Bills of lading: The Early Departure

Procedure and other words of caution

One of the functions of a bill of lading is to act as a receipt

for the cargo shipped. The bill must therefore contain an
accurate record of the quantity of cargo carried. This is
often more complicated than it may at first appear and
this article looks at two of the key issues that can arise.

Olivia Furmston
Legal Director
+44 20 3320 8858
[email protected]

Introduction figures show different quantities of

Bills of lading are the cornerstone of cargo. Ships rely on their individual
nearly all contracts of carriage by sea. tank gauges, often as well as a draft
Once issued, a bill of lading: (1) acts survey, while shore-side terminals
as a receipt for the cargo shipped; (2) and facilities use a variety of different
represents the contract of carriage methods to calculate the quantity
between the receiver and carrier; and of cargo provided to a ship. While
(3) is a document of title for the goods no method is beyond repute, more
in question and, in turn, a negotiable often than not, a shore-side terminal/
instrument. By virtue of (3), property facility will claim it has provided more
in the goods being transported on cargo to a ship than the amount
board a ship can be passed from one the ship claims to have received.
buyer to another while the sea carriage
is still in progress, through what is Refusal to sign
known as an endorsement on the bill. In these circumstances, provided the
master has reasonable grounds for
The legal issues surrounding bills of suspecting the quantity (or for that
lading are vast, as are the international matter condition) of the cargo loaded
conventions that have been created on board the ship is inaccurate, he
by the shipping community. These may refuse to sign the bill of lading ‘as
international conventions include presented’. However, if the master
the Hague1 and Hague-Visby2 unreasonably refuses to sign or
Rules and the Hamburg Rules3. authorise the issue of a bill of lading
with the use of shore figures, he runs
Ship versus shore figures the risk of being in breach of Article
All three above-mentioned III of the Rules and possibly also liable
conventions require that bills contain to his charterer (under the subject
accurate and true information as to charter) for any delay and consequent
the quantity and condition of the costs/losses down the chain.
cargo loaded. For example, under
Article III Rule 3 of the Hague/Hague- Case study
Visby Rules, after receiving the cargo, What constitutes a reasonable
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Legal

1 Dated 25 August 1924. and on the demand of the shipper, refusal will, as with all things, turn
2 Dated 23 February 1968. the master is obliged to issue a bill of on the particular facts of the case.
3 The full title of the convention is the lading evincing, amongst other things, However, the English courts handed
United Nations Convention on the the quantity of cargo to be carried. down some useful guidance in The
Carriage of Goods by Sea 1978. A recurring problem many carriers Boukadoura4 . In this case, there was
4 [1989] 1 Lloyd’s Re 393. face, especially when loading liquid a difference between the shore and
cargoes, is when the ship and shore ship figures of about 1%. The master

Standard Safety, Tankers May 2016 37

Bills of lading: The Early Departure
Procedure and other words of caution
continued

was prepared to put both the ship to the correct quantity of cargo
and the shore figures on the bill of loaded. All of these options have
lading, but the shippers refused their own shortcomings and, it
and insisted on the shore figures should be mentioned, club cover
being used. In an attempt to resolve implications where a master or
the dispute, a second draft survey member issues a bill of lading with
was carried out by an independent knowledge that it contains an incorrect
surveyor. This confirmed the ship’s statement as to the quantity of
figures, but the shippers nonetheless cargo loaded on board the ship 5.
still refused to accept a bill of lading
showing the ship’s figures. Ultimately, Early Departure Procedure
and after considerable delay, a bill Why is it used?
of lading based on the ship’s figures In many terminals, considerable
was issued and the cargo was carried pressure is placed on the ship to leave
to its destination and discharged, the loading berth quickly. In such
without any shortage claim. The cases, tank gauging and corresponding
charterer subsequently claimed for generation of documentation can
the time lost due to the delay at the often be performed in a hurried fashion
load port. Although the charterparty and the onus is always on the ship’s
provided for bills of lading to be issued officers to ensure errors are not made.
by the master ‘as presented’, the By definition, an Early Departure
court agreed that the master was Procedure (EDP) normally requires
only obliged to issue a bill lading for that the ship departs prior to the bill
the quantity of cargo he reasonably of lading having been issued, and
believed to have been loaded. sometimes even before the quantity
of cargo on board has been officially
Reasonable refusal determined. EDPs are especially
There are no clear-cut guidelines to prevalent in the North Sea and the
determine when, or if, a master can Middle East, and the practice raises
reasonably refuse to issue a bill of a number of factual uncertainties
lading if he considers the quantity and possible legal liabilities for the
of cargo shown on the bill to be shipowner. We deal with these below.
inaccurate. Each case will turn on
its individual facts and also largely While an EDP is said to be at the option
depend on expert evidence (including of the visiting ship, in reality there is
additional draft surveys). Further, and often heavy pressure on an owner
somewhat irrespective of the law of to comply. Terminals are keen to
the subject charterparty, the location have maximum use of their facilities
and law of the loading port will play an and minimum delay to waiting ships.
important role in any ‘budding’ dispute. Charterers are frequently worried
Therefore, as soon as a master is aware about the effect of delay on discharging
of a problem in this respect, it is vital schedules, as well as complications
that he contacts the club or club’s local with regard to laytime and demurrage.
correspondent for advice and guidance It is known that an EDP is commonly
(ideally with personal attendance on a feature of pre-fixture negotiations
board) before any dispute escalates. and that charterers often seek to use
their commercial clout with a view to
Other options the inclusion of express provisions
Other options available to a master stating an owner’s acceptance
(rather than insisting upon a corrected of an EDP and corresponding
bill of lading) include: demanding a deductions from laytime for
letter of indemnity (LOI) from the any ‘lost’ time resulting from an
shipper and/or charterer, issuing a owner’s non-compliance with it.
5 See Rule 3.13(8) letter of protest (LOP) or obtaining
guidance from the local court as

