CMI - SINGAPORE

A carrier who transports certain goods is only the bailee of these goods. Unless the goods may have been abandoned, always a person exists who must be regarded to be in control of the goods.

The legal basis of such control may vary. The person in control may be the owner of the goods, a pledgee, or any other person with certain rights as against the goods. Two relevant examples are: A seller may under a sales contract have reserved ‘the right of disposal’ of the goods until certain conditions are fulfilled. The goods remain its property after delivery to the buyer until the condition, e.g. payment of the goods, is fulfilled. Also, a seller may have the ‘right of stoppage in transit’, i.e. the right of the unpaid seller who has transferred the ownership of the goods to his purchaser, to resume possession of the said goods during their transit to the agreed place of delivery. This right is restricted to specific circumstances, such as insolvency of the buyer7 (See Vienna Sales Convention, Article 71, sec. 2.)

These rights as against the goods, which certain persons may have on a statutory or contractual basis other than pursuant to the contract of carriage, should be exercisable under the contract of carriage by these persons. In other words, these rights have to be "translated" into certain rights under the contract of carriage.

Another matter is that certain persons under the contract of carriage itself must be regarded as being entitled to give the carrier specific instructions relating the carriage and/or the delivery of the goods. Examples of these are the instruction to carry the goods at a certain temperature or to deliver them at a certain point of time at the premises of the consignee.

The giving of instructions of this kind to the carrier may be in accordance with the terms and conditions of the contract of carriage. In other words, the following up of these instructions is part of his normal performance of the contract of carriage. However, they may also fall outside that scope. A request to deliver the goods at another place of destination is clearly a request to amend the contract of carriage itself. Same applies to a request to split a consignment during its carriage and to deliver the parts of it to different persons.

From the above it may be concluded that in various senses a variation exists in respect of the underlying reasons of the wish to instruct the carrier, which may result in different legal consequences. Therefore, control of the goods during their carriage is an issue which has to be dealt with under transport law.

The existing maritime conventions are silent about the right of control. Practices that have developed under the bill of lading system may have been the reason that in the past no urgent need was felt. However, with the growing use of non-negotiable documents in maritime carriage and, in future, probably carriage without documents at all, in a new instrument rules have to be developed covering this issue.8

The right of control may be defined as follows:

10.1

(a) The right of control of the goods during the carriage means the right under the contract of carriage to instruct the contracting carrier in respect of these goods during the period of its responsibility as referred to in 3.1. Such right to instruct the contracting carrier may include:

(i) the demand of delivery of the goods before their arrival at the place of destination;

(ii) the substitution of the consignee for any other person including the person who exercises the right of control;

(iii) any other instruction which qualifies as a variation of the contract of carriage;

(iv) to give or to modify instructions in respect of the goods in accordance with the terms and conditions of the contract of carriage.

(b) The person in possession of the right of control is entitled to transfer its right to another person. Unless a negotiable transport document is issued, the transferor shall give due notice to the contracting carrier of any such transfer.

As to the terminology, it is preferred to use the term ‘right of control’9. The carrier has the actual control of the goods as a bailee. Here, the legal control of the goods is the essence. It must be emphasised that this right of control, as referred to in the above article, is a right under the contract of carriage.

Where there exists an actual carrier and a contractual carrier, the addressee of the instructions is the contractual carrier. If and to the extent required by the nature of the instruction, a contractual carrier has to pass on the instruction to the actual carrier.

The instructions referred to under (i) and (ii) are typically those which are needed under the contract of carriage by the person who is in control of the goods during their transport under a contract of sale or pledge. The ‘delivery of the goods before their arrival at the place of destination’ is the "translation" of ‘the right to stop the goods in transit’ into transport law terms. The instruction to substitute the consignee means that the stopped goods can be delivered to another person than the original consignee. It may be expected that these two instructions will be used in conjunction. Taken together, they form the minimum requirement for the execution under the contract of carriage of the control of the goods that may exist under the sales contract. Under the circumstances, it may be desirable to add further instructions, such as to temporarily store the goods (in an intermediate port or at the place of destination) or to return the goods to the place of their origin. These further instructions are covered under (iii).

