Otterbourg Obtains Summary Judgment in a Case of First Impression on Bills of Lading

June 11, 2014

In a case of first impression, Otterbourg obtained summary judgment dismissing a foreign manufacturer’s claims that its international bank client was liable for the price of goods purchased by a borrower/importer where the bank was identified as a consignee in several bills of lading. 

In November 2011, the manufacturer shipped the goods to a freight forwarder in the United States using several bills of lading.  The original bills of lading were delivered to the bank as consignee with instructions that the bills of lading be held until the manufacturer received payment for the goods.  The goods were allegedly released by the freight forwarder without payment or receipt of the original bills of lading, and the manufacturer commenced an action seeking to hold the bank liable for the price of the goods because the bank was the named consignee.

The firm successfully argued that the bank’s handling of the bills of lading was subject to the International Chamber of Commerce Uniform Rules for Collection (“URC”).  Pursuant to the URC, banks entrusted with documents of collection such as bills of lading are required to act precisely as instructed with respect to such documents and are not obligated to take any action with respect to the goods to which the collection relates.  In this case, the manufacturer had initially instructed the bank to hold the original bills of lading until payment was received and then later requested that the bank return the original bills of lading.

The Court found that under the URC the bank did not have any obligations with respect to the goods, and that the bank had properly discharged its obligations with respect to the bills of lading when it returned the originals to the manufacturer’s banks.  Accordingly, the Court held that the bank was not liable to pay for the goods even though it was listed as the consignee, and the Court dismissed the claims against our client.  

The decision can be found here.