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House B/L issued by a freight forwarder is the same as a B/L?

Can a house bill of lading issued by a freight forwarder be characterized as a B/L? In other words, is the holder of a house B/L provided with any kind of security? Question came up in Cro Solutions vs. Australia Capital Financial Mgmt [2018].

An exporter got a loan from a finance co. to buy cow hides & sheep skin. The B/Ls were issued by a freight forwarder (FF) and they were deposited with the finance co. as security. Booking was made with an ocean carrier by FF, and sea carrier’s negotiable B/Ls for the same goods were issued to FF. Unidentified receivers used these negotiable B/Ls to take delivery in China. The exporter defaulted and now the finance co. was claiming against the FF.

Citing a passage from Bills of Lading (2nd ed), court first acknowledged that like an elephant, a B/L is easier to recognise than to define. It found that the FF is not a carrier and generally arranges for things such as customs clearance, delivery etc. FF had indulged in misleading & deceptive conduct by putting into circulation an extra set of B/Ls (i.e. its house B/Ls) which could not have been used to take delivery of the cargo. House B/Ls were held not to be B/Ls. Damages in excess of $800K were awarded.

FFs (atleast in Aus.) will now be looking at their documentary management processes!

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