International Trade and Transportation Law - Case Study Example

International Trade and Transportation Law Lading is another word for cargo or freight. A bill of lading can be described as a contract or an agreement made for transportation and a receipt for cargo that a common carrier gives to a seller when a carrier transports goods on behalf of a seller. In other words, the Bill of Lading is a document that establishes the terms of a contract between a shipper and a transportation company 1. Moreover, the bill of lading has evolved from a simple ship captain’s receipt into a multi-purpose financial and legal record for any improved international trade.  Generally, the bills of lading used on international shipments include ocean bills of lading for cargo transported by ocean and air waybills for cargo transported by air. Some bills of lading are negotiable where as some are not. The difficulties of non negotiable bill of lading was explained by Chana (1999). He also discussed about the comparison of bills of lading in China, Hongkong and United States of America (Chanb, 1998). The status of bills of lading in China was also explained by Chen (1999). A Bill of Lading performs the following important functions: 1. Initially its primary purpose is to certifying the specified goods to be transported from one point to another. The cargo or carrier certifies that it has collected the goods mentioned in the bill of lading for     transportation to the specified destination 2. It provides the title deed i.e., it is a document which proves ownership of the goods mentioned in the bill. 3. It provides evidence of a contract between shipper and shipping company for 1 : http://www1.doshisha.ac.jp/~tradelaw/international-trade/Functions%20of%20bills%20of%20lading.htm.     the transportation of the goods mentioned in the bill 2. 4. It is highly convenient way of transportation as it facilitates the negotiation. It can be used to transfer the ownership    of the goods named on it to somebody else. 5. it also explains the good condition of goods at the time of collection and ensures the same quality of ggods at the time of delivery. 6. It also acts as a reliable instrument based on which the financial organizations and banks rely for making payments to the clients in any international trade using letter of credit. 7. It acts as a final receipt for the goods issued by the carrier. It is a receipt for goods, showing prima facie that they have been received into the charge of a carrier. 8. Bill of lading can function as legal evidence in cases of dispute. 9. It also serves as a source of cargo and shipment information for APL or carrier. 10. It also specifies what and how much is being shipped, how and when it will be shipped and to whom carrier company will release the cargo. 11. It also acts like insurance certificate. The total value of the goods may be insured conveniently 3. 12. It is a necessary document for clearance of customs department. The letter of guarantee provided by the bank or any financial institution will be vital in some cases of bills of lading. For example in case of an Australian context i.e. Pacific Carriers Ltd. v. Banque Nationale de Paris, the bank who had given the letter of guarantee was held responsible for loss of goods (Derrington and White, 2002). Even though letters of indemnity are a common practice, in some of the ceses, they were criticized by the courts for violation of the facts (United Baltic Corp. v. Dundee Perth & London Shipping Co., 1928). 2 : http://www.apl.com/boomerangbox/d126.htm. 3 : http://www.schenker.com.my/website/FAQtext.htm. Role of bill of lading in International trade : By performing all the above mentioned functions, bill of lading contributes significantly to International trade of goods. 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 delivery of goods according to the contract of sale is under progress. Similarly an exporter, holding a bill of lading as title to the goods, may, by choosing when to pass the bill to the buyer, decides when the latter takes delivery of the goods. Thus the bill of lading becomes an essential element in controlling payment procedures in international trade. Most important thing is that the extent of protection provided by bill of lading is quite enormous (Jan Ramberg, 1979). The standard format for documentary credit transactions in international trade is ‘The Uniform Customs and Practice for Documentary Credits’, or UCP 500 which will ensure more legal status of bills of lading (Uniform Customs and Practice for Documentary Credits, 1993). Components of bill of lading are as follows: 1. Name and location of the shipper 2. The name of the carrier or vessel 3. Description of cargo, including identifying marks, numbers and types of packages 4. Name of port of shipment 5. Port of discharge 6. Details of freight 7. Consignor's name and address 8. Party's name and address - often an agent acting on behalf of the consignee at the port of destination. 9. Terms and conditions of sale; 10. Number of original bills issued; 11. Signature of shipping line 4. 4 : http://www.pslgroup.net/paper.html. The shipper /exporter or his agent should furnish the above details to the shipping line in writing. One has to look in to the statutes that govern the functions of bill of lading as far as the transportation and trade of goods are concerned. The contract of carriage under bill of lading is governed by the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, Brussels, August 25, 1924 (as amended by the Visby Amendments in 1968 and by the Brussels SDR Protocol in 1979 (Hague/Visby Rules). However the following are exceptions for this 5. (a) Once the bill of lading shows a contract of carriage to or from the United States, it is regulated by the United States Carriage of Goods by Sea Act 46 U.S.C. §§ 1300 et seq. (COGSA) and the Pomerene Act , 49 U.S.C. §§ 80101, et seq. (Pomerene Act). (b) In case of contract of carriage from Australia or New Zealand, it is governed by the Australian Carriage of Goods by Sea Act, 1991 as amended (Australian COGSA) or the Chapter XVI of the New Zealand Maritime Transport Act, 1994 (New Zealand Act), whichever is applicable in respect of the carriage of goods by sea. (c) If any dispute arises from this bill of lading it must be solved through the United Nations Conventions on the Carriage of Goods by Sea Act 1978 (the Hamburg Rules). Bolero bill of lading: Bolero is one of the most secured electronic communication and trading system available in the global market 6. Bolero bill of lading is nothing but electronic certification of goods transportation from shipping corporation to seller regarding the delivery of goods. It was constituted by Bolero International Limited, United Kingdom. Bolero is not only a technical but also a legal framework intended to simplify and unify an international document exchange. 