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									  Chapter5, Carriage of Goods by Sea and Marine Cargo Insurance
      A bill of lading is document issued by a carrier to a shipper, signed by the captain,
agent, or owner of a vessel, and stating the conditions in which the goods were
delivered to (and received by) the ship; and an engagement to deliver goods at the
prescribed port of destination to the lawful holder of the bill of lading. A bill of lading
is, therefore, both a receipt for merchandise and a contract to deliver it as freight. It is
a document of title to the goods, enabling the shipper or owner of the goods to
endorse title to other parties, sell goods in transit, and Present to banks with other
documents in seeking payment under documentary credits. Abbreviated generally as
B/L, it is the most important document for sea transport. There are a number of
different types of bills of lading.
Shipped (On Board) B/L and received for shipment B/L
   ■ Shipped B/L is issued by the shipping company after the goods are actually
      shipped on board the designated vessel. Since shipped bill of lading provides
      better guarantee for the consignee to receive the cargo at the destination, the
      importer will normally require the exporter to produce shipped B/L and most bill
      of lading forms are preprinted as "Shipped Bill".
   ■ Received for Shipment B/L arises where the word "shipped" does not appear
      on the bill of lading. It merely confirms that the goods have been handed over to,
      and are in the custody of the shipowner. The buyer under a CIF contract will not
      accept such a B/L because, in the absence of the date ofshipment, he is in no
      position to anticipate the arrival of the consignment.
Clean B/L and unclean B/L
   ■ A clean bill of lading is a bill of lading where the carrier has noted that the
      merchandise has been received in apparent good condition (no apparent damage,
      loss, etc.) and which does not bear such notations as "Shipper's Load and
      Count".
   ■ If defects are found on the exteriors of the goods, or the shipping company does
      not agree to any of the statements in the B/L, the bill will be marked as
      "unclean", "foul" or "... packages in damaged condition". Unclean B/L is usually
      unacceptable to the buyer and banks.
Straight, blank and order B/L
   ■ A Straight bill of lading indicates that the shipper will deliver the goods to the
      consignee. The document itself does not give title to the goods (non-negotiable).
      The consignee need only identify himself to claim the goods. A straight bill of
      lading is often used when payment for the goods has been made in advance.
   ■ Blank B/L also called Open B/L or Bearer B/L, means that there is no definite
      consignee of the goods. There usually appear in the box of consignee words like
      "To bearer". Anyone who holds the bill is entitled to the goods the bill represents.
      No endorsement is needed for the transfer of the blank bill. Due to the
      exceedingly high risk involved, this bill is rarely used.
   ■ Order B/L, or Shipper's Order B/L is widely used in international trade. A
      Shipper's Order Bill of Lading is a title document to the goods, issued "to the
     order of" a party usually the shipper, whose endorsement is required to effect its
     negotiation. Because it is negotiable, a shipper's order B/L can be bought, sold,
     or traded while goods are in transit and is commonly used for letter-of credit
     transaction. The buyer usually needs the original or a copy as proof of ownership
     to take possession of the goods.
Direct, transshipment, through bill of lading
  ■ Direct B/L means that the goods are shipped from the port of loading direct to
     the port of destination without involving transshipment.
  ■ Transshipment B/L means that the goods need to be transshipped at an
     intermediate port as there is no direct service between the shipment port and the
     destination port.
  ■ It is sometimes necessary to employ two or more carriers to get the goods to
     their final destination. In this case, usually the first carrier will sign and issue a
     through bill of lading. The on-carriage may be either by a second vessel or by a
     different form of transport.
Liner B/L, container B/L and combined transport B/L
  ■ Liner bill of lading is issued by a liner company for shipment on scheduled port
     calls through scheduled routes.
  ■ Container B/L is becoming more common in use with the development of
     containerization. It covers the goods from port to port or from inland point of
     departure to inland point of destination.
  ■ Combined transport B/L is issued by combined transport operator that covers
     the multi--modal transport on a door-to-door basis in one contract of carriage. It
     is ideal for container movements. It differs from "through B/L" in that combined
     transport is operated by only one carrier.
Long form and short form B/L
  ■ Long form B/L is more detailed with shipping contract clause printed on the
     back of the page.
  ■ Short form B/L, as the name implies, is an abbreviated type of document,
     smaller and not containing the long list of detailed clauses that generally appear
     on bills of lading. In certain circumstances it may not, therefore, be considered a
     suitable form of evidence of contract or of freight.
On Deck B/L, stale B/L, ante-dated B/L and advanced B/L
  ■ On Deck B/L is issued when the cargo is loaded on the ship's deck. It applies to
     goods like livestock, plans, dangerous cargo, or awkwardly-shaped goods that
     can not fit into the ship's holds. In this case, the goods are exposed to greater
     risks and therefore usually specific insurance must be taken out against
     additional risks.
  ■ It is important that the Bill of Lading is available at the port of destination before
     the goods arrive or, failing this, at the same time. Bills presented to the
     consignee or buyer or his bank after the goods are due at the port of destination
     are described as "Stale B/L". As a cargo cannot be collected by the buyer
     without the Bill of Lading, the late arrival of this all-important document may
     have undesirable consequences such as warehouse rent, etc. and therefore should
      be avoided. Sometimes especially in the case of short sea voyages, it is
      necessary to add a clause of "Stale B/L is acceptable".
   ■ Ante-dated B/L means when the actual shipment date is later than that
      stipulated in the L/C, the carrier sometimes, at the shipper's request, issues a B/L
      with a date of signature that suits the requirement so as to avoid non-acceptance
      by the bank. Due to the risk of the goods being rejected by the buyer arising
      from the issuance of such a bill, it is advisable to avoid this mal practice even
      when it seems necessary in certain circumstances.
   ■ Advanced B/L is issued when the expiry date of the L/C is due but the exporter
      hasn't yet got the goods ready for shipment. The purpose of issuing such a bill is
      to negotiate payment with the bank in time within the validity of the L/C. It is
      also regarded as unlawful and risky and should be avoided
      Still there are some other types of B/L such as Groupage B/L which covers a
      number of consignments from different shippers, and House B/L issued by a
      freight forwarder to each individual shipper. House B/L is issued by the freight
      forwarder before he gets one groupage B/L from the shipowner
      All the above mentioned bills are not independent of each other. Several types
  may be combined into one like "Clean on board, to order, blank endorsed B/L". A
  received for shipment bill may also be a straight and clean bill. Bills of lading are
  made out in sets, consisting of a number of originals (usually three) and a number of
  copies and marked "original" and "copy" respectively. Only the originals signed by
  the carrier enable the consignee to take delivery of the goods. The copies are just for
  reference.
                                      Marine Cargo Insurance
   Insurance provides a pool or fund into which the many contribute and out of which the few who
suffer loss are compensated. Insurers frequently re-insure a portion of the "risk" they have
accepted. The insurance of large "risks" is spread directly or indirectly over a large number of
insurance or re-insurance companies or underwrites. In international trade, the transportation of
goods from the seller to the buyer is generally over a long distance by air, by land or by sea and
has to go through the procedures of loading, unloading and storing. During this process, the
potential for damages and loss to good, in comparison with land and air transportation, is
tremendous. In order to protect the goods against possible loss in case of such perils, the buyer or
seller before the transportation of the goods usually applies to an insurance company for insurance
covering the goods in transit.