All these instructions (i), (ii) and (iii) qualify as variations of the contract of carriage. However, because of their special functions under the contract of sale, instructions (i) and (ii) have to be followed up by the carrier, provided that certain conditions are met (see 10.3, (a), below).

The instructions under (iv) are the ‘normal’ instructions under a contract of carriage, of which examples already are given above.

10.1(b) gives the rule that the right of control may be transferred. A consignee who pays for the goods may wish to acquire the right of control upon such payment. Also a bank may need of the right of control if it is the pledgee of the goods.

In the event of a non-negotiable document the transfer of the right of control will normally take place through assignment of this right. In the case of a negotiable document this right will be transferred when the document is endorsed and transferred.

The next question is who holds the right of control under the contract of carriage. Here, a distinction has to be made whether a negotiable transport document has been issued or not.

10.2

(a) When no negotiable transport document is issued,

(i) the contracting shipper and the consignee may agree who will hold the right of control, of which agreement the contracting carrier shall be given due notice by the shipper;

(ii) in the absence of such specific agreement, the contracting shipper holds the right of control as well as the consignee as from the moment such consignee under the applicable national law may have become a party to the contract of carriage;

(iii) in the event both the contracting shipper and the consignee hold the right of control, any instruction referred to in 10.1, (a), (i), (ii) and (iv) given by the consignee is subject to any earlier or later instruction to the contrary given by the contracting shipper; any instruction referred to in 10.1, (a). (iii) given by the consignee requires the consent of the contracting shipper before the carrier is allowed to carry out such instruction;

(iv) any person holding the right of control shall on request of the carrier produce proper identification.

(b) When a negotiable transport document is issued, the holder of that document is the exclusive person entitled to exercise the right of control. On request of the carrier he shall produce the negotiable document to the carrier. In the event that more than one original of the negotiable document is issued, all originals shall so be produced.

The starting point is that the right of control is a contractual matter. Parties are free to determine who will have the right to control the goods during their carriage. In the event the goods have been paid for and the ownership of them has been transferred to the consignee upon loading of the goods, the transport document may state that the right of control is in the hands of the consignee. And if during the carriage the goods will be paid for by the consignee, he may wish the right of control transferred to him.

It is obvious that the contracting carrier should be made aware which person is in control, either right from the beginning of the carriage or as from any stage during the carriage. It should be left to the parties how to effect this.

When no specific agreement is made, the contracting shipper is the person who should be in control of the goods. He may need this control as long as the goods are in the custody of the carrier. Not uncommon is the instruction to the carrier not to deliver the goods before the carrier has received the consent thereto from a third party, e.g. a bank that first must confirm that the goods have been paid for. Same applies to an instruction in respect of climate or temperature conditioned goods that these should not be delivered before a certain point in time or before the goods have reached a certain condition. These kind of instructions ‘not to deliver before’, which may run parallel with certain corresponding rights or obligations of the seller under the contract of sale, should not be frustrated by any action of the consignee.

On the other hand, a consignee may wish to give the carrier instructions on delivery, which may require a certain lead-time from the carrier. This desirability has found recognition in the CMR Convention10 and in some national laws, where the shipper looses its right of control in favour of the consignee upon the latter becoming a party to the contract. In these jurisdictions the consignee may become a party by claiming the goods when they have arrived at the place of destination.

In the above draft the compromise has been devised that both the shipper and the consignee (the latter only if and from the moment that national law may attribute such right to it by becoming a party to the contract of carriage) may have the right of control, supplemented with a priority rule11. Contracting shippers’ instructions must have priority when they conflict with actions of a consignee.

With such a rule, the shipper is assured that an essential instruction given by it cannot be frustrated by the consignee, while a consignee, who under the applicable national law may be entitled to give instructions to the carrier, can do so as long as the shipper will not resist.

Obviously, this system applies only to those instructions which a carrier is obliged to follow up. If any instruction would lead to a genuine modification of the contract of carriage, such has to be agreed by the parties to the contract, including the shipper.

