Glencore International AG v MSC Mediterranean Shipping Company SA and anor [10.07.15]

Carrier held liable to shipper for cargo misappropriated at the discharge port, the cargo having been released to an unauthorised recipient apparently against presentation of the computer-generated import code. The Commercial Court finds that the duty of a carrier to deliver goods only to the person entitled to take possession of them applies notwithstanding the operation of an electronic release system.

Background 

Glencore shipped three containers of cobalt briquettes from Fremantle to Antwerp under a negotiable bill of lading dated 21 May 2012. Glencore’s agents at Antwerp, Steinweg, were the notify party. MSC Mediterranean Shipping Company SA (“MSC”) were the carrier. 

When the cargo arrived at Antwerp it was handled under the port’s electronic release system (ERS). Under the ERS carriers do not issue paper delivery orders or release notes against bills of lading. Instead, computer-generated PIN codes are provided and holders of bills of lading can present these to the terminal and so take delivery of their goods. 

MSC adopted the ERS at Antwerp in 2011 and asked forwarders such as Steinweg to provide a designated e-mail address to which MSC could send PIN codes. Steinweg provided MSC with a designated e-mail address as requested. Prior to the loss which gave rise to Glencore’s claim against MSC, Steinweg handled 69 shipments of cobalt to Antwerp on behalf of Glencore with MSC as carrier under bills of lading with materially similar terms to those in the present case. On each occasion the cargo was discharged under the ERS without issue. 

However on 22 June 2012 MSC e-mailed a PIN code to Steinweg’s designated e-mail address for delivery of the cargo under MSC’s bill of lading dated 21 May 2012 but when Steinweg’s haulier went to collect the containers they found that two had already been collected. It was common ground that the two containers had been delivered to unauthorised recipients. 

Glencore sued MSC in the English Commercial Court for breach of contract, bailment and conversion. 

Decision 

The terms of the bill of lading provided that the bill of lading would be “surrendered by the Merchant to the Carrier…in exchange for the Goods or a Delivery Order”. Glencore’s case was that as a matter of construction MSC should have released the cargo only on presentation of a bill of lading or a delivery order given in exchange for it. 

MSC contended that the provision of a PIN code constituted a “Delivery Order” and MSC had therefore complied with the terms of the bill of lading. MSC relied on the pattern of previous dealings between Glencore and MSC and submitted that it was an implied term of the bill of lading that a PIN code would substitute for a delivery order. 

The Court rejected MSC’s argument. By statutory definition a delivery order in the context of a bill of lading contains an undertaking that the goods to which the bill relates shall be delivered to the person identified in it (Section 1(4) (b) of the Carriage of Goods by Sea Act 1992). MSC did not submit that by providing a PIN code it gave any such undertaking (and it would have been found to be in breach of the undertaking had it submitted that it had provided one). It was unlikely that a bill of lading holder would agree to surrender its rights against the carrier without receiving either the goods or an undertaking in return. 

The pattern of previous dealings did not support MSC’s argument that a wider meaning should be given to the term “Delivery Order”. Since negotiable bills of lading have to be understood by a range of people each potentially having different knowledge of the factual background (merchants, bankers, lawyers), their terms are taken to have the meaning conveyed by their wording. Further, on the evidence Glencore itself was not aware prior to the loss that MSC used the ERS at Antwerp and even if it had been aware of this and had been content to use the ERS on previous occasions it did not follow that Glencore would have agreed that receiving a PIN code would constitute delivery. 

Glencore’s previous 69 shipments under the ERS did not give rise to any estoppel that could assist MSC. Glencore’s complaint was that MSC had wrongfully delivered the containers to an unauthorised recipient. In order to be estopped, Glencore would have had to have represented clearly that it was content for goods to be delivered to anyone who presented the relevant PIN code. Glencore had not made any such representation. 

Glencore’s claim succeeded in contract and bailment. 

Comment 

This case illustrates that using a port’s ERS does not relieve carriers of their bill of lading obligation to surrender possession of goods only to the person entitled to take delivery of them (as established in Barclays v Customs & Excise [1962]). Where goods are wrongfully released to an unauthorised person who has learned of the electronic release code, the carrier may be liable to the bill of lading holder regardless of the cause of the data breach.