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A lesson to all exporters on the use of electronic release systems by carriers

Kirsten Mullins

A recent judgment of the English Court of Appeal may be a reassuring one for African exporters, but should also be seen as a grave warning to take extra precautions to ensure cyber security systems are secure and to ensure that contracts reflect the actual practice.

The judgment in MSC Mediterranean Shipping Company S.A. v Glencore International AG deals with the use of an electronic release system (ERS). The ERS involved carriers providing the receiver of goods, their agents and the port terminal with a computer generated pin code. The pin code enable persons collecting goods to gain access to the terminal and collect the relevant containers; replacing hard copy delivery orders or release notes given against a bill of lading.

Glencore made various shipments of drums of cobalt briquettes to the Port of Antwerp in three containers carried by MSC. On collection it was discovered that two of the containers had been removed from the terminal by unauthorised persons.

The issue for the court was whether the provision of the pin code was sufficient to take delivery of the containers, rather than the bill of lading or delivery order.

The case was decided on the facts and by reference to section 1(4)(b) of the Carriage of Goods by Sea Act 1992. Even though on the previous 69 shipments in which the ERS was used the pin codes were used successfully, legally and contractually they were not sufficient under the terms of the contract.

This case illustrates a continued movement towards the use of cyber technology in the logistics sphere. It is imperative that parties exporting goods from Africa’s increasingly busy ports are alive to the possible use of ERS at ports of discharge. In due course, these electronic measures will no doubt be introduced in ports around Africa and this will then affect importers too. Exporters should ensure that their cyber security measures, and those of their overseas agents, are sufficient to prevent similar occurrences. 

 Carriers may be surprised at the outcome of the case and the judgment’s apparent refusal to accept the new age of paperless commerce. However it shows that contracts of carriage will need to be updated to reflect the actual procedure used to release goods. The parties will also have to ensure that the amended procedure is not in breach of any statutory obligation at the port of discharge that may override the terms of their contract.

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