CMI - SINGAPORE

11.1 In the event the carrier issues a negotiable transport document with the consent of the owner of the goods to the first holder, the carrier, after it has received these goods from the consignor, holds the goods in its custody for such holder.

The holder of a negotiable document (if more than one original has been issued, the holder of the full set of originals) is the person for which the carrier holds the goods. The owner of the goods must have allowed the carrier to issue the document. Without such, usually implicitly, given consent, the document cannot represent proprietary rights in the goods.

It should be noted that, in the event a document is issued by a carrier without the (implied) consent of the owner of the goods, a bona fide third party holder, which acquires the negotiable transport document in accordance with 11.2, usually enjoys a protection on the basis of the general rules under national law relating to the position of bona fide acquirers of unregistered assets. However, this matter is left to the applicable national law

11.2

11.2.1 The holder may transfer rights embodied in the negotiable transport document by passing such document to another person,

(i) if an order document, duly endorsed either to such other person or in blank, or,

(ii) if a bearer document or a blank endorsed document, without endorsement, or,

(iii) if a document made out to the order of a named party and the transfer is between the first holder and such named party, without endorsement.

This provision follows the general rules of transfer of rights embodied in negotiable documents.

11.2.2 The passing of a negotiable transport document to another person in accordance with 11.2.1 shall have the same effect with regard of proprietary rights in the goods, as would the passing of the goods themselves.

It is believed that this rule reflects the essence of the title function of a negotiable transport document.

11.2.3 The other person to which the document has been passed in accordance with 11.2.1 will become the holder for which the carrier will hold the goods in its custody as from the moment of passing of the document.

A person to whom the negotiable document has been transferred following the rules of transfer as stated in 11.2.1 will become the new holder. The carrier will hold the goods for it in the same manner as it held the goods for the previous holder.

11.3 The transfer of any proprietary rights in the goods, for which a negotiable transport document has been issued by the carrier with the consent of the owner of the goods, shall only take place concurrent with the passing of such document to the person who acquires these proprietary rights. However, the parties to the contract of carriage may agree otherwise, in which case such agreement has to be stated in the document [either explicitly or incorporated therein by reference], or must be part of the custom of the trade in the goods for which the negotiable document has been issued. In no event, such agreement may affect detrimentally the position of any later holder of such negotiable document, which had or could reasonably have had no knowledge of such agreement.

The first sentence of this provision reflects one of the essential elements of the system relating to negotiable transport documents. However, it is not part of mandatory law and, in practice, it frequently occurs that sellers and buyers deviate from the rule as laid down in the first sentence. Refer 9.4.2. Instead of using the bill of lading to transfer property in the goods, the traders provide letters of indemnity to each other, in which they guarantee that they possess title to the goods. In these cases, bills of lading usually refer to charterparties where it is agreed by the charterer and the carrier that the carrier must deliver the goods in the discharge port upon instruction of the charterer without the bill of lading being surrendered to the carrier by the person which acquires delivery of the goods. In some trades this practice has become customary. However, it should not be acceptable that in those trades where traders’ letters of indemnity are not customary, the agreed deviation from the main rule cannot be inferred from the bill of lading. Otherwise, the value of a bill of lading could be undermined too much. Additionally, the position of the innocent bill of lading holder has to be protected, but, on the other hand, among professional traders and/or their financing institutions, innocence should not too lightly be assumed.

11.4 Where the parties to a contract of carriage have made an agreement in accordance with 11.3 with the result that the delivery of the goods by the carrier at the place of destination takes place without the negotiable transport document being surrendered to the carrier, a holder, which becomes a holder after the carrier has delivered the goods to the consignee, or to a person entitled to these goods pursuant to any other contractual or other arrangement than the contract of carriage, [and, consequently, the document is no longer capable to transfer proprietary rights in the goods,] will only acquire rights under the contract of carriage if the passing of the document was effected in pursuance of contractual or other arrangements made before such delivery of the goods, unless such holder had or could reasonably have had no knowledge of such delivery.

This provision relates to situations referred to in 11.3. Where the parties have agreed that the negotiable document should not play a role in respect of delivery of the goods by the carrier, the question arises what after such delivery the value of the bill of lading still is. It frequently occurs that the bill of lading still has to go through a whole string of sellers and buyers which made their transactions during (or sometimes even before commencement of) the voyage. The above provision, which is based on a similar provision in UK COGSA 1992 (s.2.2), gives the rule that only these persons will acquire rights under the contract of carriage. Obviously, they will not acquire the right of delivery of the goods, because the goods already have been delivered in these cases.

