H.M.Paperwork - Filling out the Forms!

Most of the information in this section has been taken from "The International Freight Guide" with the kind permission of the British International Freight Association.

Bill of Lading
Airway Bill
CMR Note
Standard Shipping Note
Certificates of Origin
ATA Carnet
Movement Certificates
The Role of Customs and International Trade
Customs Entry and Customs Procedure Codes
Community Transit & the Single Market Effect
EDI - Customs, Trade & the Future

INTRODUCTION

Documentation used in international trade performs a number of separate functions and these can be divided into the following categories: instruction; financial; identification; authorisation. In this section we will be dealing with those documents which are used in international trading activity, with the exception of customs documents which are discussed in the CUSTOMS sections.

Bill of Lading

Introduction

Consideration of the bill of lading as a document relating to the contract of carriage between shipper and ship owner, the responsibilities and liabilities of each party, has been set out in Conventions (Hague-Visby Rules and Carriage of Goods by Sea Act 1971). The purpose of this section is to consider the commercial use of the bill of lading in relation to the transfer of title to goods and in relation to the payment for goods.

Function of the bill of lading

There are three essential elements to an ocean bill of lading issued by a shipping line and covering the carriage of goods by sea:

1. It is evidence that a contract of carriage exists between shipper (exporter) and ship owner.
2. It is a receipt for goods, showing prima facie that they have been received into the charge of a carrier.
3. It is a document of title which allows title to the goods to be transferred by endorsement and delivery of the bill of lading. (Note: transfer of title to the goods is not synonymous with transfer of property. Whoever holds the bill of lading may take delivery of the goods, but property will pass when buyer and seller intend it should do so under a contract of sale, usually when payment is effected.)

Taken together, these three elements show the importance of the bill of lading to commerce over the years. With the bill of lading showing that a contract of carriage exists and that the goods have been received by the carrier, a buyer and his bank are assured that the despatch of goods according to the contract of sale is under way. Equally an exporter, holding a bill of lading as title to the goods, may, by choosing when to pass the bill to the buyer, control when the latter takes delivery of the goods. Thus the bill of lading becomes an essential element in controlling payment procedures in international trade.

A number of different types of bills of lading are available to exporters, according to the type of service being used. Furthermore, a number of different clausings are applicable to bills of lading and these are considered under "Clean bills and claused bills", following the details which must be shown in the bill of lading.

Main details to be incorporated in the bill of lading

Most bills of lading make provision for the following details to be inserted as shown:

1. name and address of the shipper (i.e. the person entering into the contract of affreightment, most probably being the exporter);
2. the name of the vessel;
3. description of cargo, including identifying marks, numbers and types of packages, contents, gross weights and volume;
4. port of shipment;
5. port of discharge;
6. details of freight, including whether it is to be "prepaid" (at port of despatch) or "payable at destination" (freight collect);
7. consignor's name and address which may be that of the buyer. Alternatively bills of lading may be made out to show "to order" in the consignee box or "to the order of..." (see "Negotiation of bills of lading" below).
8. notify party's name and address - often an agent acting on behalf of the consignee at the port of destination. However, the consignor's details may be entered in the "Notify party" box where "order" bills of lading are applicable (see "Negotiation of bills of lading" below);
9. terms of sale;
10. the date on which the goods are received for shipment or shipped on board the named vessel;
11. number of original bills issued;
12. signature of shipping line or its appointed agent.

The shipper (exporter) or his agent should furnish the above details to the shipping line in writing (e.g. by fax) or on blank bills. It is essential that the details are correct in relation to:

1. The actual goods being shipped;
2. The contract of sale; and
3. Any letter of credit or payment requirements.

Principal notations on bills of lading

Clean bills and claused bills.

A "clean" bill of lading is one in which no notation is shown on the document relating to cargo having been received by the line or shipped in any other than good condition and correct quantity. Thus, standard printed bills of lading usually bear the wording "Shipped (or received for shipment) in apparent good order and condition". If no clause to the contrary is entered, the bills are said to be clean. In the case where the cargo is noted to be wet, damaged or otherwise in doubtful condition or quantity, bills of lading will be issued "claused" (or "dirty"), showing the defect in the cargo. It follows that if goods are shipped under a claused bill, consignees may reject them or, alternatively, banks may not accept such bills of lading for payment purposes.

