How to remedy a lost bill of lading?

The loss of shipping documents during express delivery often results in the consignee being unable to take delivery of the goods using the original bill of lading at the destination port. In practice, the consignee usually takes delivery with a copy of the bill of lading; or the carrier issues a new set of bills of lading for the supplier to take delivery and settle payments; or the exporter authorizes the carrier to telex release. However, in these three scenarios, the carrier typically requires the cargo owner to provide reliable security. Currently, shipping companies often require the exporter to provide a joint guarantee with their opening bank, with guarantee periods ranging from one to three to six years. When banks issue guarantees, they usually require the exporter to deposit a margin. If the amount is substantial, tying up the significant funds for three to six years creates immense pressure on the exporter. If the bill of lading is acquired in good faith by a third party, the exporter faces the complete loss of both goods and payment. 

There are several possible scenarios for a bill of lading being lost during transit:

(1) Lost while under the exporter's control;
(2) Lost at the issuing bank after the exporter submits the documents;
(3) Lost after the issuing bank hands the documents to the courier company;
(4) Lost after the courier company delivers them to the negotiating bank;
(5) Lost after the negotiating bank sends them to the consignee.

    In scenarios (1) and (5), the exporter and importer shall bear responsibility respectively.

          In scenarios (2) and (4), the issuing bank or the negotiating bank shall be responsible.

          The issue is that loss often occurs in scenario (3). According to current valid postal regulations, the postal service bears only very limited liability.

According to the interpretation of the 2000 Incoterms, under CIF, CFR, and FOB terms, the seller must provide the transport document to the buyer at their own cost and without delay. By inference, the risk of loss of documents is generally borne by the seller.

To protect their own rights, carriers require the consignee to provide a guarantee for delivery without the original bill of lading and request a bank guarantee. Considering the issue of tied-up funds, the following measures can be taken to resolve it:

(1) Timely notify the relevant shipping company and its agent. In this case, the shipping company and its agent have a duty of care. They can no longer release the cargo solely based on the holder presenting the original bill of lading but should require the presenter to provide sufficient evidence proving they obtained the bill of lading in good faith. For example, is the endorsement continuous? Does it meet requirements? Was reasonable consideration paid? The carrier can also deposit the cargo covered by the bill of lading through legal procedures to discharge their responsibility for the goods.
(2) Apply to the court for a public summons promptly. Firstly, it ensures the rights under the bill of lading are not infringed upon. Secondly, it can resolve the issue of the long-term deposit of securities. Once the court decides to accept the public summons, any transfer of rights on the instrument during this period is invalid. The legal costs for public summons procedures are relatively low, as are attorney fees. Similar procedures should exist abroad. After the summons period expires (usually 60 days), an application for a judgment of nullification can be made to the court.
(3) Generally, the loss of documents should not affect the demurrage or delay at port, as the consignee has the obligation to take delivery and cannot refuse to unload the cargo based on this. Similarly, the carrier cannot deny unloading just because the consignee does not have the original bill of lading, although they do have the right to refuse to release the cargo.
(4) Regarding the liability of the courier company, current regulations grant them almost complete immunity. Whether the loss risk can be transferred by insuring against courier risks is questionable, as insurance companies seem not to offer this type of insurance currently.
(5) When a bank issues a letter of guarantee, the risk is generally low if the wording of the guarantee is comprehensive and specific. For significant guarantees, it is best to have a legal advisor review them, as there are indeed precedents where bank guarantees were deemed invalid in practice.