Palermo Shipping Co.

Executive Memo
Milan Palermo S. Co
Italy

Analysis of Bill of Lading Case:

Keppel TL V. Bandung
Date Analysis Performed By: Analysis Performed For:
May 29, 2017 GROUP 7 CEO
KASPER SOMMERENG
PAULUS WIRAGI
MUHAMMAD MUHANA
MOHAMMAD TAWHIDUL
ISLAM

General Feature of Bill of Lading (B/L)

Bill of lading (B/L) is one form of contract of carriage by the sea issued by the carrier which
cover a single delivery order of a cargo in a ship from a shipper to a consignee.

Main Function of Bill of Lading (B/L)1

1. Receipt document
The B/L is used to note that the goods own by shipper delivered by carrier is received by
the consignee. In most practice, the consignee will put a mark/stamp on the B/L proof the
receive and the condition of the goods.
2. Document of title
Title means the right of the possession of the goods carried in the ship. Then, B/L is
categorized as a document of title because the possession of this document indicates the
possession of the good transported (in this case the B/L is blank, transferable). However,
the right of ownership of the goods is determined in the sales contract.
3. Contract of carriage document
This document also acts as the contract of carriage between the carrier (Bandung, using
Victoria Cobb ship) and the shipper (Shweta).

1 As per Carriage of Goods by Sea Act (COGSA) 1992, paragraph 4

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Different Forms of Bill of Lading (B/L)2
1. Bearer B/L
This kind of bill of lading has no stated consignee (blank) typed in the document. It makes
the party who hold this document become lawful owner. Which means that this type of bill
of lading is the transferable document. The B/L issued in the first time by Bandung is this
type.
2. Order B/L
This type of document represents an order to deliver cargo to a certain consignee which
can be transferred to other parties using an endorsement (in this case, the endorsement
given by Keppel to the State Bank).
3. Straight B/L
This type of bill of lading contains a stated consignee name (specific consignee, non-
negotiable) to which the cargo should be delivered.

Important Issues and Consequences of transferring the Bill of Lading (B/L)3

1. Transferring a Bearer B/L
This type of B/L does not require an endorsement to transfer to other party. However, once
a party endorse a blank B/L to specific consignee (when Keppel type the name of State
Bank in the blank B/L), it become dedicated to stated party (the State Bank).
2. Transferring an Order B/L
The transfer of ownership of this type of B/L requires an endorsement. In this case, Keppel
needs an endorsement from the State Bank to become a lawful owner again. A “cancelled”
stamp created by Keppel is not considered as an appropriate endorsement.
3. Transferring a Straight B/L
This B/L is designed for a fixed consignee. There is no option of negotiation/endorsement
to another party.

2 As per COGSA 1992, paragraph 1(2), subsection; ‘(a) and (b)’

3 As per COGSA 1992, paragraph 2 and paragraph 5(2), subsection (a), (b), and (c),

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Deep Insight on Keppel TL V. Bandung Case

In the case Keppel Tatlee Bank LTD (Keppel TL). V. Bandung Shipping PTE LTD. (Bandung)
the defendant is Bandung which is the owner of Victoria Cobb and the plaintiff is Keppel TL
which is bankers4.

Keppel Tl claimed that they were the lawful owner of the goods that was carried by Victoria
Cobb and the question is whether Keppel Tl has the rights of suit with the evidence by the bills
of lading.

Under s2 (1) of the COGSA5, “a person who becomes the lawful owner of the bill of lading
shall have transferred to and vested in him all rights of suit under the contract of carriage as if
he had been a party to that contract.” That means if Keppel TL is the lawful owner, they have
the rights of suit. Then we have to decide who is the lawful owner of the bill of lading.

A cargo of 508 tons of crude palm oil was shipped by Shweta International onboard Victoria
Cobb from Indonesia to India. Furthermore, there were two Bills of lading issued by Bandung
for that shipment. Shweta sold the cargo to Ranchhoddas Purshottam Holding (RPH) and the
cargo was shipped on board Victoria Cobb. Shweta indorsed the two Bills of lading in blank
and delivered them to RPH, which sold the cargo to Lanyard Foods. Afterwards, RPH
delivered the bills of lading through its bankers to Keppel TL for purchase/ negotiation without
filling in any name of the endorsement made in blank by Shweta. Keppel TL filled in the name
“the State Bank of Saurashtra” and delivered the bills of lading to the State Bank to hold the
same for collection by Lanyard6. However, Lanyard never paid for the cargo and the bills of
lading were returned by the State Bank and back to Keppel TL.

4Singapore court of appeal, the Singapore Bill of Lading Act was applied, which is adopted from the English
Carriage of Goods by Sea Act (“COGSA”), 1992.

5 Section 2 (1), Carriage of Goods at Sea Act 1992

6 Section 2 (5), Carriage of Goods at Sea Act 1992

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 Figure 1. Case Illustration

The court states that the bill of lading functioned as a bearing bill as the bill of lading was
indorsed in blank. That means the bill of lading could be transferred easily without further
endorsement. Furthermore, the bill of lading can be endorsed specially or blank if the bill of
lading were to transfer easily to another party. In this case, Keppel TL, filled in the name of
the State Bank in the blank, now the State Bank became the lawful holder and pursue the rights
of suit7. As the cargo could not be paid for, State Bank returned the bill of lading without
making any further indorsement, which was necessary for Keppel TL to be the lawful holder
again. As Keppel TL physically has the bills of lading, they are still not the lawful holder,
because the bills of lading went from a bearing to an order bill of lading.

After Keppel TL received the bills of lading, they stamped “cancelled” over the indorsement.
Furthermore, the court stated that Keppel KL could be the lawful holder if there was an
appropriate indorsement. Moreover, they couldn´t by their own act cancelling the indorsement
made in favor of State Bank to improve their position.

In the meantime, the cargo was discharged to the lawful holder and Keppel TL had no rights
of suit.

7 Section 5 (2), Carriage of Goods at Sea Act 1992

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