Release of cargo without House Bill of Lading – live case study

I received the below question about release of cargo without house bill of lading from a reader as a comment on one of my previous articles which discussed the difference between house bill of lading and master bill of lading..

release of cargo without house bill of lading

hi, I am a forwarder, we had done shipment to USA using FMC registered House Bill of Lading (HBL). Now issue is our agent has released cargo to the Consignee without presentation of original HBL. 

The HBL is lying with shipper as consignee hasn’t paid the shipper. When we checked with our USA agent they informed that in USA, if Master Bill of Lading (MBL) is telex released and payment done, then consignee can take the delivery directly from carrier. So what is the use of releasing FMC HBL to shipper?

We need to know whether we can take legal action against consignee and our agent in USA.


I am sure there are several others who have faced this similar predicament or if you are involved in insurance or cargo claims you may have come across such cases..

For this article, I am leaving the floor open to all of you to comment 

  1. whether the agent is correct in his/her statement “if Master Bill of Lading (MBL) is telex released and payment done, then consignee can take the delivery directly from carrier
  2. whether the destination agent fulfilled his/her obligation in acting as the agent for the issuer of the HBL
  3. whether the shipper/forwarder at origin has any recourse

Share your views below and let us compare notes on this live case study..

*** End of Article ***

47 thoughts on “Release of cargo without House Bill of Lading – live case study”

  1. FOB should mean that risks, costs and responsibility transferred at FOB point i.e. the minute goods were loaded on the vessel in the country of export. According to the INCOTERM goods are deemed to have been delivered. This is probably how you should view it as an exporter however out of interest what is the dispute between the importer and forwarder about?

    Reply
  2. Hi,
    I am the exporter, doing a fob shipment , there is a dispute between my customer ( importer) and freight forwarder. Freight forwarder is witholding original BL from me to prevent me from surrendering the Bl.
    What options do i have ?

    Reply
  3. Hello Hariesh, i am an importer in Canada. We got a container recently from China. It was the Shippers forwarder. We had some dispute with shipper before regarding damaged merchandise but he never compensated us. Going further, we got the Pickup number from the forwarding agent in Canada and we paid the customs duty+taxes and cleared it and picked it up. After we got it the forwarding agent in Canada is after us to pay the balance to the shipper. On the bill of lading, the consignee is my company and also on the notify party. So is there anything that can be done to not pay the balance and stay out/win in court as the forwarder in Canada is taking us to court for not paying balance to shipper.

    Reply
  4. When Shipper has not got paid and is holding the original House bill of lading for payment. The forwarder at origin who booked the shipment with SSL must make sure that Master is not a Seaway bill of lading or a telex release. If forwarder has credit with SSL and you have a Telex rls or Seaway , SSL will release the shipment at destination. to safeguard the shippers interest, You need to always ask for original MBL. When Shipper notifies that he got paid. then forwarder can send the originals back to SSL and issue a Telex Rls or he can courier them to his agent in US. At destination if consignee’s broker clears customs , and issues a Delivery Order and there is Custom Release and Freight Rls on the container at the Terminal. the consignee can pick this container without any problems, even though he has not paid his shipper. Hope this helps

    Reply
  5. In Ghana for instance, it is not possible for you to take delivery of cargo without surrendering the HBL. this is what happens. We have consolidators who the MBL are consigned to from the carrier. The carrier/Shippingline does what we call first releast on a B2G platform called GcNet. Ones this is done, the agent would have to go the consolidator for final release and issuing of the D/O. the agents for the consignee must submit HBL to the consolidator before release is done.
    Whether or not the MBL is telex or Original, the agents for the actual consignee must go to the consolidators.
    in summary;
    1. The carrier/shipping line itemizes the master bill that bears the name of the consolidator.
    2. the consolidator submits house manifest to customs telling them the actual consignee on the HBL.
    3. Carrier does first release to the consolidator on the MBL.
    4. Consolidator does the final release to the consignees agents and issues final D/O.
    5. Even before carrier does first release, agents must go for internal release from the consolidator.
    That is how its done in Ghana.

    Reply
  6. Hi Hariesh,
    Thanks for taking the time to reply to my problem. Yes, it’s really a pity. We are the consignee on the Draft BL. The containers were loaded in Germany. The destination of the vessel is South Korea.
    Thanks

    Reply
  7. Greetings,
    My supplier is not sending me the Surrender BL. He told me that the shipping company is blocking all his container because he didn’t pay them for a different shipment than mine.
    The container is arriving at its final destination in the coming days.
    What can I do? All I have is a Draft BL from my supplier.
    Thanks

    Reply
    • Yikes..!! One of the common problems Lucas.. What type of bill of lading is it (Straight, Negotiable, Seaway) and from where to where..?? Certain country laws may allow release against straight bill without presentation of OBL if you can prove you are the actual receiver..

