Carriage of Goods under Bills of Lading and Similar Documents

• Author: Edgar Gold; Aldo Chircop; Hugh M. Kindred; William Moreira
• Pages: 563-656

563

CHA PTER 13

CARRIAGE OF GOODS

UNDER BILLS OF

LADING AND SIMILAR

DOCUMENTS

A. LINER SHIPPING DOCUMENTS

1) Introduction

The delivery of goods by sea is processed and regulated in distinctly dif-

ferent ways depending on the nature of the cargo. As explained at the

beginning of Chapter 12, while tramp ships carry goods, such as raw

materials, in bulk under charterparties, liner vessels transport packaged

and unitized goods, typically merchandise and processed products, un-

der bills of lading and similar documents. During the nineteenth and

well into the twentieth century the use of bills of lading to process the

carriage of goods in liner services was practically ubiquitous. Informal

documents, such as mate’s receipts, and delivery orders, designating in-

dividual shares in a cargo, were also used but uncommonly. Later in the

twentieth century, however, the advantageous advances in cargo handling

techniques, achieved by the introduction of containers, and in the pro-

cessing of transactions, made possible by the application of computers,

have transformed the carriage of goods by liner ships. As a result of these

changes, a variety of new transport documents have been developed and

put increasingly into use in place of bills of lading. These documents

include sea waybills, which are simpler instruments than bills of lading,

and combined transport documents, which are used for through carriage

by sea and multimodal movements. In addition these paper-based pro-

cesses have now been widely replaced by electronic transactions.

PART IV: MA RITIME TR ANSPORTATION564

While the variety of shipping documents used in liner services has

increased in recent years, the law governing all of them has remained sub-

stantially the same since 1924. Unlike charterparties, which have been left

to the freedom of the contracting parties, liner services have been the sub-

ject of government regulation for over a century. To avoid the confusion

that multiple national regimes would create, an internationally uniform

set of rules, known as the Hague Rules after the place of their provisional

preparation, was agreed at an international conference held at Brussels in

1924.1 These Rules have been amended more than once and alternative

sets of rules have been agreed to but not widely applied. Undoubtedly a

new internationally uniform regime that meets the needs of carriers and

cargo owners operating modern, containerized traff‌ic by streamlined elec-

tronic processes is required. The latest effort to establish such a regime

by governmental agreement internationally culminated in 2009 with the

conclusion of the so-called Rotterdam Rules,2 but they have yet to enter

into force and effect. Meanwhile Canada applies3 an amended version of

the Hague Rules, known as the Hague-Visby Rules.4 Accordingly this chap-

ter addresses f‌irst the legal character and functions of the various liner

shipping documents, both paper and electronic, and then the Canadian

application of the international Hague-Visby Rules, and concludes with a

brief review of the Rotterdam Rules as they may impact Canadian law.

2) Bills of Lading

A bill of lading is a document used in international sales to process the

delivery of goods by sea. It is widely employed in liner shipping and on

chartered ships in some trades. Issued by the carrier to the shipper, also

known as the consignor, of the goods, it may be in one of two forms. By

far the most common are order, alias negotiable, bills of lading. Straight

bills of lading constitute the second form and are distinguished by being

non-negotiable. Their characteristics are discussed in the next section

below. Following common practice, this text will use the term “bill of

1 By the International Convention for the Unif‌ication of Certain Rules of Law Relating

to Bills of Lading, 24 August 1924, 120 LNTS 155 [Brussels Convention containing

the Hague Rules].

2 UN Convention on Contracts for the International Carriage of Goods Wholly or

Partly by Sea, 11 December 2008, GA Res 63/122, UNGAOR, 63d Sess, UN Doc

A/Res/63/122 (2 February 2009) Annex [Rotterdam Rules].

3 By the Marine Liability Act, SC 2001, c 6 [MLA], Schedule 3 [Hague-Visby Rules].

4 Protocol to amend the International Convention for the Unif‌ication of Certain Rules of

Law Relating to Bills of Lading, 1924, 23 February 1968, 1412 UNTS 121, English

text at 128 [Visby Protocol].

Carri age of Goods under Bills of Lad ing and Similar Document s 565

lading” to refer to the regular, order or negotiable bill of lading, and will

speak of the “straight bill” when the distinction is legally signif‌icant.

A bill of lading has three functions: (1) as evidence of the contract

of carriage, (2) as a receipt by the carrier for the goods to be carried,

and (3) as a document of title to the goods.5 Early bills of lading were

merely receipts for goods received by a carrier. Progressively conditions

of carriage were included in them, especially as standard form contracts

became prevalent. Their status as documents of title was eventually ac-

cepted by the common law in 1782 when the commercial practice of ne-

gotiating the shipper’s right to the goods by endorsing the bill of lading

in favour of the consignee or purchaser was recognized in the case of

Lickbarrow v Mason.6

Its status as a negotiable document of title is what distinguishes the

ocean bill of lading from all other documents used to process sea car-

riage transactions, in particular straight bills of lading, sea waybills, dock

receipts, and delivery orders. The cases do not so much def‌ine a bill of

lading as describe its three functions and list its typical contents. The

usual indications on the document are its title of negotiable bill of lading

and its directions to deliver the goods to the named consignee “or to or-

der.”7 Transport documents that do not bear this time honoured phrase

are not negotiable title documents (though they most likely are good

evidence of receipt of the goods and the terms of their carriage).

The form of a bill of lading now follows a fairly standardized two

page format in which all the details of the particular cargo and its car-

riage are entered on the front and the shipping company’s standard

trading terms appear in f‌ine print on the back. At the foot of the f‌irst

page, just above the signature line, there is generally a statement that

incorporates the clauses on the back of the form as part of the operative

conditions of carriage. Some shortform or blank back bills of lading

omit the printed clauses and instead incorporate the carrier’s standard

terms by reference to them at their business premises.

The f‌ine print clauses of a typical bill of lading are numerous and

extensive. They set out the carrier’s standard trading conditions as they

vary the terms implied by common law8 while ref‌lecting the manda-

5 See Canadian General Electric v Armateurs du St Laurent Inc (The Maurice Desgagnés),

[1977] 1 FC 215 (TD) [Canadian General Electric] and the def‌inition of a bill of

lading in the Hamburg Rules, art 1(7) enacted in the MLA, above note 3, Schedule

4 (see also note 165, below in this chapter).

6 (1794), 101 ER 206.

7 Henderson & Co v Comptoir d’Escompte de Paris (1873), LR 5 PC 253; Canadian

General Electric, above note 5; see also Hamburg Rules, above note 5, art 1(7).

8 Described in Chapter 12, Section B.