Release of Cargo without Original Bills of Lading

1. We recently had an opportunity to speak in a webinar conducted on 11^th April 2025 by AMTOI. One of the questions raised during the session was on the reluctance of NVOCC’s to release cargo against a Bank Guarantee (“BG”) and who still insisted for the surrender of the Original Bill of Lading (“Bs/L”). While we did answer the question during the webinar, we wanted to relook at the issue again and hence this article. Our earlier articles on Bs/L and Letters of Indemnityⁱ also dealt on this issue and which can be viewed by clicking the hyperlink listed in the endnote below.
2. A Carrier has a common law duty to deliver the cargo to the holders of the Original B/Lⁱⁱ, failing which they (Carrier) have a liability at least for the value of the cargo. In addition, the Carrier would also incur expenses to investigate and defend the claim and pursue the Bank for the BG submitted. This being the case, should there be any competing claims for the delivered cargo, the exposure for the Carrier would sometimes exceed 200%ⁱⁱⁱ of the value of the cargo!
3. All liability policies generally make it a pre-condition of cover that the cargo is only released against surrender of the Original Bs/L issued. Alternatively, as the duty on the Carrier is to release to the holder of an Original BL, any such release without seeking Original Bs/L may be considered as a reckless behaviour. Accordingly, Liability Insurers would invariably deny  cover given that release of cargo without B/L is expressly excluded^iv as provided in the Rules/Terms of cover.
4. The other issue is that the provider of the BG, when triggered, may deny any recovery to the Carrier based on
   1. Fraud
   2. Legal defenses including that the BG was not validly signed or provided
   3. Any other technical defences.
      This being the case, should a Carrier decide to accede to the request of the cargo interests to release the cargo against a BG, they would have to consider, amongst others, the antecedents of the BG provider, whether they will honour their BG, the provisions of the BG which will trigger the application of the BG and the amount of security (whether it would include the value of the cargo and also cater to the additional costs as detailed in 2 above).

5. Unless expressly provided in the contract, there is no duty on the Carrier that they must deliver the cargo against a BG in lieu of the Original BL being unavailable for surrender. Given the potential for claims for not only the value of the cargo but also legal costs without the availability of any liability cover, it is understandable that Carriers may be reluctant to accede to such requests, particularly, when they are not being compensated for the additional time and trouble incurred. However, should other competing Carriers be willing to accede to such requests i.e. release against a BG, this may then impact their future support and loss in business. Accordingly, this issue may be better dealt if the Carriers and their agents (including NVOCC’s) discuss amongst each other (say by their associations such as Singapore Shipowners Association/Singapore Logistics Association) to ensure safeguards and which should include the BG wordings^v, minimum percentage to be factored for the potential legal costs together with a list of “approved” Banks who have been appropriately vetted.
6. To conclude, the reluctance of a NVOCC to release cargo against a BG is understandable given the additional risks and costs. However, this must be tempered considering the market practices and whether such reluctance may lead to future loss of business. In this case, Carriers, including NVOCC’s, should consider seeking BG’s with wordings which they are comfortable with and for appropriate values to protect their exposures.

ⁱ. Release of Cargo without presentation of Bills of Lading  – TLO Cover, Bills of Lading – Issues & Bills of Lading & Letters of Indemnities.
^ii. While 3 original Bills of Lading may be issued, the Carrier needs only 1 original Bill of Lading given that the attestation clause in the B/L.
^iii. This would obviously depend on the value of the cargo and for high value cargoes, the costs of defence and pursuit would be a smaller figure.
^iv. See Rule 34 1i of the Gard Rules for Ship Part II, P&I Cover 2025. Release of cargo against a LOI or BG may also be considered as reckless such that any claim could be denied on this basis.
^v. We would recommend the IG P&I Club wordings with suitable amendments to cater for both law , jurisdiction and dispute resolution clause.