      Alternatively if your cargo is worth quite a bit, you can try and negotiate with the shipping line to pay for your freight (even if you already paid your supplier) and see if they agree..

  8. Since HBL is issued , the MBL would surely have been consigned to the US agent then how the Carrier can release the cargo the consignee? This is highly illegal practice.
    The US agent should claim the damages/penalties from the carrier at destination and consequently you can claim the same from US agent.

    In some countries like Korea, if the OBL is directly consigned to the actual consignee, then I suppose the carrier can release the cargo to them if the consignee can furnish Bank guarantee against the cargo.

    Reply
  9. Shipper has issued Org bl from Forwarder.
    Consignee has taken cargoes without Original BL.
    Shipper is preparing to sue Forwarder because he did not receive payment from consignee.
    As per shipper conversation., they still have Original Bl in bank.
    How can we believe it?
    Shipper is from Myanmar, Consignee is from Sydney.

    Reply
    • Hi Swe, if consignee took delivery from the line, it all depends on how the master bill of lading has been consigned.. If the MBL was consigned to the actual consignee instead of the forwarder’s agent at destination, then it is possible..

      Which original does the shipper still have in the bank..??

  10. hello sir

    i have a one question
    we are a consignee and we have bought shipment from another country and our supplier insist to mention the notify party name this is in different country can we send out the payment to this notify party and also will get a notify party invoice ???
    can we payment to notify party instead on notify party invoice ???

    regards,
    ar

    Reply
  11. 90 pct of claims landing on the ITIC desk or other Liability insurers world wide are related to wrongfull delivery of cargo , which includes delivery of cargo without presentation of OBL. This huge percent is a result of many NVOCC’s who issue house B/L and of course have another one issued by Line, consequently confusion prevails especially when both are marked freight prepaid .
    Definitely is wrongfull to deliver the cargo without having the OBL in hands.
    A) the shipper in this case will sustain a huge loss which he can claim from agent or his forwarder whose actions or servants have deprived him the ability to prevail receivers from taking possession of goods .

    B) the shipper can claim from shipping line wrongfull delivery as well , because they have delivered the cargo to receiving agents . (here you need to check what is written in the line B/L and under which convention, the goods are carried).

    C) A good solution could have been the goods to be placed under customs custody, and be released only after all documents were presented….

    Reply
  12. Dear Sir,

    good day to you

    do I eligible to issue a house bill of lading, or should I take any authorization from any legal body

    appreciate your swift and prompt reply

    thanks and best regards

    Reply
  13. Countries like Brazil and Yangon the rule of Government/Customs is that they don’t wait for any original HBLs if it is involved in that shipment once the liner is issue the Master D/O to customer they can take cargo directly ….. this what my understanding ( please correct me if am wrong) other than these two countries, normally the other country agent’s have enough control on issuing the D/O to customer with out agent confirmation the liner will not issue the D/O to actual consignee. Since the shipper and consignee on most of MBL will be cargo agents not the actual shipper and consignee ..
    Asokan

    Reply
    • Dear Asokan,

      If the Master is issued consigned to the importer/cnee, yes he can take the cargo directly. But in case of House the Agent/Freight Forwarder has control under the cargo. Besides there are some terminals that don’t release the cargo if the original house is not presented.

  14. The Agent was supposed to take the Shippers confirmation as per the Normal Practice. Only Shippers instructions to telex release the BL should be implemented. No matter consignee shows the Carg and freight payment is fully made. There might be some other settlement Shipper had with Buyer in their contract. So FOB or CIF Shipments both cases BL should not be Released with out Shippers confirmation.

    It happended in past experience – FOB Basis – Buyer wanted Credit facility and says that he cannot clear cargo at POD anyway till Shippers instructions- The containers were in POD agents custody. And Buyer kept payments pending till 1 year because the Agent actually cleared the cargo without Shippers consent, Which is totall wrong Practice

    Reply
  15. Normally a HBL relates to Shipper’s and Consignee’s Terms and most of time it is governed by the letter of Credit and in this view Master Bill of lading can not be negotiated in the bank at all. However ever in this case it seems a simple transaction as freight prepaid and Prepaid bill of lading deliveries my not be hold. Proper endorsement is also a matter. It seems a wrongful act.