The draft has not taken over the requirement of e.g. CMR and COTIF-CIM Conventions, that the person wishing to exercise his right of control, has to identify himself by showing a certain copy of the transport document. No legal need exists for such specific manner of identification. To follow the CMR and COTIF-CIM requirements in this respect, would be against the current practice in maritime transport and, additionally, in view of all modern communication techniques available, an outdated manner of identification as well.

10.2(b) follows the established rules and practices relating to the right of control when a negotiable transport document is issued.

The requirement that the full set of originals has to be produced, means that, when one original is carried on board, the shipper is in control as long as he possesses the other originals. The original on board is deemed to be carried on behalf of the shipper. When in such event the shipper has parted with the other originals, or the various originals may have come into the hands of different persons, the result is that nobody under the contract of carriage is in (legal) control of the goods anymore.

Also, a seller who under article 71, (2), of the Vienna Sales Convention has the right to stop the goods in transit, is not able to exercise that right under the contract of carriage after it has parted with (any original of) the negotiable transport document(s). It will have to seek other means to prevent delivery of the goods by the carrier, e.g. through timely attachment of the goods.

10.3

(a) The carrier shall follow up any instruction as referred to in 10.1, (a), (i), (ii) and (iv), provided that the execution of such instruction is reasonably possible at the moment that it reaches the person under a duty to perform it, does not interfere with the normal operations of the carrier or result in damages to the carrier or any person interested in other goods carried on the same voyage. The following up of any instruction as referred to in 10.1, (a), (iii), will be subject to agreement of the parties to the contract of carriage.

(b) The execution of any instruction by the carrier may not result in any additional expenses, loss or damage to the carrier or to any other person interested in other goods carried on the same voyage. The person giving instruction to the carrier shall indemnify the carrier or such other person against any such additional expenses, loss or damage, if they nevertheless occur.

(c) In the event a negotiable transport document is issued, any instruction as referred to in 10.1, (a), (i), (ii) and (iii) shall be stated in that document.

The functional relation between the contract of carriage and the contract of sale and related contracts carries with it that a carrier, in principle, must comply with the demand to deliver to the goods before they have reached their destination. Same applies to the request to substitute the consignee for another person. A carrier will have to submit to these variations of the contract of carriage, because they are essential elements of the legal control of the goods.

The carrier has to satisfy any instruction ‘in accordance with the terms and conditions of the contract of carriage’ for quite another reason. A carrier must be deemed to have agreed to this kind of instruction when he concluded the contract of carriage.

Certain conditions precedent, of a mainly operational nature, apply to both types of instructions. The conventions, mentioned in footnote 8, include similar conditions precedent. It follows that, if these conditions cannot be met, a carrier is not obliged to carry out the instruction and it should advise the person giving such instruction accordingly.

The third category of instructions mentioned in 10.3.a relates to a straight variation of the contract of carriage. Like any contract variation, the carrying out of these instructions, including any conditions as appropriate in the circumstances, has to be agreed between the parties to the contract.

10.3(b) is a general provision which should be applicable to any instruction given to the carrier during a voyage. The other transport conventions include comparable provisions.

10.3(c) gives a rule aimed at the protection of third party holders of a negotiable transport document. These holders, generally, must be able to rely on the contents of the document. Therefore, any amendment of the contract of carriage has to be reflected in the negotiable document.

A similar rule is not given for non-negotiable documents. The evidentiary status of such a document is different. In addition, the person giving the instruction may not possess the document. Further, it may be expected that any instruction is either given in writing or confirmed in writing. Therefore, it is submitted that no need exists to provide for a specific evidentiary rule when the contract of carriage is laid down in a non-negotiable document.

10.4 Goods that are delivered pursuant to 10.1, are deemed to be delivered at the place of destination and the provisions relating to such delivery, as laid down in chapter 9, are applicable to these goods as well.

The carrying out of the instructions may result in a delivery of the goods otherwise than originally intended. For avoidance of doubt, it seems useful to provide that the general provisions relating to delivery are applicable to such extraordinary delivery as well.

Finally, this chapter should include a draft provision relating to the issue to which person a carrier should address itself in the event that he needs some instruction from the cargo side in respect of the goods. This matter is related to the question how the carrier can find the person to which it is entitled to deliver the goods, which question, in particular when a negotiable document is issued, requires further discussion before appropriate provisions can be drafted. Therefore, for the time being, a provision on this matter is left out.





