Under FOB whom should be issued the B/L

   Recently, a newspaper published two articles of the Shanghai Maritime Court Wang Yang’s "under FOB contract, the double identity of domestic freight forwarding " and Nanjing Cheng Erdong ‘s "under FOB terms, is it really security for domestic seller? ". these articles, point their own views for the increasing of FOB trade contracts disputes of domestic seller v. freight. Features of such disputes: the International Sale contract of Goods is done under FOB terms. When the seller give the goods to freight, the freight don’t issue B/L to seller, lead to the credit of seller not to do settlement exchange. The freight think themselves as port agents is the contractual carrier, and accept the booking space from foreign buyers, and give the documents of transportation to buyer, so he is no obligation to deliver documents to the domestic seller, and he should not assume the compensate liability of the seller freight.

Mr. Wang Yang believes that the key of such cases is that the freight forwarders have a double role, both are the shipping agent of seller and the agent of carrier. The seller can not prove he commissioned the forwarder to book space, nor to pay booking fees, and not to prove have a contractual relationship with freight forwarding, so freight is no obligation to  issued transport document to the seller. Therefore he recommended that the seller should sign a written freight forwarding contracts with forwarding, to fix the obligations of freight forwarding document. But the Chen Erdong that the key of this case is not on the double role of freight, and in FOB terms is two carriers: seller and buyer, under Chinese "maritime law" requirement. The forwarder have obligation to give transport documents to both of carriers. So the forwarder should be avoid to 

two view in different angle, come to different conclusions. The focus of contradictions are: 1. under FOB terms , whom should be issued B/L by freight forwarder? 2. under FOB terms, how the seller protect themselves and avoid the money and cargo damage?

FOB is one terms in international trade, for those who arrange the transport of goods by sea, under FOB terms there are several different approaches. According to British judges Devlin and Duonadesen summary, there are three practices in liner shipping:

The first approach is the ship named by the buyer, and the seller loaded the goods on board, to get a B/L. If the B/L is a bill of lading instructions with the seller, the seller become a party to the contract of carriage. Only the buyer endorsed B/L to the seller, the seller will become a party to the contract of carriage.

    The second approach is broadly in line with the first, just only the buyer commissioned the seller to arrange transport, but the legal consequences are the same.

The third approach, the seller loaded the goods on board, and get a mate receipt and give the receipt to the buyer or his agent. The buyer or the buyer’s agents can be used it to exchange for B/L from the carrier. In this case, the buyer, from the outset, is the party of contract proved by the B/L.carriage for the. Bill of lading the shipper is the buyer's name, according to the buyer direct deliver. The consignor name is buyer’s name, and the forwarder deliver goods ordered by buyer.

For the obligation of carrier issueing B/L to shipper, both of author do not doubt on it. So, under the FOB terms, in the first approach, whom is the forwarder of agent issued B/L to, the seller of the buyer?

Here it is necessary to analyse the nature of the bill of lading. From the perspective of property rights, the seller is the owner of the goods, after send the goods to the carrier, the carrier shall issue the B/L to seller which represent the property rights of goods. Because the changes of movable property ownership occupied as the transfer or hold. If the carrier does not sign on the B/L ,representation of the ownership, to seller, the seller will loss the ownership after he deliver goods to the carrier, which is plainly absurd, and transfer possession and transfer ownership is completely different legal relationship. From the value perspective, the contract of sale is the buyer paying the purchase price, and the seller delivering the goods; the buyer and the carrier is the seller paying the freight, and the carrier providing transportation services. To get the goods, the buyer shall pay the contract of sale the right price - purchase price to the seller, rather than after paying the freight he can get B/L which represent the ownership of the goods. In other words, unless the seller, who has the ownership of goods, the carrier do not have the right to issue B/L to buyer. The carrier just have the transfer possession right in transportation process. At this time his behaviour was ultra virus.

    But some one might ask that the buyer is really shipper in FOB. As the role of shipper ,can the buyer ask the carrier to issue B/L? If not, would it violate the "Maritime" and the Hague Rules ?

    In the article, Mr. Chen Erdong states: "According to China's" maritime "article 42, paragraph 3, the" shipper "means: 1.  make contract with carrier. Under FOB, the shipper is generally considered foreign buyer2. one or others committed by one, in one’s name or for one deliver goods to carrier who relate with contract, the domestic seller. "However, the law does not tie the two shippers juxtaposition, that mean there are not two shipper. Under FOB, in the 1or 2 approach, the shipper is seller, and in 3 approach, the shipper is buyer.so, in distinction of FOB, we can not consider that the buyer is the shipper who may ask the carrier to issue B/L.

In Mr. Wang Yang's article, there are several rounds. First, he admit the seller is the shipper, but he denied the freight forwarder as agent of shipper issue B/L to seller. Second, because the the seller can not prove he have commissioned booking space of charging booking fee, the agent of forwarder have no obligations to give him the transport document. This point completely ignored the title function of B/L. Third, Mr. Wang Yang think that " the seller deliver goods to forwarder is the behaviour, which actually perform obligations of FOB trade contract. for forwarder, this behaviour is the fact behaviour in civil legal, but it is not the civil legal behaviour, and it can not be the equal price for forwarder performing the obligation. " It is incredible that when seller transport possession of good, he just do a fact behaviour nor than civil legal behaviour.

How do sellers protect themselves, under FOB, Mr. Wang Yang point that, in this dispute, the document provided by credit is often not the bill of lading but freight receipts. In fact, this is a trap from the foreign buyer. If the seller accepted such a letter of credit, there are no guaranteed for exchange., because the buyer with B/L have already take the goods. In short, the buyer should be its own master bill of lading to require the carrier issue B/L voucher, and not exchange by cargo receipt. "God helps those who help themselves", the seller have right to require the carrier to issue bill of lading. If he give up the right, he have to bear the consequences of giving up.

Under FOB terms, the question, whom is issued B/L to by carrier or his agent, already is the  rule in international practice, but in our country is still disputed. The B/L is transport contract, and the certification of transport contract, and the  view of China's "maritime law" seems inconsistent with international practice, which has been affecting our country's judicial practice. Mr. Wang Yang advice that in this situation, it is unnecessary that seller of FOB signed a contract with the freight forwarder to make sure the right of forwarder issueing B/L. In his view, it is almost concluded that under FOB, the seller has no right to receive B/L issued by forwarder. This would subvert the FOB system and lead to the collapse of FOB practice.