectation that a bill of lading would be issued to cover it, they entered into it upon those terms which they knew or expected the bill of lading to contain.14

9 In the case of a bill of lading issued for the shipment of goods on board a chartered vessel, whether or not such a bill of lading evidences a contract of carriage between the shipper and the shipowner depends on a proper construction of the bill of lading. This was made clear in The Arktis Sky15 where the High Court held that bills of lading issued to the shipper evidenced a contract of carriage between the shipowners and the shipper. The court came to this conclusion as it found that the time charterer’s agent signed the bill of lading with the authorisation of the shipowners and there was an identity of carrier clause in the bills of lading.

10 However, a bill of lading issued to a voyage charterer who has shipped goods on the chartered vessel is only evidence of the receipt of the goods. Such a bill of lading does not evidence the contract of carriage between the voyage charterer and the shipowner as the voyage charterparty is the contract of carriage. If authority is needed for this proposition, it may be found in the decision of the High Court in BNP Paribas v Bandung Shipping Pte Ltd.16

11 Where goods have been shipped under a house bill of lading17 issued by a freight forwarder on terms that it undertakes the carriage of the goods, the subsequent issuance of a bill of lading by the disponent owner of the carrying vessel to cover the earlier shipment of goods does not have any contractual effect vis-à-vis the shipper of the goods. In such a situation, the contract of carriage is made between the freight forwarder and the shipper as evidenced by the terms of the former’s house bill of lading.18 This occurred in Ocean Projects Inc v Ultratech Pte Ltd19 where the Court of Appeal held that the disponent owner could not rely on the lien clause in its bill of lading to assert a lien against the shipper as there was no contract of carriage between the disponent owner and the shipper.20

B. Right to take delivery of goods at port of delivery

12 The shipper to whom a bill of lading is issued has a contractual right to take delivery of the goods at the port of delivery on production of the relevant bill of lading.21 The shipper’s right arises from the carrier’s issuance of the bill of lading.22 In such a case, as the court pointed out in The Cherry,23“neither the owner of the cargo nor anyone else can insist on delivery of the cargo being made to him if he is unable to produce the bill of lading”.24 Thus a carrier that delivers goods to a person without requiring the person to surrender the original bill of lading acts in breach of its contractual obligation unless it is able to establish that the instructions on which it acted emanated from or were authorised by the shipper25who was at all material times the holder of the bill of lading.

13 Where a straight bill of lading has been issued to a shipper, the carrier is under a contractual obligation to deliver the goods at the port of delivery to the shipper on production of the straight bill of lading. The leading case for this proposition is the Singapore Court of Appeal’s decision in APL Co Pte Ltd v Voss Peer.26 In that case, the carrier issued a set of bills of lading with Voss named as “shipper”. The set of bills of lading bore the name of the buyer, Seohwan Trading Co in the box entitled “Consignee” but without the words “to order”. The bill of lading stated that there was a set of three originals and upon surrender of any one negotiable bill of lading properly indorsed all others stood void.27

Voss held all three sets of the original bill of lading because the buyer had yet to pay him for the balance of the purchase price.28 At Busan,29 the carrier delivered the goods to the consignee without requiring production of the straight bill of lading.30 Voss commenced action against the carrier for breach of the contract of carriage or breach of its duty as bailee, and/or in negligence for failure to exercise due care of the goods and failure to deliver the cargo against presentation of the original bill of lading and its wrongful delivery of the goods to Seohwan without production of the bill of lading.31

14 In the APL case, the carrier contended that under a straight bill of lading, it was required to deliver the goods to only the named consignee and no one else and further, such delivery could be made notwithstanding that the consignee did not produce the straight bill of lading.32 The Court of Appeal found the first proposition unexceptionable33 but disagreed with the second proposition. Chao Hick Tin JA (as he then was) who delivered the judgment of the court, said that the issue must be resolved on the basis of contract law and the intention of the parties. Noting that the parties had caused the bill of lading to be issued in a set of three originals in the form of a bill of lading (and not a sea waybill), his Honour concluded that the parties intended to retain all the other features of a bill of lading other than the characteristic of transferability.34 Accordingly, the parties intended for the straight bill of

lading to retain the other main characteristic of a bill of lading, viz, a document of title that has to be presented before delivery of the goods may be taken.35

15 Chao JA said that the fact that a straight bill of lading was not transferable (in the sense that its transfer did not operate as a transfer of the constructive possession of the goods),36 did not in itself mean that the carrier had no contractual obligation under such a bill of lading to deliver the goods only on production of the bill of lading.37 Hence the court in the APL case found the carrier liable to the shipper for breach of the contract...

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