		10 Right of Control A carrier who transports certain goods is only the bailee of these goods. Unless the goods may have been abandoned, always a person exists who must be regarded to be in control of the goods. The legal basis of such control may vary. The person in control may be the owner of the goods, a pledgee, or any other person with certain rights as against the goods. Two relevant examples are: A seller may under a sales contract have reserved ‘the right of disposal’ of the goods until certain conditions are fulfilled. The goods remain its property after delivery to the buyer until the condition, e.g. payment of the goods, is fulfilled. Also, a seller may have the ‘right of stoppage in transit’, i.e. the right of the unpaid seller who has transferred the ownership of the goods to his purchaser, to resume possession of the said goods during their transit to the agreed place of delivery. This right is restricted to specific circumstances, such as insolvency of the buyer7 (See Vienna Sales Convention, Article 71, sec. 2.) These rights as against the goods, which certain persons may have on a statutory or contractual basis other than pursuant to the contract of carriage, should be exercisable under the contract of carriage by these persons. In other words, these rights have to be "translated" into certain rights under the contract of carriage. Another matter is that certain persons under the contract of carriage itself must be regarded as being entitled to give the carrier specific instructions relating the carriage and/or the delivery of the goods. Examples of these are the instruction to carry the goods at a certain temperature or to deliver them at a certain point of time at the premises of the consignee. The giving of instructions of this kind to the carrier may be in accordance with the terms and conditions of the contract of carriage. In other words, the following up of these instructions is part of his normal performance of the contract of carriage. However, they may also fall outside that scope. A request to deliver the goods at another place of destination is clearly a request to amend the contract of carriage itself. Same applies to a request to split a consignment during its carriage and to deliver the parts of it to different persons. From the above it may be concluded that in various senses a variation exists in respect of the underlying reasons of the wish to instruct the carrier, which may result in different legal consequences. Therefore, control of the goods during their carriage is an issue which has to be dealt with under transport law. The existing maritime conventions are silent about the right of control. Practices that have developed under the bill of lading system may have been the reason that in the past no urgent need was felt. However, with the growing use of non-negotiable documents in maritime carriage and, in future, probably carriage without documents at all, in a new instrument rules have to be developed covering this issue.8 The right of control may be defined as follows: 10.1 (a) The right of control of the goods during the carriage means the right under the contract of carriage to instruct the contracting carrier in respect of these goods during the period of its responsibility as referred to in 3.1. Such right to instruct the contracting carrier may include: (i) the demand of delivery of the goods before their arrival at the place of destination; (ii) the substitution of the consignee for any other person including the person who exercises the right of control; (iii) any other instruction which qualifies as a variation of the contract of carriage; (iv) to give or to modify instructions in respect of the goods in accordance with the terms and conditions of the contract of carriage. (b) The person in possession of the right of control is entitled to transfer its right to another person. Unless a negotiable transport document is issued, the transferor shall give due notice to the contracting carrier of any such transfer. As to the terminology, it is preferred to use the term ‘right of control’9. The carrier has the actual control of the goods as a bailee. Here, the legal control of the goods is the essence. It must be emphasised that this right of control, as referred to in the above article, is a right under the contract of carriage. Where there exists an actual carrier and a contractual carrier, the addressee of the instructions is the contractual carrier. If and to the extent required by the nature of the instruction, a contractual carrier has to pass on the instruction to the actual carrier. The instructions referred to under (i) and (ii) are typically those which are needed under the contract of carriage by the person who is in control of the goods during their transport under a contract of sale or pledge. The ‘delivery of the goods before their arrival at the place of destination’ is the "translation" of ‘the right to stop the goods in transit’ into transport law terms. The instruction to substitute the consignee means that the stopped goods can be delivered to another person than the original consignee. It may be expected that these two instructions will be used in conjunction. Taken together, they form the minimum requirement for the execution under the contract of carriage of the control of the goods that may exist under the sales contract. Under the circumstances, it may be desirable to add further instructions, such as to temporarily store the goods (in an intermediate port or at the place of destination) or to return the goods to the place of their origin. These further instructions are covered under (iii). All these instructions (i), (ii) and (iii) qualify as variations of the contract of carriage. However, because of their special functions under the contract of sale, instructions (i) and (ii) have to be followed up by the carrier, provided that certain conditions are met (see 10.3, (a), below). The instructions under (iv) are the ‘normal’ instructions under a contract of carriage, of which examples already are given above. 