Recent years have seen numerous claims arising from cargo delivery without the presence of the original bill of lading in some South American countries. And there have been growing concerns among the Members over whether the carriers will lose control over the goods or whether imports are regarded delivered after they are handed over to the customs-bonded depositary (bailee) in compliance with local laws and regulations. Based on CPI practices and consultation with local correspondents, we prepared this circular to introduce regulations pertaining to cargo import, clearance and delivery in Brazil, Argentina and Chile.

Brazil

According to Brazilian Customs, the carrier shall deliver imported cargoes to the custody of customs-controlled facilities and the consignee must provide a set of documents to be entitled to take delivery.

As set out in Customs’ Normative Instruction (IN) RFB 690/2006, importers are required to produce various documents to the bailee as a condition of taking delivery, including the original B/L.

However, in 2013, the Customs issued IN RFB 1,356/2013, surprisingly revoking Clause I, Article 54 of IN RFB 680/2006, which means consignees are no longer required to present original B/L for the withdrawal of goods from the bailee. A series of problems were then stirred up and the practice was subject to widespread criticism from the shipping community.

In response, the Customs issued IN RFB 1,443/2014 that removed the dispense of the original B/L to ensure that the cargo is delivered to the rightful cargo owner. But in practice, some local ports and terminals still implements the 2013 regulation and deliver cargoes without demanding the original B/L.

In 2017, the Brazilian Customs issued IN RFB 1,759/2017 restating the obligation of the consignee to submit the original B/L amongst other documents to take delivery. The new regulation, in agreement with the common practice in the shipping community and relevant laws, has considerably helped reduce mis-delivery claims. See more about it in LP 046/2017 Brazilian Customs Redemanding the Original Bill of Lading for Taking Delivery in IN RFB 1,759/2017.

Argentina

Ever since the enactment of the Federal Law on Ports No. 24,093 in June 1992, Argentina has been performing custom clearance and delivery procedures consistent with the international practice. As per requirements, instead of delivering directly to the consignee, the carrier shall leave the cargo to the port authority at bonded area of the discharge port. Consignees, even NVOCC, will then have to submit the original B/L to pick up goods from the bonded warehouse. Only with collection of freight by the carrier and reception of B/L by the local shipping agent, the port authority will be allowed to deliver the goods. Note that it will be the liability of the port authority or the shipping agent if the cargo is released without presentation of the original B/L.

Chile

Under Chilean Customs law, the procedure for processing imports depends on whether the goods are cleared through Customs in advance. If goods are not cleared in advance, then the carrier shall:

1)   submit the cargo manifest to the Customs authority;

2)   deliver the goods to a custom-controlled warehouse.

In practice, the consignee endorses the B/L to a customs agent that is licensed by the national director of the Customs authority. The agent will only be approved to withdraw goods from the warehouse after completing customs clearance and paying the warehouse service provider.

The Compendium of Customs Regulations provides that the import declaration must be drawn up on the basis of various documents, including the original bill of lading. The import declaration, authorized by the Customs Authority, and the payment voucher in respect of customs duty must be presented to the warehouse operator prior to release of the goods. In 1995, due to the increase in container traffic, the procedure for dealing with containers became different under Customs Resolution 2808 (April 12 1995). Container operators are authorized to issue a form known as a title for the temporary admission of containers. The form enables the container, once the form is authorized by the Customs Authority and presented to the warehouse operator, to leave the warehouse facilities on a temporary basis.

Although Article 977 of the Commerce Code defines a B/L as a document that obliges the carrier to deliver the goods upon presentation of the bill of lading to the carrier, under the old customs regulations this verification often could not take place. With this in mind, the Compendium of Customs Regulations expressly included the original B/L as one of the documents used to prepare the import declaration. If the original B/L was not available, it could be replaced with a non-negotiable copy of the same, or alternatively, by a certificate issued by the banking institution. Risk of fraud and wrongful delivery persists as the carrier is still not entitled to verify the B/L.

Resolution 2250/05 issued in 2005 amended the Compendium of Customs Regulations in terms of delivery without surrender of original B/L:

1)   The customs agent is now obliged to submit the original B/L to the carrier once the import declaration has been accepted for its handling;

2)   Quasi-original B/L and bank certificates are eliminated. The import declaration must be drawn up on the basis of the original B/L;

3)   In the case of cargo in containers, the surrender of the original bill of lading to the ocean carrier is a condition precedent for the issuance of the title for the temporary admission of containers.

By implementing the regulation, the Chilean authorities have taken an important step towards the harmonization of Chilean law with the international law and practice on goods delivery that may lead to a better and safer environment for ocean carriers, which now have direct control over the cargo delivery chain.

Resolution 3505/05 was issued the same year referring to additional procedures for the clearance of oil bulk cargoes. It has also set out exceptions to the rules introduced in Resolution 2250/05:

1)   A copy of the original bill of lading, rather than the original, can be included with the import declaration in order to prove the endorsement of the bill of lading to the importer;

2)   A customs broker must provide a written antecedent from the supplier or the shipper (or its agent in Chile) showing authorization to deliver the cargo to the consignee without production of the original bill of lading.

This means that carriers discharging oil bulk cargoes at Chilean ports are again threatened with misdelivery and fraud, which makes the resolution a negative precedent.

Later in 2006, the Chilean Customs issued Resolution 507/06 as a complement to earlier Resolution 2250/05, targeting the problem of cargo delivery without presentation of the original B/L in Chilean free trade zones (namely the free trade zone of Arica, Iquique and Punta Arenas). Imports arriving at these ports can be cleared through the general system or the special procedures where the goods are first transported to the Customs authority’s primary zone and an application (a Z form) will then be requested for authorization of transferring the goods to the free trade zone. Upon review of the Z form, and subject to prior approval by the company that administrates the free trade zone, the Customs Authority authorizes the user or his customs agent to withdraw the goods from the warehouse depot. The resolution diminishes the risk of misdelivery and fraud as it stipulates that user of the free trade zone or the customs agent is obliged to surrender the original B/L to the carrier prior to withdrawing the goods from the Customs authority's primary zone and ocean carriers are allowed to be directly involved in cargo delivery procedures.

To conclude, except for oil bulk cargoes, the presentation of the original B/L is a must for withdrawal of general cargoes and cargoes in the free trade zones, rendering carriers the right to verify.

Overall analysis

Although the issue of cargo delivery without presentation of the original B/L is explained in the case of only three countries, similar situation is observed in other parts of the America and some African countries as well with constant changes in regulations and practices. Again, when trading in these areas, Members should be aware that it’s always the carrier’s obligation to deliver to entitled consignee and it’s always necessary to check the cargo release procedure with local agent. If control over the goods is taken by the port authority, Members are advised to collect evidences for further defense in case of any misdelivery or fraudulent claims. Extra caution should be attached to such risks as they are not covered by CPI P&I.

The guidance is for Members’ reference only and regulatory changes mentioned above are up to the date of the issuance of this circular. For further consultation, please contact your manager at the Club.