Study On Effect Of Jurisdiction Clause In Bill Of Lading

Different Countries have different understanding on the effectiveness of the jurisdiction clause in Bill of Lading. In order to protect the country’s jurisdiction and to protect the interests of cargo owners, some countries tend to limit the effectiveness of the jurisdiction clause in Bill of Lading. Some other countries tend to admit the effectives of the Bill of Lading to protect the carrier’s interests and promote the development of litigation industry. Even the courts in one country have different understanding regarding the validity of the jurisdiction clause in Bill of Lading.The effectiveness of jurisdiction clause in Bill of Lading has been debated endlessly by scholars. It is still not settled yet. British and American scholars always focus on the case related to the jurisdiction clause; discuss the decision of the courts. Chinese scholars always focus on the statue law; discuss the reasons why jurisdiction clause in Bill of Lading is valid or invalid. Chinese Scholars always combine the reasons that invalid the effectiveness of the jurisdiction clause in Bill of Lading to propose a standard for the effectiveness of the jurisdiction clause. But the standards they propose are always too general, thus not suit for practice.The divergences between different scholars and judges are resulted from their different choices of values. Jurisdiction clause in Bill of Lading show many aspects of value, including efficiency, order, freedom and justice. Efficiency include the efficiency of business transactions and the efficiency of dispute resolution, order include predictability and stability of commercial relations and the country’s sovereignty and public order, freedom mainly refers to the contracting freedom, fair mainly refers to the parties should have fair opportunity to solve disputes.There are conflicts between these values, if we acknowledge the effectiveness of jurisdiction clause in Bill of Lading; we can get efficiency, stability and predictability, but sacrifice the contracting freedom, the country’s sovereignty and public order, vice versa. We must choice between conflicted values.There is carriage of goods by sea contract between the carrier and the shipper. Before conclusion of the contract, shipper has opportunity to see the jurisdiction clause in the carrier’s Bill of Lading samples, to discuss the content of jurisdiction clause with the carrier. Although in most cases the shipper won’t pay attention to the jurisdiction clause in Bill of Lading, the carrier and the shipper reached an agreement about the jurisdiction clause. Acknowledge the validity of the jurisdiction clause in Bill of Lading conforms to formal fairness.There is not any agreement between the carrier and the non-original parties. In order to improve the business efficiency, ensure the transferability of the bill of lading, the law regulated that the terms in Bill of Lading is binding to the holder of Bill of Lading, but the bill of lading terms should be limited to the substantive right and obligation terms. The jurisdiction clause involves national sovereignty and public order, thus has higher request for fairness. The jurisdiction clause in Bill of Lading shall not bind the holder of Bill of Lading.Arbitration clause can also guarantee the stability and predictability. The arbitration is created for the efficiency of dispute resolution.In order to balance different values, we should acknowledge the effectiveness of jurisdiction clause between the shipper and carrier; deny the effectiveness of jurisdiction clause to the holder of Bill of Lading.The insurer gets the litigation rights based on the right of subrogation. The litigious rights of the insurer are transferred from the insured. In the lawsuit, the rights and obligations of the insurer are the same with the insured. Jurisdiction clause in Bill of Lading is binding to the insurer because jurisdiction clause is binding to the insured other than there are mutual assent between insurer and the carrier.Therefore, if the jurisdiction clause in Bill of Lading is effective between the insured and the carrier, it will bind the insurer; if the jurisdiction clause in Bill of Lading is not effective between the insured and the carrier, it wills not bind the insurer.Under the letter of credit business, the bank can get Bill of Lading after payment to the seller. Banks get the Bill of Lading not for the ownership of the goods, but for guarantee the realization of the creditor’s rights. After the buyer pay to bank, the bank will give the documents to the buyer. Banks get the Bill of Lading in order to enjoy the right of pledge. If the buyers do not pay to the banks, the banks may get the goods under the Bill of Lading to realize their rights. Banks must become holder of Bill of Lading before they can get the ownership of the goods. Therefore, when Banks claim to the carrier, they are the holder of the Bill of Lading. The jurisdiction clause in the Bill of Lading is not binding to the bank.