    Reply
  16. This is a bit open but we presume that as this involves a M B/L and a H B/L, Master is Agent to Agent and the House, actual Shipper to Consignee.
    So the carrier an legally release to the destination Agent shown as the Consignee on their B/L. It would be that Agent that allowed release to the actual Consignee.
    We relate this to a wrongful release as opposed to an illegal release, as the lines are blurred.
    It is a given not to release without the endorsed original H B/L, but not all understand this either by ignorance or a smooth talking Consignee!! Not hard to put in bold “Do not release without original H B/L to hand”. They may still release, but this gives you a much stronger argument with Insurance or the courts.
    Rest assured if the Shipper sues the origin Agent he will win and don’t be surprised if the Consignee starts to claim the goods are of poor quality etc. Not a defense as he should not able to touch the good until all charges have been settled.

    Reply
  17. Hi all,

    HBL is not a related document for the marine carrier.
    Who was consignee on the MBL: forwarder’s agent in POD or actual cnee?
    It’s not clear from the case who released cargo to consignee: carrier or forwarder’s agent?
    I believe only shipper can take action against consignee in this case as consignee obtained goods without having rights to do so (most likely payment terms on a contract were violated), but forwarder can take action against their agent in POD if agent was informed that OHBL was issued and wasn’t surrendered. This way forwarder can try to charge agent with not protecting principal’s interest and failing to fulfill his obligations as an agent. Though I’m not sure how US laws regulate agency work.

    Reply
  18. the agent in the USA has no right to release the shipment to the importer.he should first consult the shipper before releasing the shipment.as a real agent u first request for original BL before issuing delivery order to the shipper,if it is not available than you must contact the shipper before doing anything.so for me the agent will be wrong for doing this.

    Reply
  19. In fact if cnee doesn’t present the original HBL it means the shipper has retained for any reason. It doesn’t matter original or telex release MBL once what matters is HBL. Unless it was issue a direct MBL consigned to cnee.
    In case of issuing a HBL I think your partner in USA didn’t have commitment with his partner abroad.

    Reply
  20. There are simply too many omitted facts for anyone to adequately analyze this question. I suggest that Harriesh go back to the drawing board and provide complete facts. As brought out in some of the comments above, these facts should be abundantly clear.

    Reply
    • Hello Wang, as this is a “live case” the reader is unable to provide further information relating to who the shipper, consignee, notify party shown on the HBL and MBL which will no doubt give quite some clarity on the actions taken..

      The reader’s statement is

      “I read all messages and thankful for the assistance , but now at the moment I can’t share the details as my management is talking with shipper, my query is whether in usa law we can take legal action against consignee as they custom cleared the document and they didn’t paid to shipper and now cargo is on their custody.”

  21. Do not forget to sign a Letter of Indemnity addressed to your carrier. Releasing cargo without BL’s is not a good practice.

    Reply
  22. MBL is always issued in the name of Forwarder and not the importer. So Shipping co can not issue delivery order in the name of importer directly. It’s against the rules. The payment issue bet importer and the supplier should shorted out for smooth clearance of goods. Your agent is in fault for issuing delivery order without surrender of Original HBL. You can take action against your agent.

    Reply
  23. If an agency agreement is in place & Master B/L shows shipper as Indian forwarder & consignee as USA agent, proper pre-alert sent to USA agent instructing to effect delivery against House B/L, then agent cannot deliver without collect HB/L.

    As per standard practice, when Master B/L states consignee as an agent’s name, its bound to be known that a House BL is involved. Thus forwarder can ask their B/L insurer/underwriter to initiate a claim against US agent & notify other agency networks about the incident.

    The legal standing of agency agreement is questionable, however a comprehensive agreement specifying obligations, honoring each other’s House bill of lading for delivery / collection of freight & additional charges, adds a lot of value on situation similar to these, as a violation of mutually agreed terms on legal recourse.

    Reply
  24. We always use HBL for our shipments. the HBL as others said is not concerned to carrier and or their agents. we as a forwarder in destination port use name of our co. as actual cnee in MBL and arrange the payment of sea freight in due time, so when cargo arrives POD our counterpart (load port forwarder) tlx release the MBL provided the shipper(s) confirm that cnee has no debt to them. load port forwarder hand over the HBL to shipper and the shipper courier full set of original HBL to cnee who has to deliver the HBL to us(destination forwarder) with paying D/O fees, THC and other local charges of POD after which we deliver the goods to cnee . we also take guarantee like banking cheque, cash deposit for detention charges if any (because as we are the main cnee in MBL therefore we are also committed against carrier’s agent to settle all pending when empty cntr(s) returned back to CY. i do not know about the rules in USA on this issue but i think your agent had to inform you about their decision for delivery of shipment to cnee.