However, again, the position of the innocent holder of the bill of lading has to be protected, reason why an exception should be made for the holder which is unaware of what in the real world happens.

11.5 The intermediate holder, which does not claim any right under the contract of carriage, does not assume any liability under the contract of carriage solely by reason of becoming a holder.

This provision complies with a general perception in the banking industry. It is not thought that a provision of this kind is statutory law in any country, however, it belongs to the functional realities of bill of lading practice. Only the UK COGSA 1992 includes this principle, but goes a lot beyond: any holder of a bill of lading who claims any right under the bill of lading automatically assumes all the shippers’ liabilities as well.

It should be noted that this provision does not exclude that, outside the contract of carriage, any liability may arise between the intermediate holder and the carrier. That may be the case e.g. if the carrier acts as a negotiorum gestor on account of the party interested in the goods.

11.6 In the case of a non-negotiable transport document, the general principle is that a carrier holds the goods on account of the shipper. The shipper is allowed to advise the carrier that it should hold the goods for another person. In particular in cases where the no traditional documentation has been issued, but the transport is carried out on the basis of electronic messages only, a provision that unless, or until the moment that, the contracting shipper advises the carrier that it should hold the goods in its custody for another person, in which case such other person may advise the carrier likewise and that any notice to the carrier of the transfer of the right of control shall be deemed to include the instruction to the carrier to hold the goods for the party which acquired the right of control, would create clarity.

It should be noted that the goods must be in the custody of the carrier. If the goods are stolen from the carrier, the ship has sunk, the carrier has transferred the goods to another person not under his control, etc., the holdership of the goods by the carrier has been terminated.

Such a provision would include a link with the transfer of the right of control. The carrier holds the goods for the shipper or the party, which directly or indirectly acquires the right of control from the shipper. It is important to realise that under such a provision a carrier would not hold the goods for a consignee, which might (under national law) be in possession of the right of control without having acquired this right directly or indirectly from the shipper.





