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Bentleys' Bulletin

Published July 2017

ELECTRONIC RELEASE SYSTEMS AND THEFT OF CARGO: MSC v GLENCORE [2017] EWCA CIV 365

Many modern ports have implemented systems whereby cargo can be released on the input of electronic codes or otherwise using electronic technology in order to avoid the inconvenience and delay associated with original paper documents. It follows that those involved in such systems have to be alive to the risk of computer hacking and other steps to steal information and secure release of the cargo.

Glencore, as holder of a bill of lading covering three containers of cobalt briquettes, claimed against the carrier MSC following the theft of two of the containers at Antwerp after discharge. The port operated an electronic release system whereby carriers provided, against bills of lading, electronic pin codes to the receivers or their agents and the port terminal. The codes would be presented to the terminal to take possession of the goods, instead of the usual delivery orders or release notes. The collecting driver had to enter the pin codes manually to gain access to the terminal and collect the containers.

The bill of lading stated that "an original bill of lading, duly endorsed must be surrendered by the Merchant to the Carrier (together with outstanding freight) in exchange for the Goods or a Delivery Order". Glencore duly presented the bill and paid the necessary charges and MSC emailed Glencore's local agents, Steinweg, a release note containing the relevant pin codes.

When the haulier arrived at MSC's terminal at Antwerp, it found that two of the containers had already been collected. It appears that the codes had been obtained by unknown computer hackers.

MSC submitted that the provision of the pin codes to Steinweg itself amounted in law to delivery of possession of the goods. The Court of Appeal rejected this argument. Whether delivery of a means of access to goods constitutes delivery depends on the context and terms of the contract in question. In the present case the parties contemplated either actual delivery against presentation of a bill of lading or in accordance with a delivery order, and therefore delivery of the code did not, of itself, constitute delivery. Furthermore, it appeared that MSC had the power to revoke or invalidate the codes and the terminal was operated for MSC. Accordingly, MSC did not divest itself of all power to control physical dealings with the goods.

Alternatively, MSC submitted that the release note containing the pin codes was itself a delivery order for the purposes of the bill of lading. Under an English law contract, a delivery order should be regarded as having the same meaning as a "ship's delivery order" as defined in COGSA 1992, meaning that it had to contain an undertaking by the carrier to deliver the goods to the person identified in the order. The release note with codes provided in the present case did no more than instruct the terminal to deliver against the entry of pin codes provided to Steinweg. MSC were, therefore, in breach of their obligations under the bill of lading to produce a document containing an undertaking to deliver in favour of Glencore or Steinweg. A promise to deliver to whoever first enters the right code is not the same as an undertaking to deliver to Steinweg or Glencore.


OTHER ARTICLES IN THIS ISSUE

Post-Termination Benefits and Damages

Unsafe Ports and Co-Insurance in the Supreme Court

Electronic Release Systems and Theft of Cargo: MSC v Glencore [2017] EWCA CIV 365

Escalated Demurrage Rate Clauses Under Examination

Aggrieved Shareholders and Settlements






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