LCXpert

Interpretation of Bill of Lading Date ;

UCP 500 sub-Article 23 (a) (ii) clarifies,

…….if a bl has a preprinted date, which is the only date on the bl then it is the only date (of issue) shown on its face is to be "deemed as" the date of loading on board AND the date of shipment (as far as examination of stipulated documents is concerned) to avoid confusion and dispute.

Best Practice ; To show two “dates” namely, the date of loading on board and the date of issue.

In a "received for shipment" bill of lading, which does not contain pre-printed "on board" acknowledgment, two "dates" may be shown on its face (although most of the times, in practice, only one date may be shown), namely, the date of loading on board and the date of issue. UCP 500 sub-Article 23 (a) (ii) also clarifies that the date of loading on board is "deemed as" the date of shipment (as far as examination of stipulated documents is concerned).

Literally, the date of a bill of lading should have no other meaning other than an indication of

the date on which the bill of lading is issued. However, in letter of credit operations, for a bill

of lading with pre-printed wordings to indicate that the goods has been loaded on board, there

is usually only one date being shown on its face. Hence there is a need for the UCP 500 sub-

Article 23 (a) (ii) to clarify that this only date (of issue) shown on its face is to be "deemed as"

the date of loading on board AND the date of shipment (as far as examination of stipulated

documents is concerned) to avoid confusion and dispute.

For a "received for shipment" bill of

lading, where there is no pre-printed "on board" acknowledgment, two "dates" may be shown 

on its face (although most of the times, in practice, only one date may be shown), namely, the

date of loading on board and the date of issue. It is sufficient for the UCP 500 sub-Article 23 (a) (ii)

to clarify that the date of loading on board is "deemed as" the date of shipment (as far as

examination of stipulated documents is concerned), leaving the date of issue to be interpreted

according to its literal meaning here. I remembered a dispute case that a draft called under a

letter of credit was payable a certain number of days after the bill of lading date. In the bill of

lading, there were two dates being recorded on its face, the date of loading on board and the

date of issue. The bill of lading had pre-printed wording evidencing "received for shipment".

One party considered that the payment date of the draft should be counted from the date of

loading on board according to UCP 500 sub-Article 23 (a) (ii) stipulation. The other party

considered that it should be counted from the date of issue of the bill of lading because that

was exactly what had been written on the draft. The underlying reason for the dispute in date

of maturity of the draft was due to its impact on the interest. Having been asked for a consultation

by one party, I gave the opinion that the payment date of the draft called under the letter of

credit should be counted from the date of loading on board, particularly in the letter of credit

operations environment, to be consistent with the UCP 500 sub-Article 23 (a) (ii) stipulation.

The matter was finally resolved amicably by negotiation. 
Hence, in letter of credit operations, parties should be discouraged from the habit of indicating

the date of payment by a draft payable a certain number of days after the "bill of lading date"

or "date of bill of lading". To certain parties, the date of loading, the date of shipment, the date

of issue of a bill of lading and the date of dispatch in carriage by charter party may take

different meanings, in spite of UCP 500 sub-Article 23 (a) (ii) stipulation, particularly when the

literal meaning is to be taken. I may elaborate further on these different dates in a bill of lading

in the future issue of the L/C Monitor based on my understanding of maritime transport operations

and local practices. 