5:http://www.2wglobal.com/www/customerCentre/billoflading.jsp. 6: http:// www. Bolero.net. It helps in significant cost reduction in document preparation and tracking, security-related expenses and litigation costs as far as the transportation of goods is concerned. It is equally legal as the traditional bill of lading is concerned (Yiannopoulos,1995). How Bolero bill of lading functions? The Core Messaging Platform (CMP) through which all messages are routed is the central control unit in Bolero system. Bolero provides highest level of security through the CMP using the "public key cryptography". All users are provided with a pair of keys called the private key and the public key. The user is needed to digitally sign every message with private key assigned to him or her, this message is then sent to Bolero, where they are verified for its sender using the corresponding public key. Bolero also developed a Title Registry which is a centralized database relating to Bolero Bills of Lading. All messages to the Title Registry are guided only through the CMP. There will be two agreements between a) the users of the system and Bolero and b) the users of Bolero amongst themselves. This is based on the Bolero Rule Book. This is crucial for the smooth functioning of the whole project. The legal status of bolero bill of lading: Bolero bill of lading provides legality of trade of goods at global level to a significant level. In countries where the jurisdiction does not require a contract to be in writing, there should be no objection to the admissibility of electronic evidence to prove the existence of the contract. Several countries have accepted the idea of accepting paperless trading in the form of bill of lading. The following two most important provisions of the Bolero Rule Book also guarantee the legal status of bolero bill of lading. i) that a digital signature shall be as binding on the user as a manual signature and ii) that no user will challenge the validity of any transaction or statement made via the bolero system on the grounds that it was made electronically. Some countries do not regard electronic messages as capable as traditional bill of lading. Bolero’s Legal Feasibility Study found that certain countries still require paper documents, where they can opt for ‘switch to paper’ scheme. However the following provisions will make bolero bill of lading more acceptable at global level : 1. Domestic courts of individual countries should recognise bolero rule book. 2. The governments should prioritize the electronic system of transactions at their country level. 3. Customs and other government authorities must computerise their systems and thereby eliminate paper requirements. 4. The respective governments should amend the Hague-Visby Rules enact a modified version of the Hague-Visby Rules at domestic level similar to the Australian Hague-Visby Rules. 5. More traders and international organizations should adopt Bolero system. Advantages over traditional bill of lading: The Bolero Bill of Lading (electronic document) seeks to functionally replicate the traditional paper bill of lading or more importantly make the Bolero Bill a negotiable one. In making it negotiable lies the commercial viability. The Bolero bill is intended, as between the members of the system, to have exactly the same effect and create the same obligations, as would a paper bill of lading. It is cheaper than that of traditional bill of lading. However one cannot expect every purchaser to be a member of the Bolero association. There are still parts of the world, which are less technologically advanced, and some countries that may remain skeptical about the system. Overall, the reduction in the risk of fraud is a major advantage of the Bolero system. It is also highly cost effective. If all the traders in the trade chain are Bolero users the system becomes secure. There were reports of forged paper documents being presented to take delivery of goods from the discharge ports. However, this could be avoided if all concerned with a particular transaction are users of Bolero. The electronic bill is finding new users day by day and is expected to replace the traditional bill of lading gradually (Queree, 1999). Bibliography : Chana, F.W.H. (1999), A Plea for Certainty: Legal and Practical Problems in the Presentation of Non-Negotiable Bills of Lading. Hong Kong Law Journal, Hong Kong, HKLJ Limited, 29(1): 44-58. Chanb, F.W.H. (1998), A Comparative Study of Straight Bill of Lading - Mainland China, America & Hong Kong. Conference: The Third International Conference on Maritime Law, Beijing, China Maritime Law Association, 368-381. Chen, X. (1999), “Chinese Law on Carriage of Goods by Sea under Bills of Lading”, 8 Currents Int’l Trade L. J., 89. Derrington, S & White, W. (2002), “Australian Maritime Law Update: 2001” , 33 J. Mar. L. & Com, 275. Jan Ramberg. (1979), The Vanishing Bill of Lading & the "Hamburg Rules Carrier" American Journal of Comparative Law, 27 (2/3), 391-406. Queree, Anne "Bolero--killer solution to international trade?". Global Finance. Nov 1999. http://www.findarticles.com/p/articles/mi_qa3715/is_199911/ai_n8864458. Uniform Customs and Practice for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500. A text of UCP 500. http://www.iccwbo.org/. United Baltic Corp. v. Dundee Perth & London Shipping Co. (1928), 32 Ll. L. Rep. 272. Yiannopoulos, A.N. (1995), “XIVth International Congress of Comparative Law: Current Developments Concerning the Form of Bills of Lading” in Ocean Bills of Lading: Traditional Forms, Substitutes, and EDI Systems. A.N. Yiannopoulos (Ed.), Kluwer Law International, The Hague, 3. Read More