House Bills of Lading

1. The Institute of Chartered Shipbrokers is a membership organisation involved in maintaining professional standards in the commercial shipping industry. In this regard, it conducts examinations in various subjects including Legal Principles of Shipping Business (“LPS”) (which is one of the compulsory subjects for membership by examination). The Nov 2024 LPS question paper had a question on House Bills of Lading (“HBL”) and for which the examiner  commented post exam that “Freight Forwarders /NVOCC issues their own bill of lading to shippers under its own set of rules”.
2. Given that we have always propounded that a HBL simply means a BL with a logo, we are revisiting this topic again.The definition of HBL varies given that the majority define the HBL being issued by a Forwarder/NVOCC and who in turn contract on the basis of a Master BL (“MBL”) with the overlying carrier. In this regard, we had earlier written on “Bills of Lading – NVOCC’s” & “House Bills of Lading – Are they a cause for concern?” which touches on some elements on this topic including the essential features of an HBL and whether there will  be a MBLⁱ associated always with a HBL. In this article, we touch on the development of the HBL’s. 
3. Traditionally, BLs were issued by the Master who signed on behalf of the Owners after goods were loaded on board the vessel. The BL’s would list the name of the Vessel in which the cargo was loaded and carried. Should there be claim related to the cargo, cargo interests had an option to pursue the Owners and/or the Vesselⁱⁱ. These BLs do not have any logo (for instance – Intankbill-78 & Congen1994) given that these BL’s are Owner/Vessel BL’s.
4. The development of Liner Shipping (which required huge resources to perform a regular service including owning and/or chartering many vessels) led to various companies trying to distinguish their services and which included creating their own documents including BL’s. Initially, these companies used to own vessels but as time went by, some of the companies created separate corporate structures to ring fence their assets (separate the operating company from the ship owning company). Our search in Equasis does reveal that some of the major Shipping companiesⁱⁱⁱ do not own the vessels in the name they trade in. Additionally, in some trade lanes (where economise of scale may not exist), the Liner companies may load on third party vessels either on slot charter/or on use basis such that they would be contracting as a NVOCC.
5. The essential fact is that in the Liner industry, it would be difficult for the cargo interests to pursue the Vessel simply on the basis that the BL’s listed the vessel. This is because the contractual parties would invariably be other parties and not the Vessel owners. However, should the loss occur due to the fault or negligence of the Vessel, it is always possible to pursue the Owners and/or the Vessel as stated in 3 above.
6. We understand that previously Freight Forwarders (“FF”) used to issue BL’s as agents of the Shippers. However, these BL’s did not find favour with the trade given that in case of any cargo losses, the cargo interests would have to first identify the contractual carrier to pursue for recovery. Perhaps, this led to the development of FF’s issuing their own BL’s as Carriers to avoid this issue (in which case, the FF became a contractual carrier for the carriage)  and which also satisfied the requirements of UCP 500/600^iv.
7. We have  sighted some FF BL’s signed by the FF as the agent of the performing carrier (who may be the VOCC/NVOCC).  This would be an incorrect practice, particularly, if the Carriers (VOCC/NVOCC) had not authorised the FF to act as their agents. Instead, FF’s should consider issuing their own BL’s as Carrier and in turn contract upwards with the performing carrier (the upward contract could be a BL, Service Contract,Slot Charter, etc).
   
8. In summary,
   1. House BL’s are generally found in the Liner industry and may be issued by Container Operators (VOCC’s / NVOCC’s) and other contractual carriers (FF’s as Carriers / Consolidators).
   2. It is wrong to equate HBL’s as a document only issued by a FF/NVOCC given the changing business practices in the Liner industry.

^i. We would prefer to use overlying contract which can be by way of a BL, Slot or Service contract – however, the terms of this overlying contract is of no relevance to the downward contractual parties and who should focus on their contract only i.e. the BL issued to them
^{ii. Admiralty act in some jurisdiction’s permit  claimants to pursue the vessel directly provided the loss was due to the fault of the vessel – see for instance, the Singapore High Court (Admiralty Jurisdiction) Act 1961
iii.} See Maersk A/S and MSC details as seen in www.equasis.org
^iv. See Article 23 of UCP 500 and Article 20 of UCP 600.