Confusing switch

Ship agents released cargo to the consignee who did not have original bills of lading (BLs). The cargo was initially shipped under seaway bills (which do not need to be handed in to get the cargo) and this was subsequently changed to BLs. However, the agent mistakenly thought the goods were still subject to the seaway bills.

The consignee refused to pay for the cargo, alleging that the goods were damaged. The shipper refused to accept this and appointed lawyers to pursue the freight forwarder, who in turn, appointed lawyers to put the carrier on notice. The carrier in turn, kept chasing their agent, although it was explained to them that they had to deal with the claim first.

ITIC received legal advice from the country where the consignee was located and from the country where both the shipper and carrier were based. The advice was that the shipper would probably win against the carrier (unless there was evidence supporting the consignee’s claim – which they did not have) and that recovery against the consignee would be difficult. A settlement offer for 80% of the claim was put forward by the agent. This was rejected by the carrier and the shipper. ITIC pushed the carrier and requested evidence to check that they were taking proper action against the shipper to mitigate their loss. This was not forthcoming.

The carrier was put on notice that they were the ones inviting the claim and the agent would therefore not be contributing anything further. Finally, the carrier pushed the other parties up the chain to settle at the 80% offered, which was agreed. This sum (US$60,000) was reimbursed by ITIC.