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Maritime Letters of Indemnity




6.1 What should the law be regarding enforceability of letters of indemnity issued against clean bills of lading? In order to answer this question, the first point to consider is whether the use of the letters of indemnity to obtain clean bills of lading is currently satisfactorily dealt with under English law. As noted earlier,1 since the early decades of the twentieth century, the international shipping community has considered different ways of responding to the use in practice by merchants and shipowners of letters of indemnity issued against clean bills of lading. These include: (i) the enactment of an international convention,2 (ii) the use of the so-called supplemental indemnity form3 and (iii) the implementation of a system based on giving notice of the letter of indemnity to the underwriters.4 None of these potential solutions have ever been implemented, save by way of article 17 of the Hamburg Rules, which applies only to a small minority of current transactions for carriage of goods by sea using bills of lading. As the law stands Brown Jenkinson remains the leading authority regarding the general unenforceability of letters of indemnity issued in return for clean bills of lading.

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