Combined transport and through bills of lading

Chapter 11

Combined Transport and Through Bills of Lading

(A) Introduction

Scope of this chapter

11.1 This chapter considers the problems peculiar to those bills issued for carriage other than the traditional port-to-port shipment.¹ The terminology associated with such carriage and associated documentation is discussed below. The abbreviation MSB (multi-stage bill) will be used, despite its limitations, as a generic expression to describe such documentation.

11.2 The “classic” bill of lading provides, and provides only, for carriage of goods by means of one conveyance (a ship or ships) from one port to another. The growth of containerisation and “one-stop shop” carriers, non-vessel owning common carriers (“NVOCCs”) and forwarders willing to provide door-to-door service has in recent decades fuelled the very significant rise of MSBs such as “combined transport”, “through” and “multimodal” bills of lading.² Legal developments have lagged behind commercial ones. This may be due to the complexity of potential legal problems inherent in carriage involving multiple modes of transport, multiple “actual” carriers and multiple national regimes. The approach of English law is still basically a contractual one, with all the attendant problems of relations between chains of contractors and sub-contractors, and the interplay between different international conventions and attempts to circumvent contractual provisions by suit in tort.

11.3 Much of the law relating to bills of lading generally applies also to MSBs. In order to appreciate the different legal effects that exist between classic bills and MSBs it is necessary to consider the commercial requirements that have produced these forms of bill. Specifically:

• MSBs are concerned overwhelmingly with containerised cargo. This gives rise to the difficulties inherent in the use of a container, some of which have been discussed in relation to the Hague and Hague Visby Rules package limit in Chapter 10. In particular containers are frequently packed by the shipper, not the carrier, and it is not generally possible for the carrier to verify the nature of the condition of their content.³
  
• MSBs are generally concerned with “door-to-door” transport rather than just a sea voyage. It is the versatility of the container and its ease of transfer from one conveyance or mode of conveyance to another that has driven the rise in its use.
  
• Carriage effected under MSBs frequently does not entail or need to provide for change in ownership of the goods carried, and the need for a document of title is diminished in some trades. This is particularly the case for “groupage” shipments where goods belonging to different parties are consolidated into one container for the purposes of much of the carriage, to be separated again at an inland hub or distribution centre.
  
• Another important feature of the typical groupage or consolidated shipment is that the forwarder or agent must have control over the container after its consolidation but before its receipt by the sea carrier, and after delivery by the carrier but before “deconsolidation”. Thus, a traditional bill that names as shipper or consignee the actual owner of the whole of the goods will not suffice.
  
• The principal carrier(s) who contract(s) with the shipper or his agent are less likely to be the traditional shipowner but more likely to be an MTO (multi-transport operator), NVOCC or non-vessel owning multi transport operator (“NVMTO”), whose relationship with the shipowner and/or other MTOs may be contained in a complex web of cross-charterers, space/slot charters, pool agreements and similar contracts.⁴

11.4 MSBs are typically different from classic bills in one or more of the following respects:

1. (1) They provide, either in the standard wording of the bill, or by the ability to “tick a box”, for receipt of the goods, or commencement of carriage, prior to sea carriage and/or for delivery or termination of carriage after the end of the sea carriage.⁵
   
2. (2) They contain specific wording providing for carriage other than “port-to-port”. This may:
   
   
   
   • • provide that any arrangements for on-carriage are entered into by the carrier as agent only; and/or
     
   • • provide for different schemes of liability at different stages of carriage; and/or
     
   • • provide that the liability of the “carrier” is limited to the part of the transport performed and/or that he is under no liability for the goods other than when they are in his possession.⁶
   
   
3. (3) They may provide a liberty or right to tranship or forward goods. A liberty to tranship within the context of a port-to-port shipment will not make the bill an MSB, and transhipment to another vessel does not involve a different “mode” of transport, but transhipment raises issues closely related to common issues under MSBs, with bills permitting it sometimes described as through bills. This is discussed below.