On occasions, there are disputes over what constitutes a "claused" bill of lading as shipping lines employ certain standard clauses on certain types of bills of lading. For example, many bills of lading covering either containerised or conventional cargo bear the clause "said to contain" within the area of the document showing the quantity and nature of goods. Such a clause should not render a bill of lading "dirty", but in some instances this and other non-contentious clauses may create doubts, particularly in the minds of banks. To assist with this problem, the International Chamber of Commerce has issued a publication entitled "The Problem of Clean Bills of Lading" (No 283). Additionally, the ICC publication "Uniform Customs and Practice for Documentary Letters of Credit" (UCP 500) is useful in this respect. Both of these publications can be obtained from ICC.

Received bills and shipped bills

As has already been said above, a bill of lading constitutes a receipt for goods delivered into the charge of a shipping line. Thus the standard wording on a printed bill of lading may state "Received for shipment..." and will be signed and dated by the line or its agents. Although this shows that the goods have moved out of the exporter's charge into that of the carrier, it does not show that actual shipment has taken place. More acceptable, therefore, to buyers and banks is the "Shipped" bill of lading which bears the standard wording "Shipped on board ... [Vessel] on ... [date]". Thus the buyer or bank has evidence that the goods have indeed been despatched.

Clean shipped on board bills of lading. A contract of sale may stipulate, and a confirmed irrevocable letter of credit is almost certain to stipulate, that an exporter must produce "clean shipped on board" bills of lading. Whether or not there is this stipulation, this type of bill of lading is clearly the most useful as it is prima facie evidence that:

1. the goods are actually en route to the port of destination on a named vessel which sailed on a specified date; and
2. at the time of shipment the goods were in good condition.

Faced with such bills under a documentary letter of credit, a bank (which deals only with documents, not goods) presumes that the goods are en route to the consignee in good order and that the exporter can be paid for them provided that all other conditions in the credit are satisfied.

Stale bills of lading

Bills of lading are said to be "stale" when they are presented late to a consignee, for example after the goods have arrived at the port of destination and have been unloaded from the carrying vessel. Faced with the possibility of paying storage charges in quay rent, the consignee may reject the bills of lading on the basis that they are "stale".

The problem of stale bills of lading has been reduced by a time-limit for presentation of bills of lading to a bank often being stipulated within a letter of credit. Furthermore, the Uniform Customs and Practice for Documentary Credits states that documents may be rejected if presented to banks more than 21 days after the date in the bill of lading (if no other presentation limit is specified within the credit). These two points have gone a long way to reducing the problem of stale bills of lading.

Through bills of lading

Bills of lading issued by shipping lines originally covered only port-to-port shipments of conventional cargo. The "through" bill of lading concept allows door-to-door shipments to be covered by a bill of lading. This became necessary following the development of containerisation. Thus, this type of bill may cover ocean shipment, plus inland transport by other modes, with the ocean carrier subcontracting these other elements. Further details of the contractual and liability aspects of this type of document can be found in the section covering the Hague-Visby Rules.

Combined transport bills of lading

Similar to a through bill of lading, the combined transport bill of lading allows for the contract of carriage to be covered by a single document and a clearly defined single set of conditions of carriage to include the use of road and/or rail shipment at either end of the sea leg. This document will, when issued, extend the carrier's liability as set out in the combined transport bill of lading to the other transport modes. Freight forwarders operating as non-vessel owning carriers (NVOCS) will most usually issue this type of document.

Groupage and house bills of lading

The concept of groupage - combining a number of individual consignments into a complete container load for shipment - has been developed over many years by freight forwarders operating services between two inland points in different countries working in conjunction with an overseas office or partner. An ocean bill of lading for a container load of groupage is issued by the shipping lines showing the sending forwarder as the shipper and the receiving forwarder as the consignee. The forwarder thereafter issues his own house bills to individual exporters. These house bills become the controlling document for the release of the cargo at destination and enable the exporter, if required, to negotiate these with his customer in return for payment of the goods.

It is important to note that a "house" bill of lading does not have the same status as an ocean bill issued by a shipping line as it is not a document of title, in the same sense of the word, as an ocean bill. However, it is capable of negotiation, and is often acceptable to banks for letter of credit purposes when this has been stipulated in the credit at the time it is opened.

