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CASE LAW
LEGAL UPDATES
GLOBAL CONTRIBUTORS
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Foreword
Dear readers,
Welcome to this 2nd issue of the FIATA Quarterly Legal Newsletter, which aims to provide the freight forwarding and logistics community regular updates of new legal developments around the globe.
The FIATA Advisory Body Legal Matters (ABLM) forum during the FIATA Headquarters’ Session 2023 highlighted one of the recent top priorities of ABLM, the United Nations Commission for International Trade Law (UNCITRAL) work on negotiable multimodal transport documents, which is particularly relevant to the use of the FBL (FIATA Multimodal Transport Bill of Lading) in land transport. Mr Richard Gluck, FIATA Vice President, recently attended the 42nd session of UNCITRAL Working Group VI held in New York on FIATA’s behalf and joined the discussions of UNCITRAL Member States and Observers on the draft provisions of the UNCITRAL legal instrument regarding multimodal transport documents.
The work of UNCITRAL on negotiable multimodal transport documents is a great chance for FIATA to promote the FBL, and seek the adoption of a new international convention that would provide sufficient legal foundation for the wide use of the FBL, especially when it is issued in negotiable form for land transport.
FIATA, through the expertise of ABLM, has been an active promoter of this initiative since the very beginning, with the mission of fully expressing and representing the interests of freight forwarders in the legislative process. It has submitted several position papers to UNCITRAL on various matters of the draft provisions and participated in UNCITRAL working groups and sessions.
We also highly welcome Association Members and Individual Members with experience in issuing FBL for land transport and multimodal transport to join in this mission and contribute your knowledge and visions. You can find the most recent update of this initiative in the report of FIATA Vice President Richard Gluck.
Also in the last Geneva ABLM session, many delegates were interested to learn the relationship between FIATA STCs (Standard Trading Conditions) and FBL Terms and Conditions. ABLM has provided a detailed explanation regarding this issue which you can find on FIATA's website. If you have any further questions, you are welcome to enquire with the FIATA legal team.
Enjoy your reading!
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Dr Yuntao Yang
ABLM Chair
China International Logistics and Freight Forwarding Network (CIFA)
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UNCITRAL project on negotiable multimodal transport documents
At the 52nd session of UNCITRAL in 2019, China presented a proposal on possible future work towards the development of negotiable documents to facilitate carriage of goods, particularly by railway, in the Euro-Asian space. The proposal indicated that, unlike the ocean bill of lading, the railway consignment note did not serve as a document of title and could not be used for the settlement and financing of letters of credit. This constrained banks’ ability to provide financial services and increased the financial pressure on importers and the risks faced by exporters in collecting payments.
After consideration of the proposal’s practical significance for world trade, especially for developing countries’ economic growth, the Commission requested its Secretariat to research legal issues related to the use of railway or other consignment notes, in coordination with other relevant organisations. From 2019 to 2022, the UNCITRAL Secretariat conducted legal research on the topic, organized expert group meetings, and reported on the progress made at the annual UNCITRAL sessions. During its 55th session in 2022, UNCITRAL assigned to Working Group VI the task of developing a new instrument on negotiable multimodal transport documents. The instrument is intended to allow the issuance of documents of title representing goods received for international carriage irrespective of the actual modes of transportation, for financing purposes.
Working Group VI met in Vienna and New York in November 2022 and May 2023, respectively, to consider preliminary draft provisions for the new instrument. Those provisions do not interfere with existing liability regimes for the international carriage of goods and reflect a “dual-track” approach, under which the negotiable cargo document would not replace any transport document to be issued under the law governing a specific segment of the international carriage. The provisions address key issues concerning the issuance, content and evidentiary effect of a negotiable cargo document, rights of the holder and transfer of rights, delivery of the goods, and other issues relating to negotiable electronic cargo records.
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Ms Yanying LI
Legal officer
United Nations Commissions on International Trade Law (UNCITRAL)
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FIATA's work towards a framework for a negotiable transport document
FIATA has been consulting with China in recent years to facilitate trade financing based on letters of credit payable against presentation of negotiable transport documents for intermodal rail shipments moving between China and Europe. Problems have arisen because the laws governing railroads in this region prohibit the issuance of rail transport contracts (“consignment notes”) as negotiable documents.
FIATA suggested a dual track approach where the freight forwarder’s bill of lading (such as the FBL) is issued as a door-to-door negotiable document for rail or multimodal transport. This solution, based on the longstanding successful maritime practice, would allow the railroads or other carriers to issue their usual non-negotiable documents to the forwarder, while the forwarder in turn would issue a single negotiable document to the shipper.
China supported this pragmatic “dual track” approach, but banks remained uneasy about offering letters of credit for international shipments using negotiable freight forwarder documents in the absence of any established international law supporting them. Therefore, China asked the United Nations Conference on International Trade Law (UNCITRAL) for help in designing such a convention.
An UNCITRAL working group, including FIATA’s vice president Richard Gluck, met in New York May 8-12 to consider a draft document that uses terminology from the UNCTAD ICC rules (also used by the FBL). The working group decided:
- There would be a strong preference for the issuance of a negotiable cargo document (known as an “NCD”) as a single document combined with the contract of carriage (the FBL model) by referencing the UNCITRAL convention on the document
- The underlying carrier (e.g., rail, truck, air) would be permitted to issue an NCD as a separate document only if existing law prohibits its transport document to be negotiable
- The cargo liability terms and conditions on bills of lading, waybills, consignment notes or other contracts of carriage governed by existing national laws and international conventions would remain unaffected
- An NCD would be allowed to cover either unimodal or multimodal transport
- The convention would contain rules for use of electronic NCDs
The UNCITRAL group will continue its drafting work at a meeting in Vienna this fall.