11.5 The effect of a particular MSB will depend primarily on its express terms. This book does not provide a commentary on the specific terms of the various standard form bills. Examples of widely used MSBs such as Combiconbill 1995, Multidoc 95 and Conline 2000 (which may be used as an MSB) appear on the BIMCO website,⁷ together with a commentary on their terms. A detailed analysis of specific wordings of MSBs appears in Gaskell.⁸

Main issues

11.6 Three related categories of legal questions, other than issues of pure construction, arise frequently in practice with MSBs: (i) who are the parties who may sue or be sued under it for any particular stage of the carriage? (see section B, below); (ii) are MSBs in law “bills of lading”, whether at common law, for the purposes of UCP, or under COGSA 1971 or COGSA 1992, and, if not, what are the consequences? (see section C, below); and (iii) what (if any) regime or convention governs the liability of the carrier(s) through its contractual or compulsory application? (see section D, below).

Terminology

11.7 Traditionally two basic types of MSB existed, known as a combined transport bill and a through bill. This terminology is, however, confusing in some respects because these and other descriptive titles are frequently used interchangeably.⁹ None of these terms are of specific legal significance, and although the description of a document may be a pointer to its true nature, what is important is substance and not form. The term “multimodal transport” is increasingly used instead of “combined transport”.

11.8 A combined transport bill of lading evidences a contract between C, the cargo owner and S, the carrier, whereby S agrees to carry or procure carriage of the goods, as principal, from A to B, even if the journey between A to B involves a series of stages of sea carriage and other means of carriage such as road, rail or air carriage. S will typically sub-contract some or all of the carriage to others. But, as far as C is concerned, S is the “one-stop shop” with which he contracts.

Through bills

11.9 Under a typical through bill of lading the principal carrier undertakes to perform a portion of the carriage, for example, the sea leg, and also undertakes to arrange, as agent, an additional leg, for example, acting as forwarding agent on behalf of C for the onwards road carriage, by a different carrier, from the discharge port.

11.10 Through bills fall into two broad categories:

1. (1) where the bill is the operative document for the whole of the carriage, with the issuer acting as agent for the other carriers named or involved who carry on terms specified in the bill; and
   
2. (2) where the bill provides a liberty for the named carrier to engage (as agent) others to undertake on carriage or pre-carriage covered by a separate contract and separate documentation.

Thus, under a through bill the first carrier will or may act as C’s agent for a certain portion of the carriage, rather than as a principal only.

Other types and names of bills

11.11 Bills may also be described as multimodal transport bills or intermodal bills. Again these labels have more commercial than legal significance.

11.12 A “house bill” may be issued, commonly by a forwarding agent as opposed to an “actual” or “performing” carrier. As discussed below, it is unlikely to be a bill of lading in the strict sense at all.¹⁰ The same applies or may apply to documents described as “service” bills, “groupage” bills or “feeder” bills. This last-named term is often employed where there is carriage of short duration on small “feeder” vessels preceding or following carriage on larger ocean-going container vessels.¹¹

11.13 In the classic bill of lading the shipper and consignee are parties with direct interests in the cargo at the end of the contractual carriage, either because they are owners or have a right to delivery. Multimodal transport involves, as well as this type of bill, secondary bills issued by carriers other than the “first” carrier, and these typically name either the first carrier or a forwarding agent as shipper/consignee.¹²

Multi-purpose bills

11.14 Many standard documents¹³ are drafted to serve either as a port-to-port bill or an MSB, depending on how the detail of the bill is completed. For example, the terms of carriage may deem the bill to be a combined transport document if the boxes for “place of acceptance” and/or “place or delivery” are filled in as well as those for the port of loading and discharge.¹⁴ This is doubtless a commercially convenient practice. However, inherent in this practice is the danger that a small change in matters of apparently insignificant detail can make a fundamental difference to the character of the document.¹⁵

11.15 In The Antwerpen¹⁶ the bill providing for carriage from Felixstowe to Sydney was in a form intended for either port-to-port or combined transport shipment. Different terms for each of the two types of operation were contemplated by the wording of the bill. An issue arose as to which terms applied. It was contended that because a box entitled “place of acceptance” had been filled in with the word “Felixstowe”, the effect of a provision in another box that stated that the “place of acceptance” was “applicable only when document used as a combined transport B/L” meant that the bill was a combined transport bill. This contention was rejected on the ground that completion of the box was a “patent error” and so could be ignored.¹⁷

(B) Basic contractual issues

What is the ambit of the contract?