    Reply
  25. What the USA agent is saying is correct, if there MBL is telex released (or surrendered) then the consignee can take possession of cargo from the carrier. I stand corrected but I’m sure this is the case anywhere in the world. HBLs unlike LCs etc have the benefit of shortening lead times as well as avoiding additional costs and they are arrangements between forwarders for the release of cargo. The origin agent needs to disclose a few more details about the events that transpired though….

    Who was the consignee on the MBL? It may have been necessary to put the agent at destination as the consignee so that they could take possession of the cargo from carrier and release it to the actual consignee on surrender of HBL. However this depends on the customs regulations of the importing country. The alternative was to courier original bills (even if the consignee on OBL is the actual consignee/shippers customer) to the agent at destination so that they they could clear the goods through customs in advance and release goods to consignee upon surrender of the HBLs.

    I’m sure if there is correspondence that HBLs will be issued and destination agent as well as consignee were involved in the cutting and confirmation of the the bills then there can be recourse. If not and the origin agent simply gave the shipper HBLs and the guys at destination were not aware of their existence then the agent at destination cannot be held responsible for releasing cargo to the consignee. He assumed that everything was in order, even though it’s best practice to have confirmation to release in writing before releasing cargo.

    In that case shipper and origin agent can engage the embassy or local trade bodies to mediate in the collection of funds from consignee.

    Reply
  26. Hello,
    According to Pomerene Act, consignee can release his/her Cargo without presentation of original BL unless it’s issued as To Order. If the shipment under a Straight BL or a SWB, consignee can release his/her Cargo with only proving his/her identity. So in my opinion;
    1. The agent is correct in his/her statement.
    2. The destination agent fulfilled his/her obligation in this case.
    3. The shipper/forwarder can wait with fingers crossed 🙂 that the consignee to pay his dept to shipper.
    In short, commercial payment between seller & buyer is not related to contract of carriage.

    Thank you
    Nafi SEREZ
    Greetings from Istanbul/Turkiye

    Reply
    • Nafi . . . . Search as I will, I can’t find any US act called “Pomerene Act”. There is a US act called the Webb-Pomerene Act, codified at 15 U.S.C. 61, et seq. The Webb-Pomerene Act of 1918 gives immunity to companies against antitrust laws. This Act granted exemption to the Clayton Anti-Trust Act of 1914, which is an act enacted in the U.S. to add further substance to the U.S. antitrust law regime by seeking to prevent anticompetitive practices in their incipiency. The Act does not speak to bills of lading, although I understand it is sometimes referred to as the “Bill of Lading Act of 1918” . . . why I don’t know.

      Please cite the source of authority with enough specificity so it can be researched.

    • Nafi . . . after doing a bit more research, I think you meant the FEDERAL BILL OF LADING ACT 49 U.S.C §§80101 – 80116.

    • Nafi . . . . I have done further research on the Federal Bill of Lading Act, 49 USC 80101-80116.

      That act does not apply to this case . . . . the Act specifically limits it applicability to bills of lading in the following circumstances:

      § 80102. Application
      This chapter applies to a bill of lading when the bill is issued by a common carrier for the
      transportation of goods —
      (1) between a place in the District of Columbia and another place in the District of Columbia;
      (2) between a place in a territory or possession of the United States and another place in the
      same territory or possession;
      (3) between a place in a State and a place in another State;
      (4) between a place in a State and a place in the same State through another State or
      a foreign country; or
      (5) from a place in a State to a place in a foreign country.

      Obviously, no cargo coming into from a foreign country to the USA will be governed by the Federal Bill of Lading Act of 1916.

      Regarding that act being called the “Pomerene Act” and the Web-Pomerene Act being referred to as the Bill of Lading Act . . . I believe some legal reporters (i.e. Justica and others) have misinformed us. Their word is not law. To be on the safe side, I suggest referring to the Federal Bill of Lading Act of 1916 by it’s proper name, because nowhere in the Act itself is it authorized to be called “Pomerene Act”. Plus, I can find nothing doing a Google Search that takes me to any reliable source that says the FBLA is “Pomerene Act”.

