The Standard Club informs about split bills of lading and ship’s delivery orders. This situation occurs when the charterer asks the owner to discharge the cargo to more than one receiver, even though only one bill of lading has been issued.
Split bills of lading
These bills are issued for only part of the cargo originally carried on board the ship, despite the fact that the cargo was initially carried under one single set of bills of lading. Under the original set of bills, delivery can only take place to the named consignee. In case the owner is asked by the charterer to deliver the cargo to more than one consignee, split bills of lading can be used to achieve this goal.
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If this happens, the owner has to ensure that the original set of bills of lading is surrendered and cancelled. The act of handing over the original set of bills is an irrevocable confirmation from the holder of the bill of lading that they agree for split bills of lading to be issued.
Without such consent, owners risk that more than one set of bills is in circulation. This fact increases the risk of a misdelivery claim, something that could the owner find itself outside of club cover.
If there is the request to split bills, special consideration must be given to make sure that the overall quantity of cargo stated in all the split bills of lading is the same with the quantity stated in the original set of bills. Namely:
- The description of the cargo;
- Date of the bills of lading;
- Load and discharge port.
should be identical to the original set of bills.
Delivery orders
Another way in which delivery to several consignees can occur, is by using a ship’s delivery order. In this case it is also necessary for the original bills of lading to be surrendered and cancelled.
For a ship’s delivery order to have legal effect, it is crucial that the ship’s delivery order includes an undertaking by the carrier to deliver the cargo to the receiver specified in the delivery order. It is also suggested that the terms of the bill of lading is included also in the ship’s delivery order, including that the Hague/Hague Visby rules apply.
To enable the carrier to deliver the cargo in parcels to more than one receiver, the carrier will issue one ship’s delivery order to each receiver with the quantity to be delivered stipulated on the ship’s delivery order.
Letter of Indemnity (LOI)
If an owner does not have contractual obligation to replace bills of lading, Standard Club recommends owners to request charterers to issue an LOI in exchange of complying with charterers orders to issue split bills of lading or a ship’s delivery order. In this case, owners should be careful and make sure that they comply with such a request.