11.16 Multimodal transport frequently entails the issue of more than one set of documentation; for example, the forwarding agent may issue a “house” bill to the shipper, and then one of the carriers may issue a further bill, perhaps naming the forwarder as the shipper. Each document needs to be considered separately, albeit in the context of the overall contractual scheme.

11.17 If the arrangements between C (the cargo owner) and S1, S2, S3 and so on, a series of other parties “involved” in the carriage, are considered, then there are a number of possible permutations for the differing roles of those parties. Many of the cases are concerned with an analysis of this type of situation. Most modern bills providing for combined or multimodal carriage do so in express terms with elaborate wording.¹⁸ Except where an international convention or other set of rules is compulsorily applicable (as to which see below), there is complete freedom of contract in this respect.

One contract of carriage (to which C is party)

11.18 C may contract with S1 as carrier for the whole carriage and S1 may sub-contract all or part of the carriage to S2 and S3. This is the case with a classic combined transport bill. The reference in the bill to “carriers other than the principal carrier” may simply be a declaration as to the mode in which a single contract between C and S1 is to be performed (i.e., one contracting carrier so far as C is concerned).¹⁹ It may, however, indicate an intention on the part of the carrier to contract on behalf of the shipper with the other carriers referred to, for on-carriage, as in a traditional through bill, where C may be party to contracts with S1, S2 and so on,

11.19 The contract between C and S1 may contain separate terms governing different parts of the carriage,²⁰ and/or purport to exclude any liability of S1 for liability other than when the goods are in his custody.²¹

Sub-contracting and transhipment

11.20 A common form of words in early bills gave liberty to tranship or forward goods “at ship’s expense and shipper’s risk”, although this wording would not necessarily relieve the carrier from liability for damage caused during transhipment.²² Unless S1 is acting as agent for C in contracting with S2, transhipment on to S2’s vessel is for legal purposes simply one form of sub-contracting. Therefore, S1 will remain under contractual obligations to C in respect of the period after the transhipment has taken place.

11.21 Where there is no express or implied liberty to tranship, to do so is likely to be an act going “outside the four corners of the contract” and prevent the carrier from being able to rely on contractual exceptions.²³

11.22 In the absence of a contractual provision to the contrary, even where S1 has a liberty to tranship or sub-contract, his obligations as to the cargo after transhipment remain on the original contract terms.²⁴ The original contract terms will also apply, in the absence of any contrary agreement, where the destination of the goods has to be changed, for example, where outbreak of war makes discharge impractical.²⁵

11.23 A common problem with MSB shipments is that loss or damage occurs when the goods are in the custody of a party (e.g., S2 or S3) other than the party contracting with C. Complex problems arise over whether C can sue S2 or S3 directly, either in tort or in bailment. If S2 or S3 can be sued, there are then issues as to the extent to which S2 or S3 may be able to rely either on the terms on which they have contracted with each other, or on the terms of the contract between C and S1 (such as a Himalaya clause). The principles are discussed in Chapter 9, but compulsorily applicable regimes may modify the common law position (see section D, below).

Contracting as agent

11.24 S1 may contract with C to arrange a contract for on-carriage on C’s behalf. The agreement may contemplate one or more contracts with separate legs with S2, S3, S4, etc. In such a role S1 is acting as a freight forwarder. Frequently, however, S1 contracts as carrier for part of the route, but as agent for C in contracting with S2 for another part.²⁶ An agency contract is not a contract of carriage at all, let alone a contract of carriage of goods by sea.

