SURRENDERED BILL OF LADING | Our view of ICC Draft opinion TA949

Background:

The ICC Banking Commission met on 17th February 2025 in Dubai to discuss and approve draft opinion TA949 on the “Surrendered Bill of Lading.”

Out of the 28 comments received from various ICC National Committees, only 15 were in agreement with the conclusion of the draft opinion. Typically, ICC draft opinions receive broad support from most National Committees. However, due to the divergence of views, the Commission has decided to seek comments from the transport industry on the current practices regarding the surrendering of Bills of Lading before reaching a final decision.

This paper is intended to:

• Clarify the concept of surrendering Bills of Lading.
• Highlight the management of risks associated with surrendered B/Ls for the issuing bank, confirming bank, and the beneficiary.
• Analyse the draft opinion TA949 on the “Surrendered Bill of Lading.”

Concept of Surrendering of Bills of Lading:

As the Bill of Lading (B/L) primarily serves as a document of title,  original B/L must be surrendered to the carrier or its agent at the port of destination by the consignee to secure the release of the goods. In open account or advance payment transactions, instead of sending the original B/Ls to the buyer by courier, the seller may choose to surrender the original B/Ls to the carrier or its agent at the load port. The carrier then arranges for its agent at the destination port to release the goods to the consignee upon presentation of appropriate identification. This arrangement is widely known as telex release or express release.

When a Letter of Credit (LC) is used as the payment method, and the beneficiary agrees to surrender the original Bill of Lading (B/L) at the load port for telex or express release, issuing banks generally require the presentation of a copy of the surrendered B/L as part of the required documents. In such cases, the beneficiary is expected to submit a photocopy of the original B/L that was surrendered to the carrier or its agent at the load port.

Applicants may come forward with such requirements, particularly in cases where the shipment involves a short transit time, and the goods arrive well before the documents reach the applicant through the banking channel. However, issuing banks must guide the applicant on alternative solutions available within the scope of UCP 600, such as using a Non-Negotiable Sea Waybill or requiring the B/L as a straight consignment, rather than requiring the surrender of the B/L.

Managing Risks in Surrender of BL under LC Mechanism

The practice of arranging telex release or express release is commonly used under open account or advance payment methods. However, in the case of a Letter of Credit that permits the release of goods directly to the consignee, parties involved in documentary credit transaction—issuing bank, confirming bank (if any), and the beneficiary—are exposed to significant risks. These risks can be mitigated as follows:

Risk Mitigation by the Issuing Bank:

If the issuing bank is willing to open a Letter of Credit that incorporates conditions allowing the release of goods directly to the consignee, this should be treated as an unsecured liability. Consequently, the bank’s credit limits must be appropriately managed and blocked, by taking the necessary indemnities.

In general, issuing banks are requiring the presentation of “a copy of the surrendered Bill of Lading” as part of the documents required. However, leaving aside the interpretative issues surrounding this clause—which will be discussed in the subsequent part of this paper—it may still be unclear whether telex/express release instructions were actually provided.

The issuing bank must ensure that documentary requirements are carefully drafted to avoid ambiguities. It is recommended to include the following documentary requirement in such LCs:

“A certificate issued by the carrier or its agents at the load port, confirming that the original Bill of Lading (indicating the number and date) has been surrendered. The certificate must also confirm that instructions for the release of the goods to a named consignee (specifying the consignee’s name at port of destination) have been issued. A copy of the Bill of Lading attested by the shipping company must also be enclosed”.

Additionally, it is essential that the staff handling the issuance of LCs are adequately trained to understand the intricacies involved in these transactions.

Risk Mitigation by the Confirming Bank:

When a bank is authorised or requested by the issuing bank to add confirmation to an LC that facilitates the direct release of goods to the consignee, the confirming bank must exercise utmost caution. This is because, under such arrangements, control over the goods is typically outside the purview of the banks. Staff handling the confirmation of LCs must be thoroughly trained to understand the complexities of these transactions, as any oversight could expose the bank to unnecessary risks.

Risk Mitigation by the Beneficiary:

The beneficiary in general is exposed to documentary risks irrespective whether presentation includes the title document. If a non-complying presentation is made and the applicant refuses to accept the goods while the issuing bank refuses payment, the beneficiary may still retain control over the goods (provided the original B/L has not been surrendered). This allows the beneficiary to find an alternative buyer or reimport the goods to minimise losses.

However, if the goods have already been released through telex/express release by surrendering the original BL to the shipping company at the load port and the issuing bank refuses the presentation due to discrepancies, the beneficiary must rely on the applicant for payment. The beneficiary must be mindful of these implications before accepting such conditions in the LC and ensure that the presentation is complying.

Analysis of Draft opinion TA949

Documentary requirement under the LC:  

“One copy of surrendered Bill of Lading” along with other stipulated documents

Presentation:

Three original B/Ls indicating “original bill surrendered at origin” (without affixing “surrendered” stamp). 