A. Marine Insurance Policies and Certificates
   In an export transaction, the terms of the contract of sale provide normally whether the costs of
marine insurance shall be borne by the seller or by the buyer. It the goods sold on FOB term these
costs have to be paid by the buyer and that is even true if the FOB seller, by request of the buyer,
has taken out the policy on behalf of the buyer. If the goods are sold on CIF terms, it is the duty of
the seller to take out the policy and pay the costs of insurance.
   The marine insurance policies or certificates from part of the shipping documents. Regard shall
in particular be had to floating policy, open cove policy and blanket policy.
   Floating policy is of great importance for export trade. It is, in fact, a convenient method of
insurance goods where a number of similar export transactions are intended, e. g. where the
insured has to supply an overseas importer under an exclusive sales agreement or maintains
permanent sales representatives or subsidiary companies abroad. A floating policy covers the
shipments, as soon as they are made, under previous arrangement between the insured and the
insurance company and particulars of the shipment may be supplied to the insurance company
later on.
   Open cover policy is similar to floating policy. While a floating policy is usually limited to 12
months, the open cover may be limited in time or may be permanent. Where the open cover is
perpetual in character, a clause is inserted enabling both parties to give notice of cancellation of
the cover within a stated time, e. g. thirty days or three months.
   Blanket policy usually provides that the insured need not advise the insurer of the individual
shipments and that a lump sum premium-instead of a premium at several rates-shall cover all
shipments. In the case of a floating policy or open cover the insured has normally to make
declarations of the individual shipments falling under these insurances to the insurer. This is
inconvenient to the exporter and requires an excessive amount of labour and costs where the
various consignments are of small value or the voyage is of short duration. In these cases the
blanket policy is a better choice.

