Force Majeure: Issuing bills of lading for part-loaded cargo

Consider the scenario where the shipper insists that in case of Force Majeure at the load port, interrupting cargo operations, the receiver pays for the cargo that has already been loaded on board. This would require the carrier to issue bills of lading for the cargo in the holds at the time operations were suspended.

This raises the question as to whether a shipper has the right to ask the owner or carrier to issue a clean ‘shipped on board’ bill of lading for the quantity already loaded, then issuing a second bill of lading upon completion of loading with the remaining quantity?

Initially, it might not seem unreasonable to conclude that if loading was interrupted for a considerable period due to circumstances beyond the control of either party, the Master should in the meantime be required to issue a bill of lading covering the cargo loaded to that point in time.
However, there are elements of uncertainty here and much will depend on the facts.

Caution advised

In the case of homogenous bulk cargoes, a key factor is whether the cargo is being loaded in parcels or not.

The general rule is that the Master must sign a bill of lading in respect of each parcel shipped within a reasonable time of presentation. Where there is only one large parcel of cargo (i.e. undivided homogenous bulk) then the Master should be entitled to delay signing the bill of lading until all the cargo for the vessel has been loaded or ‘shipped’.

However, where the cargo is divided into parcels, the shipper is entitled to have a bill of lading issued once loading of the parcel in question has been completed.

Under the Hague and Hague-Visby Rules, a shipper will be entitled to demand a bill of lading after the cargo has been received into the carrier’s custody. However, if such a bill is issued before the date of completion of loading of the parcel in question, it is arguable that this would be classified as a ‘received for shipment’ (RFS) bill of lading and not a ‘shipped’ bill of lading.

While an RFS bill of lading may be helpful in some cases for commercial purposes (e.g., recording the quantity loaded and its condition), they tend to be less common, especially in bulk cargo trades where consignees would expect completion of loading and commencement of the voyage to occur within a short space of time and where letters of credit are also likely to require a ‘shipped’ bill of lading.

However, if an RFS bill of lading is issued where loading is interrupted, it may be possible to replace this with a final ‘shipped’ bill of lading showing the date loading was finally completed, provided of course that the shipper has not put the RFS bill of lading into circulation and the full RFS set can be returned and efforts should be made so that the ‘shipped’ bill reflects the period over which the full cargo was loaded.

It is important that any bill of lading shows the date on which completion of loading occurred in respect of the parcel of cargo as identified in the bill of lading.

If an RFS bill of lading is issued and there is a prolonged delay, but there is nothing physically preventing the vessel from sailing, Members should take advice on the question of whether, having issued a bill, they are under an obligation to proceed with the voyage anyway.

The correct position in any given case (including where there is a lengthy interruption to loading) will of course depend on the particular facts and circumstances and Members are encouraged to discuss things with the Club.

Seeking advice

Where loading is interrupted for a prolonged period, or where a Member is being asked to issue a bill of lading before the full intended cargo has been loaded, Members should contact the club. North’s Loss Prevention team can assist with assessing the risks associated with a particular cargo when left for an extended period of time and will consider steps such as the periodic appointment of surveyors to record the condition of bulk cargos. If this is not possible, then it is important for crew to monitor the cargo and keep accurate records on its condition. Such actions allow the carrier to be in the best position possible to argue inherent vice/Force Majeure, etc, defences to any cargo claims at the discharge port.