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Legal Update

The Rafaela S - House Of Lords Rule On Straight Bills Of Lading

28 February 2005
Mayer Brown JSM Legal Update


The House of Lords has this month upheld the Court of Appeal ruling in The Rafaela S [2003]2 Lloyd's Rep. 113 concerning several aspects of direct-consigned or "straight" bills of lading. Whilst the only real issue on appeal was whether a straight bill of lading constituted "a bill of lading or any similar document of title" under the Hague-Visby Rules (the "Rules"), the decision of the House may have a wider practical impact on the use of bills of lading in the context of carriage of goods by sea. 

Full Update

The House Of Lords In The Rafaela S

The House of Lords decision in The Rafaela S [2005]All ER (D) 236 (16 February 2005) concerned a straight bill of lading which expressly required presentation for delivery. Generally speaking, a "straight" bill of lading is made out to a named consignee and is non-transferable, whereas in contrast, an "order" bill of lading is made out "to order" and constitutes a transferable document of title.

In simple terms, the Court of Appeal in The Rafaela S held that such a straight bill of lading fell within the definition of "a bill of lading or any similar document of title under the Rules (as incorporated into English law by the Carriage of Goods by Sea Act 1971). This meant that the carrier's liability was subject to the package and unit limitation of the Rules".

For a detailed analysis of the Court of Appeal decision, please refer to JSM Legal Update "Straight Bills Of Lading - The Rafaela S (28 May 2004)"

The House of Lords has now upheld the Court of Appeal's ruling. The House's reasoning can be summarised as follows:

1.  The document in question "appeared" to be a bill of lading. It described itself as a "bill of lading" and the court would be slow in rejecting what the document described itself to be, particularly when it was the issuer of the document (i.e. the carrier) who objected to the description.

2.  Further, the terms of the document resembled those of a classic bill of lading rather than a mere receipt or sea waybill, e.g. issuance of more than one original, requirement for production for delivery, transfer of contractual rights to a third party to the contract of carriage (i.e. the consignee).

3.  Straight bills of lading were clearly within the scope of the Rules since at the time when the Rules were drafted, the use of such bills worldwide was prevalent. Considering the international nature of the Rules, particular attention was paid to the practice surrounding the use of such documents in other jurisdictions.

4.  A specified consignee in a straight bill of lading should be afforded the same protection by the Rules as a consignee under an order bill of lading.

5.  Presentation of a straight bill of lading for delivery would be necessary even without any express stipulation in the contract. It would protect shippers by ensuring that goods would only be delivered upon full payment (hence issuance of the bill of lading). 

6.  Since presentation was a pre-requisite to obtain delivery (whether or not it is an express contractual requirement), a straight bill of lading was a document of title for the purpose of the Rules.

Questions Unanswered

1.  It is not entirely clear whether straight bills of lading are "documents of title" at common law. The House evaded this question by saying that "the question before the House is not whether a straight bill of lading is a document of title at common law". The House seems to have accepted that "documents of title" under the Rules did not import the English traditional concept of title to goods and that straight bills of lading were not "documents of title" at common law. 

2.  The House seemed to be prepared to imply into every straight bill a term requiring the production of the original straight bill of lading for delivery. If that is the case, parties would probably have to expressly contract out of this requirement, if they so wish. In other words, the straight bill of lading may on its face provide, e.g. "No bill of lading need be surrendered in exchange of delivery of the goods". Following this elimination, one question would be whether such a document would continue to be a "bill of lading or any similar document" under the Rules. There may yet be a degree of uncertainty with the House's "look and feel" approach: it may "look and feel" like a bill of lading, but amount in substance to a sea waybill.


Although The Rafaela S did touch on the status of straight bills of lading in a general sense, one must bear in mind that the real issue in the case was the applicability of the Rules to the straight bill of lading in question. The House's general opinion on straight bills of lading is by no means conclusive and must be read with caution.

Notwithstanding that, one of the most significant practical implications of The Rafaela S on the practice of carriage of goods by sea is the requirement of production of the original straight bill of lading for delivery. Such a step is now confirmed by the House of Lords as a pre-requisite to obtain delivery. Thus, mere proof of identity of the named consignee may no longer be sufficient. In any event, to err on the side of caution, it would be good practice for carriers to deliver goods only upon production of the original straight bill of lading in all cases.

Bill Amos, Eugene Low

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