Gill Nadel, Dave Zeitoun, Shirly Strezhevsky, Goldfarb Seligman, Israel

Case Facts & Arguments:

A dispute arose between food importers and marine carriers during the release of food shipments which reached their destinations at the ports of Haifa and Ashdod. The food importers did not possess original Bills of Lading, even though they have already paid for the cargo in full. The marine carriers therefore refused to release the cargo due to a concern that they may be exposed to claims amounting to the value of the cargo.

The importers argued that there is no such exposure, for while they do not actually possess the original Bills of Lading, they are the sole recipients listed upon the bills. In addition, the importers argued that a cargo may be released without the presentation of original Bills of Lading as a condition for the provision of sufficient guarantees by importers.

The marine carriers, on the other hand, argued that the guiding principal set by the Supreme Court for the release of cargo is that he who possess the original Bill of Lading holds the exclusive right to receive the cargo. While the carriers agreed that there may be exceptions, they argued that such exceptions are subject to the provision of sufficient guarantees for indemnification and to the limited and cautious discretion of the court.

Regarding the amount of guarantees to be deposited for the release of cargo without original Bills of Lading, the carriers claimed that 200% of the cargo’s value is the appropriate amount. According to the carriers, even if the original Bills of Lading are not negotiable, their exposure to claims is not lessened while the original Bills of Lading are not in the possession of the importers, as the risk involved includes liability for indirect damages caused to those who are actually in possession of the original Bills of Lading.

The Court’s Ruling:

The court reaffirmed the Supreme Court’s ruling regarding the importance of an original Bill of Lading. The Bill of Lading is a receipt from the carrier to the sender of the cargo that attests to the fact that the cargo was transferred to the carrier, as well as a testament to the forwarding agreement between the sender and the carrier. In addition, the Bill of Lading is a document which grants its wielder the right to demand that the cargo and goods listed in the bill be surrendered to him.

The court determined that in this case all agree that the cargo should be released against the deposit of sufficient guarantees, but dispute the amount of guarantees to be deposited.

The question of whether the Bill of Lading is negotiable or not may impact the amount of guarantees required – if it is negotiable, anyone who possesses the Bill of Lading earns the right to demand the goods. Even so, in practical terms, many opt to use nonnegotiable Bills of Lading when the goods are addressed to a specific importer, which may receive the goods by presenting identification other than the original Bill of Lading.

In this case, all bills presented attest to nonnegotiable Bills of Lading, a fact taken into consideration for reducing the amount of guarantees. In addition, the importers presented documentation and other evidence that the goods in question were fully paid for by them. It should be noted that the court drew attention to the consideration that the Bill of Lading presented to it is not a direct copy of the original, and that a concern for forgery and deception remains.

The court ruled in this case that the cargo shall be released against the deposit of 100% of its value, as it was convinced that the Bill of Lading in question is nonnegotiable.

In a similar case, our firm represented Run-Lee Trade Fashion (2003) Ltd. (the importer of the Mikado and Run Be fashion brands) in a civil claim it filed against Uni logistics Inc. (a multinational logistics and supply management group), requesting the release of cargo without presentation of the original Bill of Lading. The court ordered Uni to produce a delivery order for the cargo, while Run-Lee was ordered to provide personal guarantees to Uni in case it will be sued by the sender for releasing the cargo without presentation of the original Bill of Lading.

[TA 27880-06-17, Tanko International (97) Ltd. V. Cosco Shipping Lines (Israel) Company 2016 Ltd., presiding judge: Ihsan Kanaan]