      On the other hand, the Web-Pomerene Act at Section 66 specifically states: “§66. Short title. This subchapter may be cited as the “Webb-Pomerene Act”.”

  27. What was details given on the MBL if it’s showing direct shipper then they could, realistically it should be agent/agent and there on they take the delivery and release the cargo. Agent must have endorsed the MBL in this case for them to take delivery.
    Shipper is eligible to lodge claim.

    Reply
  28. The agent at the destination point is not entitled in any way entitled to release cargo to consignee without presentation of original bill of lading from the carrier’s agent at port of loading. However, in absence of the obl, a telex release instructions from carrier’s agent at the point of loading be made available to the carrier’s agent at port of discharge/destination to effect such release.
    Where a Master Bill of Lading covering cargo consigned to more than one receiver, a freight forwarder acting on behalf of the shipper is required to write to the carrier’s agent at the Port of Loading duly surrendering the Master Bill of Lading with instructions to advise the carrier’s agent at the Port of Discharge/Destination to release the cargo under individual b/l number so concerned. This process will remain contineous / repeatative till all bills of lading cargo covered under one Master Bill of Lading are duly accomplished.

    Reply
  29. The Carrier/Shipping Line is not involved with House Bill of Lading (HBL), which is issued by a forwarder. If Master Bill of Lading (MBL) is telex released, consignee can take delivery directly from the Carrier. If the payment for the shipment was not done, the shipper shouldn’t have provided telex release instructions.

    Consignee on MBL could be most likely the forwarder/forwarder’s agent at the destination, in which case the shipper should have informed the forwarder NOT to take delivery of the cargo until their payment was done. On the other hand, if the consignee on MBL was the final cargo receiver and a telex release was issued, the shipper had no control over the payment matter. The Carrier was right in releasing cargo to the Consignee. The shipper should check what was their instructions to the Forwarder.

    Reply
  30. If the shipment has been done in LCL terms and freight collect at destination, forwarders agents on loading ports will issue the master bill of lading to cover the transprtation up to the destination port. Whence discharged and goods unstuffed from the containers, shall be issued a house bill of lading for each consignee enable them to clear the cargoes along with customs. Of course hbl only be released to consignee upon the setlement of freight payment. Otherwise it shall not be. Once thr hbl released and dispatch procedures done accordingly. Cargoes shall be releasrd by port truste to the proper consignee binding to the confirmation of tax and duties.

    Reply
  31. Hello everyone,
    1. I think the statement turns wrong in most cases and acceptable for some exception.
    + If the shipment is consolidated and the consignee on MBL is the agent in the USA, it is impossible for the real consignee to receive goods without HBL
    + If the shipment is FCL and the consignee on MBL is the real consignee, not the agent, he can receive goods without HBL
    The fact of MBL being telex released doesn’t affect the title of goods indicated through MBL whatsoever.
    2. The destination agent didnt complete their duty when releasing goods for the consignee without HBL
    3. The shipper has the right to claim the forwarder in the origin and the forwarder + his agent has discussion to find out the most proper solution in this case, maybe compensate for the shipper as the total value of the shipment, I think so

    Reply
    • Phu Phan Anh . . . I agree with your analysis and believe it to be the best in this string. It appears the destination agent dropped the ball. That may lead to their liability to the shipper. However, in order to determine this to any degree of certainty, it would have been nice if there had been more facts about the shipment so we knew exactly how this could have happened. It also would help the discussion if commenters would cite law or some authority for their opinions . . . . as we can see the opinions above in this string wander all over the ocean, like a lost ship ready to go onto the rocks.

  32. I think the NVOCC or freight forwarder that issued Shipping Instructions (SI) to the carrier acted in error by not clausing the BL and cargo manifest accordingly by indicating that cargo may ONLY be released to the consignee after presentation of HBL. This would have forestalled this scenario.
    The consignee acted in bad faith while the carrier’s agent at load port who issued the telex release probably acted in violation of the SOP between the carrier and forwarder (if we assume one exists).
    Both parties mentioned above are therefore culpable of wrongdoing.
    Both parties are

    Reply
    • Akin . . . can you describe for us exactly how the NVOCC or freight forwarder that issued Shipping Instructions (SI) to the carrier acted in error by not clausing the BL and cargo manifest accordingly by indicating that cargo may ONLY be released to the consignee after presentation of HBL.” would have provided the Shipping Instructions to the carrier. Would they put it directly on the MBL, or on some other document. You knowlegable input will be appreciated by all.

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