Other stipulated documents

Discrepancies observed for refusal:

1. Surrendered bill of lading not presented in copy (but 3/3 originals)

2. The surrendered bill of lading does not contain a surrendered stamp 

The following questions were asked to the ICC Banking Commission:

1. When a documentary credit calls for “one copy of surrendered bill of lading” is it required that a copy (as opposed to the original) bill of lading is presented?

2. When a documentary credit calls for “one copy of surrendered bill of lading” how is this to be shown on the document? Would this require that the presented bill of lading is stamped “Surrendered” or can the wording “surrendered” (or similar) be printed on the presented bill of lading?

3. Are the two reasons for refusal, cited above, valid?

Conclusion as per draft opinion of ICC:

1. Yes. All the original bills of lading should have been surrendered to the carrier or their agent

2. It is the responsibility of the issuing bank to ensure that specific requirements for the copy of the bill of lading, including how the surrender of the original bills of lading is evidenced, are included in the terms and conditions of the credit. In the absence of such requirements, any indication on the copy that the originals have been surrendered will suffice.

3. The first discrepancy is valid, but not the second.

The author’s view

A Letter of Credit that requires the presentation of “one copy of the surrendered Bill of Lading” means the beneficiary is expected to present a copy of the Bill of Lading that was surrendered to the carrier at the load port.

A key question arises: Can the beneficiary present an original Bill of Lading in lieu of a copy? The answer depends on whether the shipping company requires the surrender of the full set of original B/Ls or if one original is sufficient to issue a telex/express release. In my opinion, one original B/L is sufficient to release the goods, and the remaining originals automatically become void, as stated in the pre-printed text on the B/L.

Considering this, the beneficiary could still present an original B/L instead of a copy, as the LC does not explicitly prohibit presenting an original. (Ref: Para A29-d iii of ISBP 821). 

However, in this case, the beneficiary submitted three original B/Ls (3/3) to the bank, which indicates that the full set of originals was presented. As such, discrepancy No.1 is valid.

Another important question is: How should “one copy of the surrendered Bill of Lading” be reflected in the presented document?
Would the B/L need to be stamped “Surrendered”, or would the wording “surrendered” (or similar) in printed form suffice?

The term “surrendered” is primarily a disposal instruction. There is no requirement for the B/L to carry a “Surrendered” stamp or to have this wording in printed form. If the issuing bank requires the word “surrendered” to appear on the copy of the B/L, this must be explicitly stated in the LC.

Disagreement with Concluding Remarks in Draft Opinion TA949:

1️⃣ Requirement to Surrender All Originals:
As per the draft opinion, “All the original bills of lading should have been surrendered to the carrier or their agent.”
➡️ In my opinion, at least one original B/L is sufficient for surrender. The remaining originals automatically become void, as stated in the standard pre-printed text on the B/L.

2️⃣ Requirement to Indicate “Surrendered” on the Copy of B/L:
The draft opinion states:“In the absence of such requirements, any indication on the copy that the originals have been surrendered will suffice.”
➡️ In my opinion, it is not necessary to include ‘surrendered,’ either by stamp or in printed form, unless explicitly required by the LC. There is no need to indicate on the copy that the originals have been surrendered. Including such a notation may lead to unnecessary questions, such as whether it can be manually written, whether it requires attestation, etc. The addition of ‘Surrendered’ in any form does not add value to the parties or the transaction. As such, the last sentence of the draft opinion may be removed.

Final Thoughts:

The ICC should caution banks against incorporating unrecognised practices into the LC mechanism, as viable alternatives—such as a Non-Negotiable Sea Waybill consigned to a named party or a Bill of Lading with a straight consignment—are already available for the direct release of goods without the need to present the original transport document. In the case of letter of credit transactions involving shorter voyage shipments, it is always advisable to require a transport document made out in the name of the issuing bank, and the bank issuing a Delivery Order for the release of goods is ideal to maintain better control over the transaction. Furthermore, including this issue within the scope of the ISBP is not advisable, as it is neither widely practiced nor relevant to documentary credit transactions under the framework of UCP 600.

Disclaimer

This paper is based on Document No. 470/TA.949, dated 19th December 2024, which reflects the opinion of the ICC Banking Commission’s Technical Advisers based on the facts presented to them and made available on the ICC website. These opinions do not necessarily represent the official stance of the ICC Banking Commission until formally approved or disapproved at the next scheduled meeting.

The views, interpretations, and practices related to the shipping industry expressed in this paper are solely those of the author and do not reflect the official position of the ICC Banking Commission. Readers are encouraged to refer to official ICC publications for authoritative guidance following the commission’s final approval on this issue.

This paper is presented as a research-based perspective on the topic, welcoming comments and opposing views as part of knowledge sharing and further guidance.

BALAJI KAS
DIRECTOR
IFTS Training and Consultancy Private Limited
www.iftslearning.com | training@ifts.co.in
Date of issue: 22 March 2025