Attorney Gil Nadel, Attorney Omer Wagner
A verdict was recently given in the Supreme Court, in a case that included three phases (in the Magistrates Court, through the District Court and then the Supreme Court). This case had to do with the relations between an exporter and a shipping company, in a case where the exporter requested the consignee's name to be changed on the bill of lading.
For the sake of disclosure we should note that the exporter was represented by our office.
The case and claims made by the parties:
The R.M.M Sports Company wished to export a shipment of bed sheets from Israel to Russia, and the shipping company issued three original bills of lading for the shipment.
Due to a delay, the buyer in Russia announced that he is no longer interested in receiving the goods because he could not sell them before Christmas.
The exporter found an alternative buyer for the goods, and requested the shipping company to agree to change the name of the consignee on the bill of lading.
Since one of the original bills of lading was no longer there, the shipping company demanded a security payment worth 200% of the value of the goods as a condition for changing the name of the consignee on the bill of lading and claimed that since the original bill of lading was lost they are at risk which is why they are demanding the security payment.
The exporter tried to convince the shipping company that this is an unreasonable stipulation, since, among other things, this bill of lading is non-negotiable, but the shipping company was adamant.
In light of this, the exporter's efforts to try to sell the goods to an alternative buyer failed, and he was forced to return it to Israel where he sold it at 50% of the original price as planned.
The Magistrates Court partially accepted the exporter's lawsuit and instructed the shipping company to compensate the exporter with NIS 88,000. The shipping company's appeal was accepted in the District Court and the compensation fee was nullified.
The exporter submitted a request to appeal before the Supreme Court.
The Supreme Court ruling and commentary:
The Supreme Court determined that since this is the third phase of the affair, there is no cause for the Court to interfere with the rulings of the previous proceedings, even though they were in discord.
One of the central questions discussed in the District Court was whether the marine carrier was obligated to agreed to his client's request and change the consignee's name on the bill of lading.
The District Court ruled that the marine carrier was not obligated to do so, and stated that this was a case that is beyond the letter of the law.
The Supreme Court cut back on this firm opinion and agreed to state, on a side note, that there may be some cases where the marine carrier will be obligated to change the consignee's name, and this will be further discussed in future cases, which remained open to discussion.
Under the circumstances of this case, the Supreme Court ruled that this question does not warrant reaching a decision through an appeal to the Supreme, since the marine carrier in this present case agreed to change the consignee's name on the bill of lading, but stipulated such an action upon receiving a security payment at a rate of 200% of the cargo's value.
Another question that was central to the discussion in the Supreme Court was whether, in the event that a non-negotiable bill of lading was lost, is a marine carrier entitled to demand a security for the sake of changing the consignee's name.
The Supreme Court noted that this is indeed a legal question that deals with more than the specific circumstances of this case, but it is lacking the fundamental or general dimension that would justify an appeal in the third phase.
In effect, the Supreme Court determined that the question at hand is not whether it was justifiable for the marine carrier to demand a security for a non-negotiable bill of lading, but whether a security at a rate of 200% was an exaggeration or not, and this is a question that does not have far-reaching influences, and is only relevant to these specific parties, and therefore it does not justify a third phase appeal.
The District Court disregarded the difference between a negotiable and a non-negotiable bill of lading and determined that both of them constitute a document of ownership, and that, should the original consignee find the lost bill of lading, he could have made use of it, for instance, by using it as collateral in the bank for the sake of receiving credit.
The Supreme Court chose not to accept the District Court's firm opinion and, in fact, chose not to discuss the question of whether the a non-negotiable bill of lading also constitutes a document of ownership, and left this question open to further discussion.
[The Supreme Court proceeding: Request for Civil Appeal 2972/11 Sport R.M.M. (1999) Ltd. vs Mediterranean Shipping Company S.A. and others, Judges Danziger, Handel and Shoham, verdict of November 8, 2012. Party representatives: on behalf of the exporter- Attorney Gil Nadel. On behalf of the shipping company- Attorney Dan Mervitz;
The District Court proceeding: Civil Appeal (District Court of Tel Aviv) 47605-05-10, Panel of Judges Schenler, Vardi and Levhar Sharon, given on February 28, 2011;
The Magistrates Court proceeding: Civil Suit (Magistrates Court of Herzliya) 400/05, Judge Mani-Gur, given on April 7, 2010].
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