The negotiable FIATA multimodal transport bill

The FIATA bill of lading is a document designed to be used as a multimodal or combined transport document with negotiable status which has been developed by the International Federation of Forwarding Agents' Associations (FIATA). This document, subject to correct completion according to ICC UCP 500 rules, is acceptable as a marine ocean bill of lading. Equally, the document can operate as a forwarder house bill with a suitable endorsement or as a multimodal transport document. This makes it an ideal international transport document and therefore, whenever possible, the FIATA bill of lading should be stipulated in letters of credit. In addition to the FIATA bill of lading, a number of other FIATA exclusive documents are available from members of the British International Freight Association. These are dealt with later in this section. The FIATA bill of lading is used worldwide under the same set of conditions, offering the customer a substantial degree of protection.

A forwarder who trades under 2000 BIFA Conditions may agree with a customer that a FIATA bill of lading should be issued and in that case the terms of the FIATA bill of lading will be substituted for those in the Standard Trading Conditions.

Before issuing a FIATA bill of lading a freight forwarder must become a registered trading member of the British International Freight Association as this is a condition of approval by FIATA. The BIFA registration scheme requires that a forwarder maintains adequate liability insurance to meet its responsibilities under the bill.

FIATA require that a forwarder issuing a FIATA bill of lading must ensure that:

1. he has received the consignment and has sole right of disposal; and
2. the goods are in apparent good order and condition; and
3. details set out on the face of the bill of lading correspond with the instructions he has received; and
4. insurance arrangements have been clarified; and
5. the bill of lading clearly indicates whether one or more originals have been issued (the bill of lading contains a specific box for this which must be completed).

The liability of the forwarder under the terms of the FIATA bill of lading is based on the UNCTAD/ ICC Rules for Multimodal Transport Documents (ICC Publication 481).

Negotiation of bills of lading

The bill of lading is a negotiable document which allows title to goods to be transferred by endorsement and delivery. This facility gives one or other parties to the transaction control over title to the goods and for this reason letters of credit often stipulate certain types of bill of lading in order for this control to be exercised. Three basic types of endorsement are possible:

Endorsement by consignee

In this case the bill of lading is completed as below:

• Shipper box in bill of lading: Actual shipper (exporter)
• Consignee box in bill of lading: Actual consignee (buyer)
• Notify box in bill of lading: Consignee's agent at port of arrival.

Completion of the bill of lading in this manner allows either the consignee to present himself in person to the line to take delivery of the goods or to endorse the bill of lading on the reverse side to allow his agent to do so and to deliver the goods to him. Thus the consignee exercises control over who takes the goods in charge at the destination port.

"To order" bills of lading

Bills of lading made out "to order" are completed as below:

• Shipper box in bill of lading: Actual shipper (exporter)
• Consignee box in bill of lading: "To order"
• Notify box in bill of lading: Actual consignee (buyer)

In this instance, the shipper must stamp and sign the bill of lading in order for title to the goods to be transferred to the consignee. Thus the bill of lading is useless to the consignee without this endorsement. This is a useful safeguard against bills being accidentally transmitted to buyers directly. Clearly, should this happen the buyer would not be able to take delivery of the goods and the bill of lading would have to be returned to the shipper for endorsement and presentation to the bank. Bills of lading completed in this manner are also said to be "To order blank endorsed".

To order of (bank)

In this case, the bill of lading is completed as follows:

• Shipper box in bill of lading Actual shipper (exporter)
• Consignee box in bill of lading To the order of (bank)
• Notify box in bill of lading True consignee (buyer)

The bank is the party which carries out the endorsement in this instance and which, therefore, exercises control over the goods. Thus, if the bank wishes to ensure that the buyer has actually paid for the goods before he takes delivery, the bank may endorse the bill of lading when payment is made.

Sea waybills

Sea waybills offer a non-negotiable alternative to the bill of lading. Generally speaking, they embody the Hague-Visby Rules. With a few exceptions they are not negotiable and are, therefore, not usable as a means of transferring title to goods. They are useful for companies that trade internationally with themselves between geographical areas where payment for exports is not a problem. A freight forwarder might use them to control groupage cargo. The sea waybill can thus be sent forward with the goods allowing the consignee to take immediate delivery. The legal protection offered to the shipper under a sea waybill is thought by some to be inferior to that offered under a bill of lading. However, being a relative new innovation, there has been insufficient time to test them in law.

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