Bill of Lading (BL) and Letter of indemnity (LOI) are considered as most important documents for shipping process. According to experts the awareness about these documents are not enough even among the professionals leading to misunderstanding and disputes among exports and importers.

In the 3^rd webinar charter party disputes and prevention series of Institute of Chartered Shipbrokers Hong Kong branch (ICS HK) and WISTA Hong Kong discussed issues related with BL and LOI on 13th October.

Mr Jagmeet Makkar, Arbitrator & Chairman, ICS, HK welcomed the audience and introduced Capt Sanjeev Verma, FICS, AFNI, Managing Director, Landbridge Shipmanagent (HK) ltd, who was the moderator for the session.

Highlighting the history of BL and LOI, Capt Verma stated, “BL has 3 main functions such as, evidence of contact of carriage, receipt of goods and document to the title to the goods.” He opened the floor and invited the panellists to give their ideas and overview of their understanding of the issues associated with the BL and LOI.

Ms Elizabeth Sloane, President, WISTA, Hongkong and FCIArb, FMIArb, MHKMAG, Capt Zhou Jian Feng, Managing Director, Wah Kwong Maritime Transport holdings limited; Ms Marija Pospisil, Senior Claims Executive, The Standard Club and Capt Narasimhan R, COO, KC Maritime.

“As a litigation lawyer, I see that things often go wrong where BL and LOI are concerned,” said Ms Sloane. Most importantly she highlighted the counter party risk and LOI counter party insolvency. LOI is an agreement between 2 entities in a charter party chain, so a ship owner or anyone else ability to enforce that LOI contract when things go wrong every much depends on the financial understanding of the person who is given the LOI, so it is important to have a background check before accepting a LOI.

Ms Pospisil explained the rules of P&I clubs in the situation where LOI are used, as there are common misunderstanding and misconception about what P&I clubs can and cannot do in certain situation.

“Shore staff and ship staff should clearly understand the procedure. Plus they need some extra knowledge about the cargo,” said Capt Feng.

Capt Narasimhan opined that what started as a very simple use of LOI today, It is being used for various important purposes. “Issues are plenty but at the same time what needed is awareness of the issues and how to respond to the issues raised,” added Capt Narasimhan.

The entire panel discussed on how bill of lading and letter of indemnity can be used at different situations.

Capt Makkar thanked everyone for gracing this webinar with their knowledge on the subject.

Marex Media