FORWARDERLAW.COM
Members Feature Commentaries Legal Index Library Risk Manager E-News


Please choose a category below:

Air Carriage
Cargo Claims
Caselaw and Practice - Transport Documents
Commercial Issues
Customs Brokerage
Electronic Commerce and Transport
Issues under National Law
Legal Lookout (Steve Block)
Liability for Freight
Logistics Providers
Ocean and Multimodal Carriage
Principal or Agent?
Rotterdam Rules
Summaries of Transport Cases
Text of Transport Laws

Sea Waybills under Norwegian law and practice

by Anette Jahr (Wikborg, ReinWikborg, ReinWikborg, ReinWikborg, Rein)

(Ed. Note: A commentary by Anette Jahr, the new Norwegian Editor of Forwarderlaw. We welcome our collaboration with Anette and we are sure that readers will appreciate her contributions.)

Use of Seaway Bills

It has been estimated that as much as 90% of all containerized cargo shipped over the Atlantic Ocean is carried under seaway bills. Such bills are unlikely to be any less popular with the Norwegian shipping industry. The popularity of the seaway bill is due to its ease of use relative to a bill of lading and the fact that presentation of an original document at the port of destination is not a condition for delivery. This largely avoids problems such as missing originals, back letters and delivery without presentation. While the seaway bill has significant advantages, an examination in regard to payment under letters of credit reveals that buyers should take particular notice of certain effects of the Norwegian Maritime Code (1994).

Definition of 'Bill of Lading'

According to the Norwegian Maritime Code (which incorporates the Hague Visby Rules), a transportation document is considered a bill of lading if it meets the following three requirements:

  • evidences a contract of carriage;
  • evidences the carrier's receipt of the goods; and
  • calls itself a bill of lading or states that the goods will only be delivered from the carrier upon presentation of an original bill of lading.

  • The main purpose of the bill of lading as a document of title is that goods can be sold once or many times while en route from the port of loading to the port of destination.

    Definition of 'Seaway Bill'

    The definition of a 'seaway bill' in Sections 208 and 209 of the code contains the same two initial requirements as for a bill of lading: it must evidence (i) a contract of carriage, and (ii) the carrier's receipt of the goods. However, unlike the bill of lading, the seaway bill is not a document of title. Thus there is no need for the consignee to present any transport document at the port of discharge, as long as he can identify himself as the party named as consignee in the seaway bill. Accordingly, the third requirement under the code is that the seaway bill obliges the carrier to deliver goods to the consignee named in the document. The carrier's only responsibility in this respect is to exercise due diligence when confirming the identity of the person claiming to be the consignee. Since the seaway bill is not a document of title, it may not be entirely suitable for shipments of goods intended for multiple resale during carriage. It is not absolutely clear under the code whether a buyer/consignee with a right of disposal over the goods can name yet another consignee.

    Letters of Credit

    Where a bill of lading is used, the seller's or buyer's rights relative to the goods are directly linked to the document itself. By presenting a bill of lading to the bank in accordance with UCP 500 (the International Chamber of Commerce Commission on Banking Technique and Practice's "Uniform and Customs and Practice for Documentary Credits", as revised in 1993), the bank will effect payment to the seller. The buyer will receive the bill of lading and can then take delivery from the carrier.

    Where a seaway bill is issued, the UCP 500 similarly requires that a full set of seaway bills be presented prior to payment being made. However, the Norwegian Maritime Code does not link the seller's right of disposal over the goods to the seaway bill issued. In other words, the seller's delivery of one or more original seaway bills to the bank does not give the buyer disposal over the goods. The buyer cannot exercise such disposal until (i) the goods have arrived, and the consignee has demanded delivery and paid the freight and charges due, or (ii) the shipper has waived its right to name another consignee.

    According to the code, the shipper can waive its right to name another consignee by informing the carrier. If the shipper does this, the carrier can deliver the goods only to this consignee/buyer. In other words, only when the buyer feels certain that the carrier has received sufficient instructions from the shipper is it guaranteed delivery of the goods. Thus, the seller may present a full set of original seaway bills to the bank in accordance with UCP 500, but if the seller has not informed the carrier that it has waived the right to name another consignee, the seller can still instruct delivery to be made to a consignee other than the original buyer.

    The code does not specify whether the information from the shipper to the carrier must be in writing; nor is the carrier obliged to confirm to the buyer in writing that the shipper has waived its right to name another consignee. It is merely stated in the preparatory works that, if the shipper has waived its right of disposal, "the carrier must note on the seaway bill that the shipper has waived its rights in this respect". As preparatory works are not legislation, there is actually no obligation for the carrier to fulfil this.

    The code has one significant difference from the Convention on the International Carriage of Goods by Road of 1956 (CMR). Under the CMR, the shipper cannot change the consignee without presenting a shipper's original of the CMR consignment note to the carrier. The right of disposal of the goods is directly linked to a particular original document. If the shipper has surrendered the shipper's original to the consignee (or a bank), the shipper cannot stop the goods from being delivered to the buyer and has consequently surrendered control of the goods to the buyer named as consignee in the CMR consignment note. As the UCP 500 requires presentation of all three originals of the CMR consignment note to the bank, the shipper's original will be among these. Thus, the shipper will be unable to stop the buyer from taking delivery.

    Comment

    As the Norwegian Maritime Code intends to facilitate the future use of electronic transportation documents, it may be preferable not to link the disposal of goods under seaway bills to a specific copy of the seaway bill. However, the present situation puts a heavy burden on the individual buyer, which may find out for itself that the presentation of a full set of seaway bills to the bank in accordance with UCP 500 does not stop a seller from instructing the carrier to deliver to another buyer. To avoid this, the buyer should obtain a written confirmation from the carrier that the seller has waived its right to appoint a consignee other than the buyer, even though the code does not oblige the carrier to do so.

    However, in a great number of shipments it is still more advantageous for all parties to use a seaway bill than a bill of lading. The popularity of the seaway bill is likely to increase, although parties will find that certain uses of the document require special attention (e.g., where letters of credit are used in connection with seaway bills subject to the code).

    May 8, 2004

    Please read our Conditions of Use and Legal Disclaimer.
    In association with PMLaw and other international Law firms. Copyright 1999 - 2005.