ONLY FOR READING

As a consultant specialized in documentary credits, and the related transport issues, I came across a dispute where the drafts were due for payment 90 days "after the arrival date of the carrying vessel" because the buyer would not wish to start counting the payment date until after the arrival of the goods. Unfortunately, the carrying vessel sank before completing her voyage. There was a dispute over the maturity date for payment, which might not have been deemed to exist simply because there was no arrival date once carrying vessel had sunk! From the perspective of a bill of lading being a negotiable document of title, the bills of lading were no longer documents of title since the goods they represented might not exist once the carrying vessel had sunk, particularly after a fire. In cases such as this, no passing of property would be valid, and a party's right to sue the carrier might also be effected according to the famous U.K. COGSA (Carriage of Good by Sea Act) cases of the Albazero (1975) 2 Lloyd's Rep. 295, (1975) W.L.R. 419, (1975) 3 All E.R. 21 (C.A.), (1977) A.C. 774, (1976) 2 Lloyd's Rep. 467, (1976) 3 W.L.R. 419, (1976) 3 All E.R. 129 (H.L.), the Aliakmon (1983) 1 Lloyd's Rep. 203, (1985) Q.B. 350, (1985) 1 Lloyd's Rep. 199, (1985) 2 All E.R.44 (C.A.), (1986) A.C. 785, (1986) 2 Lloyd's Rep. 1, (1986) 2 W.L.R. 902, (1986) 2 All E.R.145 (H.L.), the Aramis (1989) 1 Lloyd's Rep. 213 (C.A.), the Grant and Norway (1851) 10 C.B. 665, 138 E.R. 263 and the Delfini (1988) 2 Lloyd's Rep. 599, (1990) 1 Lloyd's Rep. 252 (C.A.). As a result, the bills of lading would no longer serve as collateral to the issuing bank against the import financing so extended. 

As already pointed out by Robert M. Rosenblith on page 12 of his article "Holder in Due Course" published in the L/C Monitor Volume 1, Issue 2, February 1999, in the recent New York case of Regent Corp. USA v. Azmat Bangladesh Ltd., Judge Cahn, relying on NYUCC SS3-104 (1) (c) and 3-109 (1) (a), concluded that the drafts were non-negotiable because they were not payable at a date certain (being one of the key requirements of a draft) that could be determined by the face of the draft (the drafts were payable a specified number of days after the bill of lading date). This date was not specific enough under S3-109 because the determination of the due date could not be found in a 'calendar or common reference book' such as an almanac. From my view another reason was that the arrival date might not even exist if the vessel had sunk. Since the drafts were non-negotiable, IFIC (the advising bank who had financed the exporter side of the deal) was merely a transferee of a claim, and as such, was not within the protected class (Holder in Due Course) that are entitled to honour, notwithstanding a fraud in the transaction. This case clearly shows additional risk for drafts to be paid a number of days after the bill of lading date. 

A better way of showing a due date for payment, in a draft or otherwise, is to count from the date of loading on board, from the date of shipment of the bill of lading, or from any specific calendar date to be agreed by the parties. There is nothing wrong with the UCP 500 sub-Article 23 (a) (ii) and hence it needs not be changed, since in shipping practice, the same date is often used for both the date of issue and the date of loading on board in a 'received for shipment' bill of lading. Dispute arises from the imprecise indication of the payment date in a draft, such as one based on the issuing date of a bill of lading or the arrival date of the carrying vessel. 

From a customer service point of view, the issuing bank should give the applicant, its customer, appropriate advice to avoid confusion or simply should not issue documentary credits containing terms and conditions that may lead to confusion as in the cases above. Likewise, the advising bank should give similar advice to the beneficiary who is often its customer. Otherwise the applicants or the beneficiaries may rely on UCP 500 Articles 5 and 12 (regarding incomplete and unclear instructions) as their defences when the disputes end up in courts of law with the issuing banks. 

QUESTIONS

1) If the B/L has preprinted wordings that the goods have been loaded on board does the B/L require to show the date of loading on board?

Yes
No
Sometimes

2) Which article of UCP 500 deals with shipment dates ?

Article 23
Article 23 (a)
UCP 23

3) What is considered to be the date of shipment?

The date of issue of B/L
The date of "Shipped On Board" notation
The date of issue or "Shipped on Board" whichever is earlier.

4) If there are 2 dates on the bill, i.e. the "issue date" and the "shipped on board" date, which date is considered to be the "shipment date" as per L/c.?

The date of issue
The date of "Shipped on board"
The date of issue or the "Shipped on board" whichever is earlier.