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Judicial Decree to Terminate the Validity of Lost Bills of Lading

Judicial Decree to Terminate the Validity of Lost Bills of Lading . Koji Takahashi For use at the Society of Legal Scholars Conference 18 September 2008, London For details, see the presenter ’ s article in (2008) 39-4 Journal of Maritime Law and Commerce .

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Judicial Decree to Terminate the Validity of Lost Bills of Lading

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  1. Judicial Decree to Terminate the Validity of Lost Bills of Lading Koji Takahashi For use at the Society of Legal Scholars Conference 18 September 2008, London For details, see the presenter’s article in (2008) 39-4 Journal of Maritime Law and Commerce

  2. When BL is lost, destroyed or stolen • Judicial decree to render lost BL null and void • Available in civil law countries • Part 3 of the Japanese Non-Contentious Procedure Act • Art. 100 of the Chinese Maritime Procedure Law 1999 • Art. 305 of the Danish/Norwegian Maritime Code • Ch. 13, sect. 55 of the Swedish/Finnish Maritime Code • To guard against the risk of being acquired bona fide and for value. • cf. An order against carrier to deliver against security • Available in common law countries • The Houda [1994] 2 Lloyd's Rep. 541, 553 (CA) • Art 7-601 of the Uniform Commercial Code

  3. Use of the Japanese decree • More often in respect of bills of exchange, promissory notes, (share certificates) • Available generally for negotiable instruments, i.e. instruments embodying rights. • In respect of bills of lading, in no less than 440 cases in the past 60 years. • cf. Norway, Sweden • A petition for the decree in the event of the loss of BL is recommended by the JETRO.

  4. Plan of the paper • Procedure • Legal effects • Actual purposes • Usefulness • Jurisdiction

  5. Procedure • Petitioner: prima facie showing of being the last holder or the last endorsee of the lost BL. • Public notice in the court and official gazette for two months or more • If the BL is presented and the petitioner disputes its identity: inter partes proceedings. • If nobody comes forward: the decree is issued to cancel the bill. • Weakness: relies on legal fiction. ∵ In practice, public notice often goes unnoticed by the lawful holder.

  6. Effect (1): Rendering the BL invalid (now a piece of paper, cf. negotiable instrument) • The lost BL no longer at risk of being acquired bona fide and for value. • A lawful holder of the instrument • is deprived of the status as the holder. • is not deprived of his right: The Supreme Court decision on 25 January 2001. • to prove his right, must adduce other evidence.

  7. Effect (2): Restoring to the petitioner the status of the holder • The petitioner may claim delivery without BL. cf. substantive right • A further facilitating measure: If the petitioner furnishes security, he does not have to wait for the actual issuance of the decree. • Article 518 of the Japanese Commercial Code • Article 305 of the Norwegian Maritime Code

  8. Purpose (1): To claim delivery of goods without BL • However, rare in practice. ∵ Carriers normally agree to deliver without BL if sufficient security is provided. • Other factors taken into account by the carrier: • the consignee’s financial standing to honour its LOI; • whether the consignor or a reputable bank also join in providing LOIs; • the enforceability of LOI(s) in the country where the port of discharge is situated; • whether the P&I club will indemnify.

  9. Purpose (2): To request the return of the banker’s LOI from the carrier • Main purpose in practice • Bank’s charge against the consignee on its LOI may keep mounting while in the hands of the carrier. • Carrier may resist returning LOI since it may remain liable for misdelivery in countries where the applicable time bar is long or uncertain. • In an attempt to persuade the carrier, the consignee may attach a copy of the decree.

  10. A Gap between Law and Practice • In law, the decree isnot sufficient as a ground for claiming the return of LOI. ∵ It does not deprive the lawful holder of his substantive right. • In practice, the carrier often returns LOI. - by its business judgment (cf. as a legal obligation). - The decree provides some assurance to the carrier.

  11. Factors in the Carrier’s Business Judgment • Desire to keep its cordial relationships with the cargo interests. • Time bars applicable by the courts to the jurisdiction of which it may be amenable. • A copy of the decree ∵ BL will no longer be acquired bona fide and for value. ∵ Such an acquisition during the period of public notice is less likely.

  12. Jurisdiction (1)Tokyo Summary Court decision on 20 October 2005 The only reasoned decision available. • the lost BL: • issued in Tokyo. • Yokohama (Japan) named as the port of loading and Keelung (Taiwan) as the port of discharge. • a choice-of-court clause giving the Tokyo District Court exclusive jurisdiction over actions against the carrier. • Held: declined jurisdiction. • The Japanese courts had jurisdiction only where the port of discharge is situated in Japan. ∵ to ensure the effectiveness of the decree. • The choice-of-court clause was only concerned with adversarial proceedings to determine the rights and obligations inter partes.

  13. Jurisdiction (2)Other decisions announced in the Official Gazette (cir. 440 cases) Jurisdictional bases are unclear. • In most cases, the port of discharge was situated in Japan. • In nearly 40 cases, the port of discharge was outside Japan. • In almost all of them, the place of issuance was situated in Japan. • In one case, neither the port of discharge nor the place of issuance was in Japan. • BL issued by a (presumably) Singaporean company in Myanmar, naming a Burmese company as the consignor, and made out to the order of a Japanese company • Yangon (Myanmar) named as the port of loading and Singapore as the port of discharge • to be transmitted via Hachinohe (Japan) • lost while in the custody of a Burmese bank • a petition by the Japanese company was granted by the Hachinohe Summary Court.

  14. Jurisdiction (3)Lex ferenda • the port of discharge • the place of issuance of the BL≒ the port of loading ∵ The decree can be useful in a wide range of cases. ∵ The lawful holder may acquiesce to being deprived of his status as the holder since those places are: • usually mentioned on the face of BL; • situated along the supposed course of circulation of BL • cf. the carrier’s principal place of business ∵ Not necessarily connected with the lost BL. • cf. the forum chosen by a choice-of-court clause in BL ∵ It is for inter partes proceedings against the carrier.

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