The liability of maritime carrier in the event of delivery of goods without presentation of the bill of lading: analysis of French case law.

By Jean-Désiré Groguhé, Ph.D.

The bill of lading plays a central role in maritime carriage and international trade operations. Serving simultaneously as a receipt for the goods, proof of the transport contract, and document representing the cargo, it constitutes an essential legal instrument for securing international commercial transactions.

In maritime practice, a recurring difficulty concerns the delivery of goods by the carrier without presentation of the original bill of lading. This situation can occur, in particular, when the goods arrive at destination before the original shipping documents or when the carrier relies on commercial instructions or a letter of guarantee.

French case law has been called upon to rule on this issue on several occasions. It has consistently reiterated that the maritime carrier must only deliver the goods to lawful holder of the original bill of lading ".

What is the basis for this principle, which has become established case law?

1. The bill of lading as a representative title to the goods.

In international maritime law, the bill of lading legally represents the carried goods. The legitimate holder of the document is therefore considered to be entitled to delivery of the goods at destination. French case law has consistently upheld this fundamental principle. In a decision dated December 3, 2013, the Commercial Chamber of the Court of Cassation reiterated that "delivery of goods without requiring the original bill of lading does not constitute proper delivery ." It emphasized that bill of lading is the document representing the goods and that only the person holding the endorsed original can claim delivery. Consequently, delivery by the carrier to a person who does not present the original bill of lading may give rise to contractual liability, or even tortious liability. ( Court of Cassation, Commercial Chamber, December 3, 2013, No. 12-13.459) DMF 2014 P.525). This judgment of December 3, 2013 is in line with the constant case law of the Court of Cassation already affirmed in the judgment rendered on June 29, 2007, according to which delivery without presentation of original bill of lading constitutes a fault engaging maritime carrier liability (Court of Cassation Commercial Chamber, June 29, 2007 n 05-19.646- DMF 2007, P 790).

This principle is explained by the economic function of the bill of lading in international trade operations, particularly in transactions financed by documentary credit, where banks often hold the original documents until payment of the price.

2. Delivery without presentation of the bill of lading: the carrier fault

French case law generally considers that delivering goods without presenting the bill of lading constitutes a fault engaging maritime carrier liability. Judges have held that carrier must exercise particular vigilance before handing over the goods. This obligation implies not only verifying the original bill of lading, but also verifying the chain of endorsement, in case of an order bill of lading, to identify the legitimate holder of the document. Failure to comply with these obligations may result in the carrier's contractual liability towards the legitimate holder of the bill of lading.

A common and frequently encountered example in maritime law is the case of a seller who ships goods under a letter of credit. While the original bill of lading is still held by the bank, carrier delivers the goods to consignee without the original bill of lading. The unpaid seller is entitled to hold maritime carrier liable for negligence.

3. The limits of commercial practices: Letter Of Indemnity (guarantee) and commercial instructions

In international maritime transport, carriers are sometimes required to deliver goods against a letter of indemnity (LOI) when the original documents have not yet arrived or for any others commercial reasons. However, French case law reminds us that this commercial practice does not relieve the carrier of its primary obligation. Numerous rulings have established that the delivery of goods against a simple letter of indemnity does not necessarily protect the carrier against a liability claim brought by the legitimate holder of the bill of lading. The Court of Cassation reiterated this in a decision of June 15, 2011, stating that "Carrier can only deliver in exchange of original bill of lading… and that delivery against a bank guarantee letter is not sufficient " (Court of Cassation Commercial Chamber, June 15, 2011, No. 10-17.671-DMF 2012, p.123). In other words, the law does not legalize irregular delivery and therefore does not protect the carrier against legal action by the holder of the bill of lading. " Delivery without a bill of lading, even against the LOI, constitutes a carrier fault, rendering him liable to the legitimate holder." (Court of Cassation Commercial Chamber, July 10, 2012, DMF 2013, p.31)

This position aims to preserve the legal certainty of international commercial transactions, as the law does not negate the rights attached to the bill of lading. While certainly a commercial tool, it is not, however, a complete shield for the carrier.

4. The legal consequences of irregular delivery

When the carrier delivers the goods without presentation of the bill of lading, several legal consequences may arise:

First, the legitimate holder of the bill of lading can bring a contractual liability action against the maritime carrier.

Furthermore, irregular delivery can lead to the loss of guarantee that the goods represent in certain financial transactions, particularly in documentary credits.

Finally, in certain circumstances, case law considers that delivery without a bill of lading can constitute a fault distinct from maritime transport, capable of escaping the limitations of liability applicable in matters of loss or damage to goods provided for by the Hague / Hague-Wisby rules (art.4.5)- (Court of Cassation Commercial Chamber, June 15, 2011, no. 10-17.671, DMF 2011, p. 739.)

5. The importance of the bill of lading in international trade finance operations

The role of the bill of lading extends beyond maritime transport. It is also an essential instrument in international trade finance. In documentary credit transactions, banks generally require the presentation of an "on board original bill of lading" before making payment to the seller.

Delivery of goods without presentation of the bill of lading can therefore infringe upon the rights of the bank holding the document and thus compromise commercial transaction security (Court of Cassation Commercial Chamber, February 17, 2009, No. 07-21.996 DMF 2009, p. 355.)

Conclusion

French case law consistently confirms the central role of the bill of lading in international maritime carriage. As the document representing the goods, it determines the right to delivery at the port of destination. Carrier must therefore exercise particular vigilance and deliver the goods only to the legitimate holder of the original bill of lading.

In a context of globalization of trade and complexity of supply chains, mastering the legal rules applicable to bills of lading remains essential for all actors in maritime transport and international trade.

G.Pac Consulting Group is can guide you through the legal complexities applicable to the use of this important maritime carriage document, the bill of lading.