In June of this year, the Court of Appeal issued its judgment in this case, known as the MSC Eugenia case. In its decision, the Court cautioned carriers about the risks of using technological shortcuts without first reflecting this in their contracts.
Between January 2011 and June 2012, Glencore shipped 70 consignments of cobalt briquettes with MSC, to be delivered to Antwerp. On the 70th consignment, two out of three of the containers had gone missing. The containers had been stolen by third parties who had somehow managed to penetrate the release procedures. Glencore were successful in their claim against MSC for misdelivery and MSC appealed to the Court of Appeal.
The bill of lading contract provided that “one original bill of lading must be surrendered by the Merchant to the Carrier….in exchange for the goods or Delivery Order”.
The port of Antwerp operates an Electronic Release System (ERS) pursuant to which a PIN code is used to secure the release of goods from the terminal. One of the issues which the Court had to consider was whether provision of the PIN codes, in exchange for the bill of lading, constituted symbolic delivery of the goods, or alternatively, whether provision of the PIN was provision of a “Delivery Order” under the contract and was therefore sufficient.
The Court rejected both of these arguments. On the question of the meaning of the term “Delivery Order”, the Court held that in this context it must be understood to mean a ‘ship’s delivery order’ as defined in section 1(4) of the Carriage of Goods by Sea Act 1992. As a consequence, the delivery order should have the key attribute of a bill of lading, namely a contractual promise by the carrier to deliver goods to the person identified in the order. The release note provided by MSC, which contained the PIN codes, did not satisfy this test.
The decision serves as an important reminder to carriers that if they use the ERS, they must still comply with their delivery obligations under the bill of lading contracts. It is up to the carrier to ensure that the delivery procedure that they are using meets their contractual requirements, or otherwise to take steps to update their agreements to reflect developing practices.
On 31 January 2018, Emma Burrage and Elizabeth McArthur will host a webinar on a number of recent shipping cases. In this article, we touch upon the key themes arising from two of those cases – find out more by signing up to the webinar.