10.1(b) gives the rule that the right of control may be transferred. A consignee who pays for the goods may wish to acquire the right of control upon such payment. Also a bank may need of the right of control if it is the pledgee of the goods. In the event of a non-negotiable document the transfer of the right of control will normally take place through assignment of this right. In the case of a negotiable document this right will be transferred when the document is endorsed and transferred. The next question is who holds the right of control under the contract of carriage. Here, a distinction has to be made whether a negotiable transport document has been issued or not. 10.2 (a) When no negotiable transport document is issued, (i) the contracting shipper and the consignee may agree who will hold the right of control, of which agreement the contracting carrier shall be given due notice by the shipper; (ii) in the absence of such specific agreement, the contracting shipper holds the right of control as well as the consignee as from the moment such consignee under the applicable national law may have become a party to the contract of carriage; (iii) in the event both the contracting shipper and the consignee hold the right of control, any instruction referred to in 10.1, (a), (i), (ii) and (iv) given by the consignee is subject to any earlier or later instruction to the contrary given by the contracting shipper; any instruction referred to in 10.1, (a). (iii) given by the consignee requires the consent of the contracting shipper before the carrier is allowed to carry out such instruction; (iv) any person holding the right of control shall on request of the carrier produce proper identification. (b) When a negotiable transport document is issued, the holder of that document is the exclusive person entitled to exercise the right of control. On request of the carrier he shall produce the negotiable document to the carrier. In the event that more than one original of the negotiable document is issued, all originals shall so be produced. The starting point is that the right of control is a contractual matter. Parties are free to determine who will have the right to control the goods during their carriage. In the event the goods have been paid for and the ownership of them has been transferred to the consignee upon loading of the goods, the transport document may state that the right of control is in the hands of the consignee. And if during the carriage the goods will be paid for by the consignee, he may wish the right of control transferred to him. It is obvious that the contracting carrier should be made aware which person is in control, either right from the beginning of the carriage or as from any stage during the carriage. It should be left to the parties how to effect this. When no specific agreement is made, the contracting shipper is the person who should be in control of the goods. He may need this control as long as the goods are in the custody of the carrier. Not uncommon is the instruction to the carrier not to deliver the goods before the carrier has received the consent thereto from a third party, e.g. a bank that first must confirm that the goods have been paid for. Same applies to an instruction in respect of climate or temperature conditioned goods that these should not be delivered before a certain point in time or before the goods have reached a certain condition. These kind of instructions ‘not to deliver before’, which may run parallel with certain corresponding rights or obligations of the seller under the contract of sale, should not be frustrated by any action of the consignee. On the other hand, a consignee may wish to give the carrier instructions on delivery, which may require a certain lead-time from the carrier. This desirability has found recognition in the CMR Convention10 and in some national laws, where the shipper looses its right of control in favour of the consignee upon the latter becoming a party to the contract. In these jurisdictions the consignee may become a party by claiming the goods when they have arrived at the place of destination. In the above draft the compromise has been devised that both the shipper and the consignee (the latter only if and from the moment that national law may attribute such right to it by becoming a party to the contract of carriage) may have the right of control, supplemented with a priority rule11. Contracting shippers’ instructions must have priority when they conflict with actions of a consignee. With such a rule, the shipper is assured that an essential instruction given by it cannot be frustrated by the consignee, while a consignee, who under the applicable national law may be entitled to give instructions to the carrier, can do so as long as the shipper will not resist. Obviously, this system applies only to those instructions which a carrier is obliged to follow up. If any instruction would lead to a genuine modification of the contract of carriage, such has to be agreed by the parties to the contract, including the shipper. The draft has not taken over the requirement of e.g. CMR and COTIF-CIM Conventions, that the person wishing to exercise his right of control, has to identify himself by showing a certain copy of the transport document. No legal need exists for such specific