The Magistrate’s Court in Acre held that a customs agent may rely on original bills of lading presented to him and is not under an obligation to conduct an in-depth inquiry into the rights of the holder of the bills of lading.
In this case, the customs agent had delivered the cargo to a private person and not to his client- the importer.The importer filed a monetary claim against the customs agent and against other bodies, for damages allegedly caused to him as a result of the release of the cargo to persons other than him, in a manner that was allegedly unlawful and in breach of contract.The court was required to consider whether the customs agent had acted lawfully by releasing and delivering the cargo as he did.
According to the facts of the case, as found by the court, the importer had made representations to the customs agent to the effect that that person was acting as the agent of the importer and in these circumstances the customs agent need not have suspected that this person was not in fact an agent to receive the cargo on behalf of the importer.
Moreover, the evidence produced in court indicated that the person had presented the customs agent with the original bills of lading relating to the goods that were delivered to him.The importer did not claim that this person had held the bills of lading unlawfully; nor did he claim that the bills of lading had been stolen or had been issued fraudulently or that the person had not been entitled to hold them (even though it was not proven in a positive manner that the bills of lading had in fact been endorsed to the person).
Had the customs agent fulfilled his obligations by delivering the cargo to that person, despite his knowledge that the man was not the importer (consignee in the bills of lading)?Was the customs agent entitled to rely on the original bills of lading presented to him by this person without first examining in depth the rights with respect to the cargo, and without requiring explicit written instructions from his client – the importer, to deliver the cargo to that person?
The court dismissed the claim against the customs agent and held that there had been no fault in his conduct during delivery of the cargo, that he had not breached the agreement between him and his client and that he had not breached the duty of care owed to his client.
The court described the three functions of the bill of lading: first, as a receipt by the sea carrier to the shipper of the cargo attesting to delivery of the cargo into the possession of the carrier; second, as evidence of the contract and terms of carriage between the sea carrier and the shipper of the cargo; and third, relevant for our purposes, the bill of lading is a proprietary document that vests its holder with the right to demand and receive possession of the cargo recorded in the bill of lading. The court emphasized the vital role played by the bill of lading “in providing security and stability in international commercial transactions, as its status as a proprietary document that can be negotiated, releases the parties and the other bodies involved in the carriage or delivery of the goods which are the subject of the bill of lading from the need to inquire into the terms of the basic transaction underlying the bill of lading”. By virtue of the status of the bill of lading which allows possession to be taken of the cargo, an importer who does not hold an original bill of lading is not entitled to receive the cargo, and whoever releases the cargo to him would be subject to a claim by the holder of the original bill of lading, as the principle is that the holder of the original bill of lading (who is not always the importer) has the right to receive the cargo.
As the parties had not raised any claims whatsoever against the validity of the endorsement of the bills of lading to the particular person, the court assumed that the bills of lading had been lawfully endorsed to him. The court emphasized that the customs agent “owes a duty of care to the holder of the original bill of lading; he must expect the harm to the holder of the original bill of lading who loses his security, when the cargo is released without displaying the original bill of lading; and therefore, the customs broker owes a duty of care within the framework of the tort of negligence and can be held liable for the tort of theft [conversion] if he delivers the cargo to a person who is not the holder of the original bill of lading”.
The rejection of the claim against the customs agent and the court’s ruling that no flaw had occurred in his conduct when delivering the cargo and that he had not breached any duty, in contract or tort, against the importer, were based on the following two cumulative findings: first, that the customs agent was entitled to assume under the circumstances that the person was receiving the cargo with the permission and under the instructions of the importer; and second, that the person had presented the original bills of lading to the customs agent and the customs agent had no reason to believe that he was holding the bills of lading fraudulently.
The conclusion ensuing from the judgment is that in the absence of special circumstances raising a suspicion of fraud, no obligation lies on the customs agent to examine in depth the rights of the holder of the bill of lading and if, on the face of it, there seems no reason to suspect the holder of the bill of lading of having obtained the documents by fraud, delivery of the cargo to him will be regarded as a reasonable and appropriate action, required by his job. It may be added that the duty of care owed by the customs agent to the holder of the bill of lading includes not only the harm which will be caused to him if the cargo is delivered to another party and the holder of the bill of lading loses his security, but it also includes the harm which will be caused to the lawful holder of a bill of lading whom the customs agent unlawfully prevents from receiving the cargo.
Adv. Shmuel Grossman, Adv. Roy Gilad