UCP 600 Article 22: Charter Party Bill of Lading — Key Definitions and Scope

Introduction

Article 22 of UCP 600 governs charter party bills of lading presented under documentary credits. Unlike Article 20 (standard bills of lading), Article 22 specifically permits bills of lading that are subject to a charter party arrangement. This guide covers the key definitions, scope, and requirements of Article 22, explaining when charter party bills of lading are acceptable and what additional scrutiny they require.

Failure Mode Analysis

Failure Mode 1: Confusing Article 20 with Article 22

Risk: The presenter submits a standard bill of lading under Article 20 when the credit requires a charter party bill of lading under Article 22, or vice versa.

Impact: A standard bill of lading (Article 20) must not contain a charter party reference. A charter party bill of lading (Article 22) must indicate a charter party. Submitting the wrong type is a discrepancy.

Failure Mode 2: Charter Party Not Indicated

Risk: The bill of lading is subject to a charter party but does not contain a clear indication of this fact.

Impact: Article 22(a) requires the bill of lading to indicate it is subject to a charter party. Without this indication, the bank cannot determine whether Article 22 applies.

Failure Mode 3: Missing Carrier Name

Risk: Article 22(b) does not explicitly require the carrier's name, unlike Article 20(b)(i). However, the bill of lading must still identify the carrier.

Impact: While Article 22(b) focuses on other content, the carrier must be identifiable. The absence of a carrier name creates confusion about who is responsible for carriage.

Failure Mode 4: Incorrect Port Names

Risk: The charter party bill of lading uses port names different from those stipulated in the credit, even though the charter party itself specifies different ports.

Impact: Article 22(b)(iii) and (iv) require the ports as stipulated in the credit. The charter party terms do not override the credit's port requirements.

Failure Mode 5: On Board Notation Missing or Incomplete

Risk: The charter party bill of lading does not contain an on board notation, or the notation is unsigned.

Impact: Article 22(c) requires the on board notation to be signed or initialled and dated. Without this, the shipment date cannot be determined.

Deterministic Resolution Architecture

Resolution 1: Document Type Verification

Before submission:
1. Verify the credit requires a charter party bill of lading
2. Confirm the bill of lading indicates it is subject to a charter party
3. Do not submit a standard bill of lading (Article 20) when a charter party bill of lading (Article 22) is required

Resolution 2: Charter Party Indication Confirmation

Verify the bill of lading contains a clear indication of the charter party:
- "Subject to charter party"
- "Freight payable per charter party"
- Reference to a specific charter party agreement
- Any language that clearly indicates the bill of lading is subject to a charter party

Resolution 3: Content Verification

Verify all Article 22(b) elements:
1. Shipper name
2. On board notation with vessel and port
3. Port of loading
4. Port of discharge
5. Original marking or number of originals
6. Date of issue
7. Evidence of contract of carriage

Resolution 4: Port Matching

Match the ports on the charter party bill of lading against the credit:
- Use exact port names as stipulated
- Do not rely on charter party port names if they differ from the credit
- Confirm both port of loading and port of discharge

Resolution 5: On Board Notation Verification

Confirm the on board notation:
- Contains "on board" or "loaded on board"
- Is signed or initialled by the carrier or its agent
- Is dated
- Identifies the vessel and port of loading
- Date is within the credit's shipment period

Resolution 6: Charter Party Terms Review

Review the charter party terms referenced in the bill of lading:
- Confirm the charter party is valid and current
- Verify the charter party terms do not conflict with the credit
- Note any unusual terms that may affect the transaction

Resolution 7: Bank Examination Protocol

When examining a charter party bill of lading:
1. Confirm it indicates it is subject to a charter party
2. Verify all mandatory content under Article 22(b)
3. Check the on board notation
4. Match ports against the credit
5. Verify the original or full set is presented
6. Review the charter party reference for clarity

Conclusion

Article 22 provides a specific framework for charter party bills of lading under UCP 600. Unlike Article 20, which prohibits charter party references, Article 22 requires them. The key requirements are: the bill of lading must indicate it is subject to a charter party, contain all mandatory content, and include a valid on board notation. Understanding these definitions ensures compliance and prevents confusion with standard bills of lading.

Frequently Asked Questions

1. When is a charter party bill of lading used?

Charter party bills of lading are used when the vessel is chartered (hired) by the shipper or a third party. The bill of lading is subject to the terms of the charter party agreement.

2. Does the credit need to specify "charter party bill of lading"?

Yes. If the credit requires a charter party bill of lading, it must state this clearly. If the credit requires a "bill of lading" without specifying "charter party," Article 20 applies and no charter party reference is permitted.

3. Can a charter party bill of lading be used for container shipments?

Yes, but this is uncommon. Charter party bills of lading are typically used for bulk cargo or full vessel charters, not container shipments.

4. What if the charter party terms conflict with the credit?

The credit terms prevail. The bill of lading must comply with the credit requirements regardless of the charter party terms.

5. Does the charter party need to be presented with the bill of lading?

UCP 600 does not require the charter party to be presented. The bill of lading must indicate it is subject to a charter party, but the charter party document itself is not required.

Source Notes

Context only. This guide is based on UCP 600 Article 22 (ICC Publication No. 600), ISBP 745 (ICC Publication No. 745), and eUCP Version 2.1. Source references in the search results pointed to general ICC Academy and UCP 600 e-book pages, which provided contextual framing but not article-specific text.