What to Do When Original Bill of Lading is Lost?

Everyone becomes puzzled, thinking what to do when original Bill of lading is lost, or missing or has not arrived, the shipment of goods has arrived, and demurrage at the destination port is getting high up.

It puts enormous stress on the parties involved. Sometimes this stress leads to the end of the contractual relationship between parties involved giving a significant negative after-effect on all the parties. This is because of the characteristics of the Original Bill of Lading (OBL). OBL is a required document to release goods at the destination. 

The main thing required in this situation is to keep calm and just think about what action best suits to solve the problem immediately. All the concerned parties like buyers, sellers, bankers, even the persons or executives involved will usually be under stress in this situation. Let’s not attack each other for any potential misconduct. 

Original Bill of Lading (OBL) and Its Characteristics:

OBL is very important because of its characteristics like – 

1. Original Bill of Lading is a contract of carriage

2. It carries the title of goods under shipment to take possession of the cargo

3. The party in possession of an OBL may demand delivery of cargo to the carrier/ agents

4. OBL can be Order OBL or Straight OBL. Order OBLs are negotiable. The right to release goods can be transferred by endorsement. Straight OBL is non-negotiable. It could be used to fraudulently obtain possession of the cargo by a party other than the named consignee. 

What are the Ways to Release a Shipment:

In practice, along with other relating documents, a shipment is released from Carrier-

1. By Presenting Original BL to the carrier/agent at the destination or,

2. Surrendering the Original BL to the carrier/agent of the Carrier at the origin or,

3. Presenting relevant copy documents along with an Indemnity Bond and Shipping  Guarantee (Bank Guarantee).

What to Do When the OBL is Lost, Destroyed, or Stolen:

There are some scary ideas about lost, destroyed, or stolen OBL: Some people say there is no other way than to re-issue a set of OBLs, and for this, you have to collect court orders, and court orders will require LOIs from concerned parties, newspaper publications, and legal proceedings, etc., etc. It is not very sensible.

Undoubtedly prevention is better than cure. When the OBL is lost, destroyed, or stolen, there are some way-outs. Depending on the regional laws, regulations, and carrier/forwarder-specific requirements, procedures may vary. It may also involve some extra charges/expenses.

Nothing is lost forever; it is just out of our sight or /hand at the moment of need (of course, if it’s not willfully destroyed or stolen). Following few things can work well, but you should do it all in the shortest possible time.

1. Assure the buyer of delivery at the quickest possible time without disclosing the total fact

2. Discuss with the related banker of the seller with enthusiasm to solve the problem

3. Take the suggestion of your senior banker and then discuss with the carrier/forwarder

4. Go for Indemnity bond/Joint Indemnity/Bank Guarantee/ Court order /Re-issue of OBL

Some international transporters may accept a Bill of Lading if one of a set of three is missing. When you confirm that you will not find OBL in the shortest time or OBLs are destroyed/stolen, it is better to release goods without OBLs. Possible ways are – 

1. Re-issued OBL or

2. Release goods against indemnity. 

Sample LOI Format: 

Another Sample LOI Format:

FAQs (Frequently Asked Questions) :

What can be Safeguard against the hazard of lost OBLs?

Carriers typically issue a set of three original Bill of Lading. It is prudent for shippers to retain any excess copies (copy BL or non-negotiable copy of BL or draft copies of OBL) if not required by third parties and the consignee. They won't be legally permissible but filing these documents is wise as they contain essential consignment information, which you can refer to later if required.

When issued, the shipper should double-check to ensure they have received all original copies. The shipper should use a reputable courier to send documents that offer tracking and 'signature required' services.

If terms of sale allow, utilize telex release services available through either the carrier or your freight forwarder.

What is the surrender of the Bill of lading?

Surrender of Bill of Lading means submitting all original shipping documents, including OBL, with a request letter to the carrier/agent at the origin/ port of departure to release the goods shipped at the destination to the consignee.

How to surrender the Original BL?

A shipper can submit all originals with a request letter to the carrier/agent of the Carrier with necessary surrender charges if any. After receiving the full set of OBLs, the carrier/agent sends a message to his counterpart at the destination port stating that OBL surrendered at the origin port. The Carrier will not insist the consignee for submission of OBLs at the time of delivery of cargo. Carrier also sends a copy of such message to the shipper also as proof of surrendering OBL.

Shipper sends the release message copy to his buyer for smooth delivery of goods without presenting the OBLs.  The consignee at destination port takes delivery of goods by obtaining delivery order from Carrier after verifying the identity of consignee. 

What is the advantage of surrendering the original Bill of Lading?

If the Documentary presentation does not require shippers to present the OBLs with original documents, most shippers do not send the OBLs to the buyer. But surrender them with the carrier or their agent. Surrendering procedures of the Bill of Lading simplifies the mechanism of transportation procedures. It makes the releasing process of the shipment faster.

What is a Letter of Indemnity (“LOI”)?

An LOI is a formal letter requesting the carrier or its agent to release goods without OBLs or to reprint it with the indemnification of the carrier or its agent from any further claim that may arise due to this. It helps to cover risk of the carrier/agent.

Why must an officer of the seller company sign the LOI?

LOI is a legal and financial obligation of the seller company. An officer’s of the company must sign the LOI. Because this signature is an evidence that the person signing has the authority to bind the company in this manner.

Why LOI from both the Shipper and the Consignee are required?

In an OBL, two main parties are the consignor (shipper/sender) and the Consignee (receiver). LOI from both the parties involved reducing the risk of a further claim, and it also ensures that both the parties have agreed to release cargo without OBLs or to re-issue the OBL.

Why is an LOI alone not sufficient?

The LOI does not ensure that the company has sufficient funds to comply with its indemnification obligations fully.

Why Shipper’s Authorization needed when the Shipper provides an LOI?

The Shipper’s Authorization serves a different purpose than the LOI and Bank Guarantee. The Shipper’s Authorization ensures that the Shipper is not retaining the OBLs while awaiting payment for the cargo; carrier/agent verifies whether the underlying sale has been completed in order to agree to deliver the shipment.

Why is a bank guarantee required when a bank is not involved in this shipment?

The bank guarantee protects the carrier from payment of all liabilities and costs because the cargo delivery without presentation of the OBL may cause those liabilities and expenses.

Why does the bank guarantee should be issued for at least 24 months?

The legal limitations for cargo and property claims generally are twenty-four (24) months. For this reason, the guarantee must be for at least twenty-four months, sufficient to cover the entire period of potential liability.

You may also read: FAQs & Answers.

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