ITIC E-learning Vid Highlights Dangers of Switch Bills of Lading
International Transport Intermediaries Club (ITIC) produced an e-learning video for ship agents on the use of ‘switch bills of lading,’ a second sets of bills used as a substitute for the original bills of lading issued at time of shipment.
ITIC legal advisor Mark Brattman said, “There are a number of valid reasons why a carrier may be asked by the holder of a bill of lading to issue switch bills. For example, the original bill might name a discharge port which is subsequently changed, or perhaps the sellers of goods in a chain of contracts want to protect their commercial position by removing the name of the original shipper that appeared on the bills. Alternatively, the buyer of the goods may require one bill of lading covering items originally shipped in a number of smaller parcels.
“The issuance of a second set of bills of lading, however, is an extremely dangerous practice and the perils of having two sets of bills in circulation for the same cargo are obvious. Great care must be exercised by ship agents who are asked to issue switch bills. They must follow certain rules. It is essential that the second set of bills should only be issued if the complete first set has been surrendered for cancellation. Moreover, the principal must agree in writing to switch bills being issued, and must also approve any changes to the content of the original bills.
“If the second set of bills contains any misrepresentations, the carrier and its agent may be at risk of claims from parties who have suffered a loss as a result of such. Agents should also be aware that switch bills of lading are sometimes issued in addition to – rather than against cancellation of - the first set of bills. This may be because the first set has been held up in the country of shipment, or because the ship arrived at the discharge port in advance of the first set of bills, or simply because the first set have been lost.
“Agents should only ever act on the instructions of their principal and should not, for example, respond to direct requests from a consignee to issue switch bills of lading.” Agents should comply with reasonable requests from their principals but should never knowingly change information that is factual – for example the port of loading – even if offered an indemnity to do so.”