11.25 Where S1 acts as agent he will, subject to the contractual terms, have an obligation to act with reasonable diligence, such as in selection of an appropriate carrier²⁷ and to protect the interest of his principals vis-à-vis the carrier.²⁸

Contract for carriage

11.26 An intermediate position, which emerged when S1 contracted as principal but the courts considered he should not have the liability of a common carrier, is where S1 contracts to procure carriage by S2 or to “see that it is done”. Such an arrangement may involve S1 in obligations akin to those of a carrier but modified, for example, by S1’s standard terms.²⁹

The role of “freight forwarders” and “agents”

11.27 The “freight forwarder” or shipping agent has a central role in trade involving MSBs. He is often the only point of contact for the shipper concerning the carriage of the goods. Bills such as the FIATA bills have been developed for forwarders and are in widespread use. In the traditional sense the freight forwarder undertakes to act only as agent for the purposes of bringing his customer into contractual relations with a carrier.

11.28 However, the term “freight forwarder” is not a legal term of art and the freight forwarder may contract as agent,³¹ as principal to procure carriage,³² as carrier,³³ or, even in the same transaction, in more than one of these capacities.³⁴ Conversely a shipper may enter into both (i) a contract for carriage on one set of terms (for example, with S1, a freight forwarder contracting as principal to procure carriage) and (ii) a contract of carriage on bill of lading terms with S2,³⁵ although relations between S1 and S2 are governed by yet another contract. A forwarder may issue not a bill of lading but a forwarder’s certificate of receipt (“FCR”) or forwarder’s certificate for transport (“FCT”), and the terms of each document must be considered to ascertain whether it is a bill of lading³⁶ or not, or indeed whether it has any contractual force.

11.29 It is not uncommon for a forwarder to be named in a bill as either shipper or consignee. Whether he is contracting with the carrier as agent or principal is a question of fact.³⁷ Where a forwarder is so named, regardless of the effect of this on whether the bill is a true bill of lading (as to which see section C, below), it will disable the owner of the goods from suing the carrier in contract if he is not a party to the contract.

Principal, agent or both?

11.30 How are the roles of the various actors analysed in practice? A common question is whether a party to an MSB contracted as principal or agent. This question often arises where a party seeks to avoid liability by contending that it acted as agent only (either of a “downstream” party, such as the original goods owner or an “upstream” party, such as the actual performing carrier). The short answer is that it all depends on the contract wording and the underlying background or matrix. The cases discussed below (not all of which are MSB cases) provide some illustrative guidance on the applicable principles but the only general rule is that there is no general rule. There is also a large body of authority on this type of issue in cases concerning land carriage, which are also potentially relevant to a discussion on sea carriage.³⁸ A detailed consideration of them is beyond the scope of this book. However, the factors taken into consideration in this context include (i) whether a party was remunerated by a flat rate or a commission, (ii) whether they were or held themselves out as carriers or not, and these may be³⁹ equally relevant in the present context. As already observed “principal” does not necessary equate with “carrier” as a party may contract as principal to procure carriage.

11.31 Cho Yang v Coral⁴⁰ is instructive, although not a case of combined transport. The claimant shipowner C claimed freight from the defendant goods owner D who was named as the shipper in the bill, and was as such, on the face of the bill, liable for freight. The defendant had sub-contracted for the carriage with an intermediary N, who had in turn sub-contracted with I who had sub-contracted with E as the claimant’s agents and who had issued the bill as such. D paid freight to N and N paid freight to I. I failed to pay C or E; hence the action. At first instance it was held that all parties except E had contracted as principals but in terms authorising the issue of a bill naming D as shipper. Therefore, D was contractually liable to C for freight. In the Court of Appeal the finding that all had contracted as principals was not disturbed, but the court held that on the facts D was not liable and allowed the appeal. Hobhouse L.J. said:⁴¹

Thus, D was a party to the bill of lading contract but had no liability for freight thereunder and had undertaken a separate contractual liability for freight to N.

11.32 In Center Optical v JTSC⁴²