		11 Transfer of rights 11.1 In the event the carrier issues a negotiable transport document with the consent of the owner of the goods to the first holder, the carrier, after it has received these goods from the consignor, holds the goods in its custody for such holder. The holder of a negotiable document (if more than one original has been issued, the holder of the full set of originals) is the person for which the carrier holds the goods. The owner of the goods must have allowed the carrier to issue the document. Without such, usually implicitly, given consent, the document cannot represent proprietary rights in the goods. It should be noted that, in the event a document is issued by a carrier without the (implied) consent of the owner of the goods, a bona fide third party holder, which acquires the negotiable transport document in accordance with 11.2, usually enjoys a protection on the basis of the general rules under national law relating to the position of bona fide acquirers of unregistered assets. However, this matter is left to the applicable national law 11.2 11.2.1 The holder may transfer rights embodied in the negotiable transport document by passing such document to another person, (i) if an order document, duly endorsed either to such other person or in blank, or, (ii) if a bearer document or a blank endorsed document, without endorsement, or, (iii) if a document made out to the order of a named party and the transfer is between the first holder and such named party, without endorsement. This provision follows the general rules of transfer of rights embodied in negotiable documents. 11.2.2 The passing of a negotiable transport document to another person in accordance with 11.2.1 shall have the same effect with regard of proprietary rights in the goods, as would the passing of the goods themselves. It is believed that this rule reflects the essence of the title function of a negotiable transport document. 11.2.3 The other person to which the document has been passed in accordance with 11.2.1 will become the holder for which the carrier will hold the goods in its custody as from the moment of passing of the document. A person to whom the negotiable document has been transferred following the rules of transfer as stated in 11.2.1 will become the new holder. The carrier will hold the goods for it in the same manner as it held the goods for the previous holder. 11.3 The transfer of any proprietary rights in the goods, for which a negotiable transport document has been issued by the carrier with the consent of the owner of the goods, shall only take place concurrent with the passing of such document to the person who acquires these proprietary rights. However, the parties to the contract of carriage may agree otherwise, in which case such agreement has to be stated in the document [either explicitly or incorporated therein by reference], or must be part of the custom of the trade in the goods for which the negotiable document has been issued. In no event, such agreement may affect detrimentally the position of any later holder of such negotiable document, which had or could reasonably have had no knowledge of such agreement. The first sentence of this provision reflects one of the essential elements of the system relating to negotiable transport documents. However, it is not part of mandatory law and, in practice, it frequently occurs that sellers and buyers deviate from the rule as laid down in the first sentence. Refer 9.4.2. Instead of using the bill of lading to transfer property in the goods, the traders provide letters of indemnity to each other, in which they guarantee that they possess title to the goods. In these cases, bills of lading usually refer to charterparties where it is agreed by the charterer and the carrier that the carrier must deliver the goods in the discharge port upon instruction of the charterer without the bill of lading being surrendered to the carrier by the person which acquires delivery of the goods. In some trades this practice has become customary. However, it should not be acceptable that in those trades where traders’ letters of indemnity are not customary, the agreed deviation from the main rule cannot be inferred from the bill of lading. Otherwise, the value of a bill of lading could be undermined too much. Additionally, the position of the innocent bill of lading holder has to be protected, but, on the other hand, among professional traders and/or their financing institutions, innocence should not too lightly be assumed. 11.4 Where the parties to a contract of carriage have made an agreement in accordance with 11.3 with the result that the delivery of the goods by the carrier at the place of destination takes place without the negotiable transport document being surrendered to the carrier, a holder, which becomes a holder after the carrier has delivered the goods to the consignee, or to a person entitled to these goods pursuant to any other contractual or other arrangement than the contract of carriage, [and, consequently, the document is no longer capable to transfer proprietary rights in the goods,] will only acquire rights under the contract of carriage if the passing of the document was effected in pursuance of contractual or other arrangements made before such delivery of the goods, unless such holder had or could reasonably have had no knowledge of such delivery. This provision relates to situations referred to in 11.3. Where the parties have agreed that the negotiable document should not play a role in respect of delivery of the goods by the carrier, the question arises what after such delivery the value of the bill of lading still is. It frequently occurs that the bill of lading still has to go through a whole string of sellers and buyers which made their transactions during (or sometimes even before commencement of) the voyage. The above provision, which is based on a similar provision in UK COGSA 1992 (s.2.2), gives the rule that only these persons will acquire rights under the contract of carriage. Obviously, they will not acquire the right of delivery of the goods, because the goods already have been delivered in these cases. However, again, the position of the innocent holder of the bill of lading has to be protected, reason why an exception should be made for the holder which is unaware of what in the real world happens. 11.5 The intermediate holder, which does not claim any right under the contract of carriage, does not assume any liability under the contract of carriage solely by reason of becoming a holder. This provision complies with a general perception in the banking industry. It is not thought that a provision of this kind is statutory law in any country, however, it belongs to the functional realities of bill of lading practice. Only the UK COGSA 1992 includes this principle, but goes a lot beyond: any holder of a bill of lading who claims any right under the bill of lading automatically assumes all the shippers’ liabilities as well. It should be noted that this provision does not exclude that, outside the contract of carriage, any liability may arise between the intermediate holder and the carrier. That may be the case e.g. if the carrier acts as a negotiorum gestor on account of the party interested in the goods. 11.6 In the case of a non-negotiable transport document, the general principle is that a carrier holds the goods on account of the shipper. The shipper is allowed to advise the carrier that it should hold the goods for another person. In particular in cases where the no traditional documentation has been issued, but the transport is carried out on the basis of electronic messages only, a provision that unless, or until the moment that, the contracting shipper advises the carrier that it should hold the goods in its custody for another person, in which case such other person may advise the carrier likewise and that any notice to the carrier of the transfer of the right of control shall be deemed to include the instruction to the carrier to hold the goods for the party which acquired the right of control, would create clarity. It should be noted that the goods must be in the custody of the carrier. If the goods are stolen from the carrier, the ship has sunk, the carrier has transferred the goods to another person not under his control, etc., the holdership of the goods by the carrier has been terminated. Such a provision would include a link with the transfer of the right of control. The carrier holds the goods for the shipper or the party, which directly or indirectly acquires the right of control from the shipper. It is important to realise that under such a provision a carrier would not hold the goods for a consignee, which might (under national law) be in possession of the right of control without having acquired this right directly or indirectly from the shipper.