financing needs of Chinese importers is made taking into consideration the flexibility
allowed to the Chongqing PFTZ to test new laws that can support new businesses.
1 Introduction
Traditionally, a sizeable portion of international trade in goods is transported by sea
and many of the related business and regulatory processes depend largely on
shipping documents.
1 The tender of the correct shipping documents is essential to
the fulfilment of several standard form international sale contracts and is fundamental to the operation of documentary letters of credit issued as a payment mechanism
for the purchase of goods. Among the shipping documents, a bank issuing a
documentary letter of credit generally places a high level of reliance on the bill of
lading, as most jurisdictions across the world recognize the bill as a document of title
that gives the holder the right to demand delivery of the goods from the carrier at the
port of discharge.
2 This legal mechanism lends security to the bank as Article 5 of
UCP 600
3 rightly points out that banks deal in documents, not in the goods or
services to which those documents relate.
With the expansion of railway corridors along the Eurasian Land Bridge
4 under
the Chinese Belt and Road Initiative (BRI), attempts are being made in China to
incorporate the functions of a maritime bill of lading into a railway consignment
note. In 2017, Chinese car traders in the Chongqing Pilot Free Trade Zone (PFTZ)
who use the Chongqing-Duisburg train corridor to import cars from Europe
requested the creation of a negotiable transport document for rail carriage, similar
to bills of lading in maritime transport, for securing the underlying financial transaction.
5 The traders highlighted the fact that banks in China are unwilling to issue
letters of credit to support the payment for their car imports as railway consignment
notes are non-negotiable documents. Railway consignment notes serve two functions, namely, receipt of the goods and evidence of the contract of carriage. They do
1 A typical shipment of goods by sea would constitute an invoice and packing list issued by the
seller; a bill of lading or other transport document issued by the carrier; a survey certificate showing
quantity and quality; an insurance certificate issued by a cargo insurer and a certificate of origin
issued by a local chamber of commerce. See Murray et al. (2012), p. 2.
2 Ibid, at 190.
3 The Uniform Customs and Practice for Documentary Credits (UCP), 2007 Revision, International
Chamber of Commerce Publication No. 600 are rules that apply to any documentary credit when
parties have incorporated them into their contract.
4 For a general discussion on the China-Europe railway corridors, see Tillman (2018), https://www.
csis.org/analysis/rise-china-europe-railways, accessed 17 April 2019.
5 Similar requests as the Chongqing car traders were submitted by railway carriers in Chengdu. This
was gleaned from personal discussions with Associate Professor Guo Yu of Peking University Law
School, Beijing, China. She also mentioned about this request from railway carriers during a
presentation at the conference entitled “A Legal Roadmap for Digital Trade”, organised by the
International Chamber of Commerce United Kingdom on 11 September 2018.
40
A. Basu Bal and T. Rajput
allowed to the Chongqing PFTZ to test new laws that can support new businesses.
1 Introduction
Traditionally, a sizeable portion of international trade in goods is transported by sea
and many of the related business and regulatory processes depend largely on
shipping documents.
1 The tender of the correct shipping documents is essential to
the fulfilment of several standard form international sale contracts and is fundamental to the operation of documentary letters of credit issued as a payment mechanism
for the purchase of goods. Among the shipping documents, a bank issuing a
documentary letter of credit generally places a high level of reliance on the bill of
lading, as most jurisdictions across the world recognize the bill as a document of title
that gives the holder the right to demand delivery of the goods from the carrier at the
port of discharge.
2 This legal mechanism lends security to the bank as Article 5 of
UCP 600
3 rightly points out that banks deal in documents, not in the goods or
services to which those documents relate.
With the expansion of railway corridors along the Eurasian Land Bridge
4 under
the Chinese Belt and Road Initiative (BRI), attempts are being made in China to
incorporate the functions of a maritime bill of lading into a railway consignment
note. In 2017, Chinese car traders in the Chongqing Pilot Free Trade Zone (PFTZ)
who use the Chongqing-Duisburg train corridor to import cars from Europe
requested the creation of a negotiable transport document for rail carriage, similar
to bills of lading in maritime transport, for securing the underlying financial transaction.
5 The traders highlighted the fact that banks in China are unwilling to issue
letters of credit to support the payment for their car imports as railway consignment
notes are non-negotiable documents. Railway consignment notes serve two functions, namely, receipt of the goods and evidence of the contract of carriage. They do
1 A typical shipment of goods by sea would constitute an invoice and packing list issued by the
seller; a bill of lading or other transport document issued by the carrier; a survey certificate showing
quantity and quality; an insurance certificate issued by a cargo insurer and a certificate of origin
issued by a local chamber of commerce. See Murray et al. (2012), p. 2.
2 Ibid, at 190.
3 The Uniform Customs and Practice for Documentary Credits (UCP), 2007 Revision, International
Chamber of Commerce Publication No. 600 are rules that apply to any documentary credit when
parties have incorporated them into their contract.
4 For a general discussion on the China-Europe railway corridors, see Tillman (2018), https://www.
csis.org/analysis/rise-china-europe-railways, accessed 17 April 2019.
5 Similar requests as the Chongqing car traders were submitted by railway carriers in Chengdu. This
was gleaned from personal discussions with Associate Professor Guo Yu of Peking University Law
School, Beijing, China. She also mentioned about this request from railway carriers during a
presentation at the conference entitled “A Legal Roadmap for Digital Trade”, organised by the
International Chamber of Commerce United Kingdom on 11 September 2018.
40
A. Basu Bal and T. Rajput