Bills Of Ladings Frauds

As recent as 2018, in a shipment of sheepskins, the carrier issued original Bills of Ladings for the cargo loaded on his ship. The freight forwarder in turn also issued “House Bills” which had the appearance of original by mentioning “To the order…” on the House Bill and stamping “Original” on them. By issuing house bills the shipper infact introduced two sets of “Document of Title” in the market for the same goods. Additionally, the shippers lifted credit against the House Bills issued by the Freight Forwarders. When the shipper defaulted in his payments the finance company was left to claim against the house bills but by then it was too late as the cargo had already been discharged against the original Bills of ladings (Australian Capital Financial Management v Freight Solutions (Vic) Pty Ltd).

Another practice which is prevalent in the world is creating fake Bills of Ladings. English courts were recently faced with a case where the cargo was delivered against a fraudulent bill of ladings. In Motis Exports Ltd. v Dampskibsselskabet AF 1912 Aktieselskab and Aktieselskabet Dampskipsselskabet Svendborg the facts of the case were that the plaintiffs had shipped different consignments on Maersk Line ships from China/Hongkong to Cotonou/Abidjan. Goods were carried under Maersk Line Bills of Ladings which consigned the goods by a remark “To Order” and additionally contained a clause:

“5. CARRIER’S RESPONSIBILITY
….
3. Carriage to and from Countries other than the USA
….
(b) where the carriage called for commences at the port of loading and/or finishes at the port of discharge, the Carrier shall have no liability whatsoever for any loss or damage to the goods while in its actual or constructive possession before loading or after discharge over ship’s rail or if applicable, on the ship’s ramp, however caused.”

Purporting to be acting on behalf of the notifying party, certain parties approached carriers’ agents and presented fake Bills of Ladings. Carriers agents fooled by the fake bills of ladings issued delivery orders for the goods to be released.

The plaintiffs in their plaint claimed wrongful delivery whereas the defendant stated that as per the clause in Bill of Ladings they are not liable for the goods once they cross the ships rail.

Faced with this situation courts ruled that the carrier, in this case, cannot hide under the clause, as the paramount duty of the carrier is to deliver the goods to the right consignee. The Court held further that only if the Bill of Lading had a term implying defence from delivery against fraudulent Bill of Ladings could the owner escape liability.

All the players including Carriers, exporters, importers involved in international trade are attempting to solve this problem of fraud or unauthorized amendment of bills of lading by introducing digital platforms. A system called Bills of Ladings Electronic Registration Organization (BOLERO) has been introduced. It facilitates use of E-Bills as part of a Blockchain and is available for viewing to everyone in the chain thus eliminating possible frauds in paper bills of ladings.