Brazil reintroduces strict Bill of Lading regulations

Steamship, West of England and North have informed members that Brazilian Customs has reintroduced a previously-abandoned obligation for a consignee to produce an original bill of lading for taking delivery.

Correspondent Proinde said in a Circular that, under civil and commercial legislations, a ship’s master was required to exercise due diligence to safekeep the goods received on board and promptly deliver them at destination within a reasonable amount of time, or as agreed upon, against the presentation of the original bill of lading.

The general rule imposed by the Civil Code regarding contract of cargo carriage established that “the goods must be delivered to the consignee, or to whoever presents the endorsed bill of lading, who must receive them and submit any claim that he may have, under penalty of lapsing of right”

The Law also defined a bill of lading not only as an evidence of receipt, but also proof of possession and ownership of the goods.

In the specific case of goods carried by sea, deliveries were not actually made to the consignee; instead, the carriers delivered imported cargoes to the custody of customsbonded spaces at ports and terminals that are controlled by the Ministry of Finance (Ministério da Fazenda), through the Federal Revenue Department (Receita Federal do Brasil – RFB), the Customs authorities responsible for applying the statutes relating to the import and circulation of goods.

All imports then undergo a Customs clearance procedure, regardless of their value or whether they are taxable or not, in order to obtain legal entry into the country and subsequent delivery to the consignee. Carriers were not involved in the delivery process and lost all control over the goods from the moment they were physically handed over to the customscontrolled facilities at destination.

To be entitled to take delivery, consignees must provide the Customsbonded depositary with the required set of documents proving ownership and regulatory compliance.

Customs’ Normative Instruction (IN) RFB 680 of 2006 set out the procedure for cargo clearance and required the importer to produce various documents as a condition of taking delivery. One of these documents used to be the original bill of lading.

However in 2013, somewhat to the surprise of the industry, Brazilian customs applied substantial changes to the rules. These included the revocation of the clause that demanded the original Bill of Lading as a condition for the consignee to withdraw the goods from the Customscontrolled spaces.

In practice, it meant that the consignee could complete the clearance process and take delivery the goods without ever surrendering the original B/L. Carriers were therefore concerned that they might be exposed to financial losses and liabilities arising from wrongful or unauthorised delivery or even nonpayment of freight charges and fees owed to them.

In 2014, Brazilian Customs issued an instruction that removed any prohibition of bailees demanding presentation of the original B/L to ensure that the cargo was delivered to the rightful cargo owner. However, Proinde noted that some ports and terminals in Brazil were still strictly following IN RFB 1,356/2013 to the letter, delivering the goods without demanding production of the original B/L, and thus leaving the sea carriers to face lawsuits from the actual cargo owners and NVOCCs in Brazil and abroad.

On November 14th Brazilian Customs updated the regulations, reintroducing the obligation of the consignee submitting the original B/L, amongst other documents, to withdraw imported goods from ports and terminals.

The latest regulation also insists that the bailee keep a safe copy of the original B/L for five years.

Concluding, the correspondents said that the reconsideration of the Customs authority to the issue of presentation of the original bill of lading should be praised, as it considerably reduced the exposure of the sea carriers to wrongful delivery claims and brought peace of mind to exporters, importers and cargo traders. It also led Brazil into alignment with international law and practice when it comes to cargo delivery requirements.….pdf—brazilian-customs-reintroduce-the-obligation-to-produce-the-original-bill-of-lading.pdf