manner of identification. To follow the CMR and COTIF-CIM requirements in this respect, would be against the current practice in maritime transport and, additionally, in view of all modern communication techniques available, an outdated manner of identification as well. 10.2(b) follows the established rules and practices relating to the right of control when a negotiable transport document is issued. The requirement that the full set of originals has to be produced, means that, when one original is carried on board, the shipper is in control as long as he possesses the other originals. The original on board is deemed to be carried on behalf of the shipper. When in such event the shipper has parted with the other originals, or the various originals may have come into the hands of different persons, the result is that nobody under the contract of carriage is in (legal) control of the goods anymore. Also, a seller who under article 71, (2), of the Vienna Sales Convention has the right to stop the goods in transit, is not able to exercise that right under the contract of carriage after it has parted with (any original of) the negotiable transport document(s). It will have to seek other means to prevent delivery of the goods by the carrier, e.g. through timely attachment of the goods. 10.3 (a) The carrier shall follow up any instruction as referred to in 10.1, (a), (i), (ii) and (iv), provided that the execution of such instruction is reasonably possible at the moment that it reaches the person under a duty to perform it, does not interfere with the normal operations of the carrier or result in damages to the carrier or any person interested in other goods carried on the same voyage. The following up of any instruction as referred to in 10.1, (a), (iii), will be subject to agreement of the parties to the contract of carriage. (b) The execution of any instruction by the carrier may not result in any additional expenses, loss or damage to the carrier or to any other person interested in other goods carried on the same voyage. The person giving instruction to the carrier shall indemnify the carrier or such other person against any such additional expenses, loss or damage, if they nevertheless occur. (c) In the event a negotiable transport document is issued, any instruction as referred to in 10.1, (a), (i), (ii) and (iii) shall be stated in that document. The functional relation between the contract of carriage and the contract of sale and related contracts carries with it that a carrier, in principle, must comply with the demand to deliver to the goods before they have reached their destination. Same applies to the request to substitute the consignee for another person. A carrier will have to submit to these variations of the contract of carriage, because they are essential elements of the legal control of the goods. The carrier has to satisfy any instruction ‘in accordance with the terms and conditions of the contract of carriage’ for quite another reason. A carrier must be deemed to have agreed to this kind of instruction when he concluded the contract of carriage. Certain conditions precedent, of a mainly operational nature, apply to both types of instructions. The conventions, mentioned in footnote 8, include similar conditions precedent. It follows that, if these conditions cannot be met, a carrier is not obliged to carry out the instruction and it should advise the person giving such instruction accordingly. The third category of instructions mentioned in 10.3.a relates to a straight variation of the contract of carriage. Like any contract variation, the carrying out of these instructions, including any conditions as appropriate in the circumstances, has to be agreed between the parties to the contract. 10.3(b) is a general provision which should be applicable to any instruction given to the carrier during a voyage. The other transport conventions include comparable provisions. 10.3(c) gives a rule aimed at the protection of third party holders of a negotiable transport document. These holders, generally, must be able to rely on the contents of the document. Therefore, any amendment of the contract of carriage has to be reflected in the negotiable document. A similar rule is not given for non-negotiable documents. The evidentiary status of such a document is different. In addition, the person giving the instruction may not possess the document. Further, it may be expected that any instruction is either given in writing or confirmed in writing. Therefore, it is submitted that no need exists to provide for a specific evidentiary rule when the contract of carriage is laid down in a non-negotiable document. 10.4 Goods that are delivered pursuant to 10.1, are deemed to be delivered at the place of destination and the provisions relating to such delivery, as laid down in chapter 9, are applicable to these goods as well. The carrying out of the instructions may result in a delivery of the goods otherwise than originally intended. For avoidance of doubt, it seems useful to provide that the general provisions relating to delivery are applicable to such extraordinary delivery as well. Finally, this chapter should include a draft provision relating to the issue to which person a carrier should address itself in the event that he needs some instruction from the cargo side in respect of the goods. This matter is related to the question how the carrier can find the person to which it is entitled to deliver the goods, which question, in particular when a negotiable document is issued, requires further discussion before appropriate provisions can be drafted. Therefore, for the time being, a provision on this matter is left out.