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Mr Richard Gluck
FIATA Vice President
Outside General Counsel to the Transportation Intermediaries Association (TIA)
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Electronic bills of lading and multimodal transport documents
The advantages of using electronic equivalents of traditional paper-based documents, particularly marine bills of lading, received special attention during the COVID-19 pandemic, when traders experienced legal problems due to delays in the transmission and presentation of physical documents. Unlike other transport documents, the marine negotiable bill of lading is universally recognised as a ‘document of title’, which provides the holder of the document with ‘constructive’ possession of the goods and the exclusive right to demand their delivery from the carrier in exchange for the original document. As such, it provides traders and banks with independent documentary security and can be traded along a chain of contracts (string sales), enabling the sale of goods in transit. Although global carriers have committed to increasing the use of electronic equivalents over coming years, in most jurisdictions these do not yet benefit from full legal recognition as accorded to traditional paper-based documents. To address this issue, a draft Electronic Trade Documents Bill is currently under consideration in the United Kingdom (UK) which is expected to provide an important boost to the use of electronic bills of lading.
At the international level, UNCITRAL is developing a new legal instrument on ’Negotiable Multimodal Transport Documents’. If, as intended, the new legal instrument would ensure full legal recognition of electronic multimodal transport documents as negotiable documents of title, these could be traded and used for the sale of goods in transit under a string of contracts, similar to negotiable bills of lading, with the buyer bearing the risk of loss of or damage to the goods in transit. Given that no international mandatory liability regime is in force for multimodal transport, it will be important to ensure that a final consignee in any cargo claim would be protected by mandatory minimum standards of carrier liability. This is already the case for claims under negotiable bills of lading that are covered by mandatory cargo liability conventions. However, at present, liability issues are not as part of the UNCITRAL instrument. To help ensure the effectiveness and acceptance of the new legal instrument, all stakeholders are encouraged to actively engage in the ongoing work.
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Ms Regina Asariotis
Chief, Policy and Legislation Section, Trade Logistics Branch/Division on Technology and Logistics (TLB/DTL)
United Conference on Trade and Development (UNCTAD)
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Paving the way for necessary change with the digital FBL
This article aims to provide insight into the procedural challenges and needs of the Central American Region to facilitate seamless transport. There are four borders in the seemingly short isthmus between Mexico and Colombia, spanning 2500 kilometers of road. This makes land transportation slow and expensive, as each border crossing could take two to six hours to pass. For any land transport-related initiative to succeed in the region, all countries involved need to agree on improvements regarding legal requirements and procedures.
The instability of prices in the maritime supply chain during the pandemic and the near shoring trend in the United States of America present opportunities for transit of goods via Central America. Countries in the region, including Panama, are attempting to facilitate trade and improve connectivity with each other to harness the benefits of this.
SIECA (Secretaria de Integración Económica Centroamerican) is the Central American economic integration system overviewing border crossings and development of relevant software. DUCA (Central American Single Declaration) was launched in 2018 with no tangible result in shortening the time of border crossings. By facilitating a simplified trade system that can ensure the efficient movement of raw materials to the factories and then to the ports, airports or other borders, Central America could secure its future economic growth.
Bringing the FIATA digital Bill of lading (digital FBL) to the attention of the authorities presents a simple way to ease multimodal transport. In Panama, APAC is liaising with the Customs and Logistics Secretary, demonstrating the need for a single document that can ensure multimodal transport and is sharing results with other countries, like Costa Rica, so they may liaise similarly with their own authorities. While some countries may be more reluctant to change than others, it is important to promote a secured and harmonised way to give Customs Authorities around the world the assurances and access to information they need to help make border crossings a breeze.
With this initiative of promoting the acceptance of the digital FBL with relevant authorities, APAC is looking to provide its members with tangible benefits that can be quantifiable in terms of time and cost.
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Mr Angel Sanchez
President
Asociacion Panamena de Agencias de Carga (APAC)
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FBL and land transport: a case on the practical use of the FBL in land transport
There is no doubt that the FIATA Multimodal Transport Bill of Lading (FBL) has been offering several benefits to its users, and some further advantages will be provided by its electronic version. For that reason, it is extremely important for all FIATA Association Members to adopt the distribution agreement and “market” the usefulness of the FBL among FIATA members.
Among the several reasons that contribute to render the FBL a unique document, I would like to focus particularly on its usage when negotiating letters of credit, on its function as a document of title, and when used as a multimodal transport document.
Customers and bank employees do recognise the value of the FBL as a reliable tool, being issued by freight forwarders who commit themselves to abide by specific and strict rules.
FEDESPEDI has in place a specific agreement for its members that perform transports by truck to Iran. The members issue a CMR consignment note accompanying the goods and use the FBL when a letter of credit is involved. The members need to sign a dedicated declaration (in addition to the customary ones), which implies that the documents cannot be used for other purposes. These FBLs are required to negotiate the credits and they need to be presented in order to get the goods as a document of title (the CMR being used only as the accompanying transport document).
Thus, in a nutshell: the FBL is a tool that has multiple uses and can really be a facilitator in the transport sector, far more than one could imagine. I hereby urge our members to use it as much as possible and enhance its distribution, with the aim to improve the portfolio of services they offer to their customers.
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Ms Antonella Straulino
Head of International Relations
Federazione Nazionale delle Imprese di Spedizioni Internazionali (FEDESPEDI)
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