B. Perils and Losses
  Goods during transportation on sea and in the course of loading and unloading might meet
various kinds of perils and the goods might suffer loss of one kind or another.
  In marine insurance, perils are generally of two kinds:

l. Perils
   (1 ) Perils of the sea. This include natural calamities and fortuitous accidents, such as weather,
thunder and lightning, tidal wave, earthquake, floods, ship stranded, striking upon the rocks, ship
sinking, ship collision, colliding with icebergs, fire, explosion, etc.
   (2 ) Extraneous risks. This cover theft, rain, shortage, leakage, breakage, dampness, etc. they
may include special risks, such as war risks, strikes, non-delivery of cargo, refusal to receive cargo,
etc.

2. Losses
Losses fall into two main classes: total loss and partial loss,
   (1 ) Total loss. This loss can either be actual total loss(实际全损) where vessel or cargo are
totally and irretrievably lost, or constructive total loss(推定全损) in a case where the ship or the
goods have been abandoned because the cost of salvage or recovery would have been out of
proportion to the value,
   (2) Partial loss. This means the loss to the goods is only partial. In case of partial loss a fine
distinction is drawn between particular average and general average. In marine insurance average
has an entirely different meaning from its normal usage and it means loss or damage to the goods
in the course of sea transportation due to natural calamities and accidents and extraneous risks.
   (a) Particular average (单独海损) is a partial loss to the insured cargo and the loss must be
borne by the owner of this individual consignment.
   (b) General average (共同海损) is a loss that results when extraordinary expenses or losses are
incurred in saving the vessel or its cargo from danger at sea. This ancient principle of maritime law,
which was developed long before insurance was available, spreads the risk of a disaster at sea by
making all parties to the voyage contribute to any loss incurred. Under this rule, if A's cargo is
damaged or "sacrificed" in the process of saving the ship, and B's cargo is saved as a result, B or
its insurer must contribute to A for the loss. A's claim is a general average. In other words, the
owner of the cargo that was sacrificed would have a general average claim for contribution against
the owner of the cargo that was saved. For example, when fire threatens an entire ship, and certain
cargo is damaged by water in putting the fire out, the owners of all of the cargo must contribute to
the loss of the cargo that was damaged by the water. The owners of cargo that is thrown overboard
to save a sinking ship may have a claim against those whose cargo was thereby saved. General
average claims are typically covered by marine insurance.
   In order to prove a general average claim, the claimant must show that (1) the ship, cargo, and
crew were threatened by a common danger; (2) the danger was real and substantial; and (3) the
cargo or ship was voluntarily sacrificed for the benefit of both, or extraordinary expenses were
incurred to avert a common peril.
   The set of standardized rules on general average is the York-Atwerp Rules, an effort to develop
commonly accepted principles of general average started in England as early as 1860, with work
on the rules being completed in 1890. Following World War II, an international effort to achieve
universally accepted general average rules resulted in the revised York-Antwerp Rules of 1950.
The l950 rules have achieved widespread acceptance by the maritime industry. The rules are not
the subject of treaty or convention, and have no been enacted into national laws. They traditionally
have become a part of the contract of carriage because their provisions are generally incorporated
into all modern bills of lading.

C. Insurance Cover
   According to the stipulations of the People's Insurance Company of China, the following basic
insurance covers are available in marine insurance:

1. Free From Particular Average Insurance (FPA) (平安险)
Under free from particular average insurance the insurance company will be responsible to pay
claim for total or constructive total losses suffered by the whole lot of cargoes during
transportation due to such natural calamities as vile weather, thunder and lightning, tidal wave,
earthquakes, and floods, or for total or partial losses due to the ship or carrier being on fire,
stranded, sinking, colliding or meeting other fortuitous accidents.
2. With Particular Average Insurance (WPA) (水渍险)
The cover of this insurance is more extensive. The insurer is liable, in addition to the total or
constructive total losses covered by FPA insurance, also for the partial losses of the insured goods
due to the risks caused by natural calamities mentioned under FPA insurance.
3. All Risks Insurance (一切险)
Among the three kinds of basic insurance, under an "all risks" policy the goods are insured against
all risks, e. g. from natural calamities, fortuitous accidents at sea, or general extraneous risks,
irrespective of percentage of loss, total or partial. A natural deterioration of perishable goods,
delay, loss or damage caused by inherent vice or nature of the subject matter are not covered.

								
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