38 Standard Safety, Tankers May 2016

Who signs the bill? to proceed so as to minimise problems
Following an EDP, the bill of lading is and possible liabilities at the discharge
usually signed by the locally appointed port(s). Such steps may include:
agent, on behalf of the master, at
some later stage after the ship has i) giving the consignee, or notify party,
sailed the port. The master will usually on the face of the bill, written notice
authorise the agent, in writing, that he of the ship’s own figures;
may sign the bill of lading on his behalf ii) issuing LOPs to all interests,
under certain strict conditions. In this including shippers, the charterer(s),
respect, we strongly recommend that charterer’s(s’) agents, and, if
an EDP should not be followed unless possible, the consignee or notify
the master has permission from his party;
commercial operator or the charterer. iii) a request for the shippers to attach
a copy of the LOP to the bill and to
Points to note forward a copy of the protest to the
The master’s authorisation to the agent buyers.
should also be limited to the signing
and releasing of the bills of lading Such measures will probably not
only, and be valid only when all details, avoid liability, but may avoid a claim
including quantity/quality of cargo, for what will usually be a paper loss.
have first been approved by the master.
If possible, the local agents should be Cargo shortage
required to fax a copy of the (draft) bills As indicated above, a port/terminal’s
to the ship for the master’s approval EDP can sometimes ‘push’ a ship to
prior to utilising his authorisation to anchorage even before the quantity
sign and release the bills of lading. of cargo on board has been properly
Upon receipt, the master would be well determined by the ship’s crew, by
advised to check through the drafts way of tank gauges and draft surveys.
very carefully, prior to confirming his If this occurs, then there is no
approval of the agent’s signing them. In ‘benchmark’ against which the ship
particular, when confronted with a draft can check the loaded quantity against
bill of lading, the master should examine shore-side figures, and thus there
the following aspects (on the face of the may be no immediate notification
bill) and ensure they accurately reflect to the master of any discrepancy.
his own records and information:
It is vital that the implementation of
i) the quantity of cargo said to have an EDP does not expose a ship to any
been loaded; unwarranted liability caused by, say,
ii) the description and condition of an unexpected passage cargo ‘loss’, in
cargo; turn attributed to unreliable gauging
iii) the date; at the load port shore-side terminal.
iv) the description of the voyage, Whenever a ship and its crew come
including load and discharge port(s). under commercial pressure to vacate
a loading terminal before they have
If the bill is incorrect had the proper opportunity to verify
If a master or ship’s crew subsequently the ship’s own figures, this must be
discover that a bill has been issued resisted so far as possible. The use
incorrectly (and hopefully against of the vessel’s own agents is perhaps
articles
Legal

their strict instructions/written letter one way of avoiding the EDP problem
of authority), then they must notify and the pressures involved, although
their management office immediately. it is appreciated that, with isolated
This should also be notified to the terminals, this will probably be difficult
member’s usual club claims handler and costly. This must however be
as soon as possible, who will then be compared to the risk exposure of
able to advise the member how best issuing bills with incorrect cargo figures.

Standard Safety, Tankers May 2016 39

Bills of lading: The Early Departure
Procedure and other words of caution
continued

Conclusion provided that bills of lading were to

–– Owners should seek to include an be signed ‘as presented’, there was
express provision in the subject an implied requirement that the
charter stating that an EDP is bills ‘as presented’ actually related
not accepted, wherever this is to the cargo and did not contain a
commercially possible. misdescription which was known to
–– This charterparty provision should be incorrect.
be brought to the attention of the –– The use of the vessel’s own agents
master in order that he can resist (where commercially and financially
commercial pressure from the viable) is perhaps one practical
charterer and its representatives way of avoiding the EDP problem or
on site. the pressures involved in inserting
–– Bills of lading are not to be signed shore-side figures into a bill of lading.
until the accuracy of their contents –– The member should contact the
have first been verified and, if club as soon as a discrepancy or
necessary, appropriately qualified dispute arises as to ship versus
by the master or the authorised shore-side figures at a load port.
agent of the master. The club’s local correspondents
–– Owners willing to take a stance can may be able to send someone
take heart from the decision of the to attend on board to assist the
English courts in the case of The master and crew.
Boukadoura. In that case, it was held
that, although the charterparty

40 Standard Safety, Tankers May 2016