Electronic Release Systems - Keep Your PIN Codes Safe

Liner operators using Electronic Release Systems (ERS) should be aware that even when the original bill of lading has been presented, they still have a duty to ensure cargo is delivered to the correct receivers.

A recent English High Court case looked at circumstances where a ‘To Order’ bill was issued which contained the following term:

“If this is a negotiable (to order/of) bill of lading, one original bill of lading, duly endorsed must be surrendered by the merchant to the carrier … in exchange for the goods or a delivery order”.

The receiver’s agents had the original bill and presented it to the carrier.

However, rather than issuing a delivery order, the cargo delivery was handled under an ERS whereby the receiver was provided with a computer generated set of  electronic numbers (Import Pin Codes) which in turn were to presented to the Terminal for delivery of the goods.

Unfortunately some of the cargo was released to unauthorised personnel who, it appears, had gained access to the Import Pin Codes. The carrier argued that they had discharged their duty regarding delivery of the cargo and were therefore not liable for the loss. However, this argument was rejected by the judge who concluded that the Import Pin Codes were not  delivery orders as referred to in the bill of lading and there was no implied term in the bill suggesting that they acted as such.

The use of Delivery Orders is an established procedure and practice, but the decision of the Judge reinforces a carrier’s obligation to deliver goods shipped under the bill of lading in line with the terms contained in the contract of carriage and to ensure that a person presenting an Import Pin Code has obtained it legitimately.

Those Members using ERS may wish to review their release processes in light of this decision.

Glencore International AG v Mediterranean Shipping Company SA [2015] EWHC 1989 (Comm).