First, let’s understand the importance of the bill of lading. A bill of lading serves as proof of ownership of the goods, and possessing it, to some extent, equates to having control over the goods.
Under normal circumstances, the primary responsibility of a freight forwarder is to follow the consignor’s instructions, ensuring the safe and timely transportation of goods while handling related documents correctly. However, in certain legal situations, a freight forwarder can withhold a bill of lading or goods.
For instance, when the consignor fails to pay freight charges, forwarding fees, or other related costs as agreed, the freight forwarder may exercise their right of retention. This is akin to entrusting your belongings to someone for safekeeping but failing to pay the storage fees—under certain conditions, the custodian has the right to retain your items. However, the exercise of such retention rights is subject to strict conditions.
The freight forwarder must provide clear evidence that there is an explicit agreement regarding payment obligations and that the consignor has indeed defaulted on the payment. Additionally, when exercising the right of retention, the freight forwarder must adhere to reasonable procedures. They cannot arbitrarily withhold the bill of lading or goods without prior notification or at an unreasonable time.
On the other hand, if a freight forwarder withholds the bill of lading or goods without justifiable reasons, such actions are deemed illegal. For example, withholding due to minor communication issues or unrelated disputes with the consignor is not legally permissible. Moreover, if the freight forwarder has no contractual authorization to withhold the bill of lading or goods, such actions may also violate the law.
From the consignor’s perspective, having their goods or bill of lading unjustly withheld by the freight forwarder can result in significant losses. It may lead to delivery delays, affect contractual obligations with the consignee, and even incur breach of contract penalties.
For freight forwarders, unreasonable withholding of a bill of lading or goods can lead to legal risks and damage to their business reputation. In practice, to avoid such disputes, consignors and freight forwarders should sign detailed and clear contracts. These contracts should explicitly define under what circumstances the freight forwarder can withhold the bill of lading or goods and outline the procedures to be followed.
For instance, the contract could stipulate that the freight forwarder may take retention measures if the consignor delays payment for a certain number of days and must provide the consignor with a written notice a specified number of days in advance before taking such action.
Furthermore, the parties should agree on a dispute resolution mechanism, such as arbitration or litigation.
Legitimate withholding of a bill of lading or goods is based on the legal right of retention and must strictly comply with the stipulated conditions and procedures. If consignors encounter unreasonable withholding by freight forwarders, they can seek to protect their rights through legal channels. At the same time, freight forwarders must act cautiously to avoid unnecessary trouble caused by improper withholding actions.
