The presentation of the bill of lading, a necessary evil: an examination of the legal implications of the misdelivery of cargo, owing to the non-presentation of the bill of lading, on the rights and duties of carriers and indorsees under South African and English law, and the Hague-Visby rules.
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Date
2019
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Abstract
The transferable nature and function as a document of title allow for bills of lading to be transferred from one consignee to another and for its use as security. The transferring of the bill of lading down a chain of buyers often results in the bill not reaching the final consignee in time to collect the cargo at the port of discharge. The late arrival of bills of lading coupled with the traditional requirement of presentation thereof to obtain delivery of the cargo causes significant practical problems for carriers. In response to these practical problems, carriers have implemented practices to circumvent the presentation rule, such as delivering the cargo without the production of the bill of lading or delivering against a letter of indemnity. These practices have become quite common amongst carriers notwithstanding the possible legal consequences. A carrier that misdelivers the cargo owing to the non-production of the bill of lading will be in breach of its contractual duties and this will affect its rights to rely on the limitations and immunities provided for in the contract of carriage.
This study aims to determine whether the presentation rule is a necessary evil and to examine the legal implications on the rights and duties of carriers and endorsees of the misdelivery of cargo owing to the non-presentation of the bill of lading. To determine the necessity of the presentation rule, the effect of the misdelivery of cargo owing to the non-production of the bill of lading on a carrier and endorsee’s rights and duties are considered in the context of the provisions in The Hague-Visby Rules. The enforceability of letters of indemnity under South African and English law is examined. Likewise, the relevant South African and English legislation is examined to determine a bank’s right as the holder of the bill of lading to institute an action against a carrier for the misdelivery of cargo. The effect of an electronic alternative on the presentation rule is also considered. This study was conducted through a literature review which included an analysis and review of legal sources such as legislative provisions, court judgments and academic opinions on the subject. This study concludes that notwithstanding the practical difficulties caused by the presentation rule, it is a well-established admiralty practice that serves a valuable purpose and should be adhered to as far as possible. The use of letters of indemnity to remedy the practical problems caused by the presentation rule is not a viable solution and a more modern and long term solution is needed. One such solution may be the implementation of electronic alternatives such as blockchain technology. However, in order to realise the use of blockchain technology the necessary legal reforms need to first take place.
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Masters Degree. University of KwaZulu-Natal, Durban.