Newer Remedies for Missing Bills of Lading
──Yuesheng Zhao

In international trade, most goods are transferred by sea. For the carrier, the most important document in these transfers is the Bill of Lading (B/L). It serves as proof that the carrier has acknowledged receipt in good condition of the materials being shipped, and serves as the only legal document for the carrier's assurance of delivering the goods. From the perspective of the buyer and seller, the B/L is also important because it can serve as a document of title to the goods.

Under Chinese Maritime Commercial Law, B/Ls are divided into different categories: Bearer B/L, Order B/L and Blank B/L. According to the character of the B/L, some carriers deliver goods on the condition that they receive the B/L, without assuming liability to confirm the identity of the B/L's holder.

As mentioned, the B/L also serves as a document of title. Once the B/L is lost, the owner of the goods runs the risk that the goods are out of their control or could be taken away by somebody else who may be holding the B/L. Due to that risk, most holders of B/Ls guard them very carefully. Still, occasions occur where they do become lost. In the past, regulations have not been clear about situations such as these. The valid owners of goods who had lost B/Ls used to either declare their rights to the shipment in publications in an attempt to protect their profit, or would try to resolve the situation through International Chamber of Commerce regulations governing commercial paper. These methods however, were often in vain.

As of July 1, 2000, PRC law has finally addressed these situations. The 100th clause of the Chinese Maritime Commercial Law was adopted and stipulates that once a holder of a B/L finds that the B/L is lost, he should immediately apply for public summons in the court where the goods are located. He should also declare before the court that the lost B/L is ineffective.

After the court places the case on file and confirms to its satisfaction there are no mistakes, it will issue a stop payment notice to the carrier or the carrier's agent in the port where the goods are located. This notice will be announced in the public media, with the typical public notice period being two months. During this time, interested persons can declare their rights to the court or make an objection. Also during this period, transferring the missing B/L is ineffective. After the duration, if no one else has stepped forward, the court will declare the B/L to be ineffective. As part of that judgment, the applicant will be entitled to the goods.

Given that so many goods move in and out of China under B/Ls, the passage of this regulation was very important. This is because it helps limit the risks associated with a missing B/L, and lends the support of Chinese law to correcting these situations, where it did not previously exist.