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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,

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Presentation on theme: "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,"— Presentation transcript:

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

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

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

5 Procedure Petitioner: prima facie showing of being the last holder or the last endorsee of the lost BL. 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 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 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. If nobody comes forward: the decree is issued to cancel the bill. Weakness: relies on legal fiction. 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. The lost BL no longer at risk of being acquired bona fide and for value. A lawful holder of the instrument A lawful holder of the instrument is deprived of the status as the holder. is deprived of the status as the holder. is not deprived of his right: The Supreme Court decision on 25 January is not deprived of his right: The Supreme Court decision on 25 January to prove his right, must adduce other evidence. to prove his right, must adduce other evidence.

7 Effect (2): Re storing to the petitioner the status of the holder The petitioner may claim delivery without BL. cf. substantive right The petitioner may claim delivery without BL. cf. substantive right A further facilitating measure: 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 518 of the Japanese Commercial Code Article 305 of the Norwegian Maritime Code Article 305 of the Norwegian Maritime Code

8 Purpose (1): To claim delivery of goods without BL However, rare in practice. However, rare in practice. ∵ Carriers normally agree to deliver without BL if sufficient security is provided. Other factors taken into account by the carrier: Other factors taken into account by the carrier: the consignee ’ s financial standing to honour its LOI; the consignee ’ s financial standing to honour its LOI; whether the consignor or a reputable bank also join in providing LOIs; 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; the enforceability of LOI(s) in the country where the port of discharge is situated; whether the P&I club will indemnify. 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 Main purpose in practice Bank ’ s charge against the consignee on its LOI may keep mounting while in the hands of the carrier. 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. 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. 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 is not sufficient as a ground for claiming the return of LOI. In law, the decree is not 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. 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. 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. Time bars applicable by the courts to the jurisdiction of which it may be amenable. A copy of the decree 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: the lost BL: issued in Tokyo. issued in Tokyo. Yokohama (Japan) named as the port of loading and Keelung (Taiwan) as the port of discharge. 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. a choice-of-court clause giving the Tokyo District Court exclusive jurisdiction over actions against the carrier. Held: declined jurisdiction. Held: declined jurisdiction. The Japanese courts had jurisdiction only where the port of discharge is situated in Japan. 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. 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 most cases, the port of discharge was situated in Japan. In nearly 40 cases, the port of discharge was outside 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 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. 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 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 Yangon (Myanmar) named as the port of loading and Singapore as the port of discharge to be transmitted via Hachinohe (Japan) to be transmitted via Hachinohe (Japan) lost while in the custody of a Burmese bank lost while in the custody of a Burmese bank a petition by the Japanese company was granted by the Hachinohe Summary Court. a petition by the Japanese company was granted by the Hachinohe Summary Court.

14 Jurisdiction (3) Lex ferenda the port of discharge the port of discharge the place of issuance of the BL ≒ the port of loading 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; usually mentioned on the face of BL; situated along the supposed course of circulation of BL situated along the supposed course of circulation of BL cf. the carrier ’ s principal place of business 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 cf. the forum chosen by a choice-of-court clause in BL ∵ It is for inter partes proceedings against the carrier. ∵ It is for inter partes proceedings against the carrier.


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