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

Introduction

UCP 600 Article 22 governs the requirements for a charter party bill of lading (also called a charter party bill) presented under a documentary credit. This article establishes when banks must and must not accept such a document, what data it must contain, and how it interacts with other transport documents governed by Articles 19 through 25. A charter party bill of lading is a transport document issued by or on behalf of the carrier that evidences a contract of carriage under a charter party — a separate agreement between a shipowner and a charterer for the hire of all or part of a vessel.

The significance of Article 22 lies in the heightened scrutiny it demands. Because charter party bills of lading are issued in a different operational context from standard bills of lading, they carry unique risks: the carrier may not be the same entity as the named carrier on the credit, port of loading and discharge may be subject to different conventions, and the bill of lading may reference charter terms that affect the beneficiary's obligations. Understanding these definitions and the scope of Article 22 is essential for any practitioner who processes documentary credits involving chartered vessels.

Failure Mode Analysis

Failure Mode 1: Absence of On-Board Notation

A charter party bill of lading that merely states "received for shipment" without an on-board notation is non-compliant under Article 22(b). This is one of the most common discrepancy reasons for charter party bills. The distinction between "received for shipment" and "shipped on board" is fundamental — the former indicates the carrier has received the goods but not yet loaded them onto the vessel, while the latter confirms the goods are aboard.

Failure Mode 2: Vessel Name Mismatch

If the credit specifies a named vessel (e.g., "M/V Pacific Star") but the charter party bill of lading references a different vessel or uses the phrase "or substituted vessel," banks may reject the document. Article 22(b) requires indication of a "named vessel," and ISBP 745 does not permit substitutions unless the credit expressly allows them.

Failure Mode 3: Port of Loading/Discharge Deviation

Presenting a charter party bill of lading showing a port of loading or discharge that differs from the port stated in the credit constitutes a discrepancy. If the credit states "Port of Loading: Shanghai" but the bill of lading reads "Shanghai or Ningbo," the conditional language renders the document non-compliant.

Failure Mode 4: Missing or Inconsistent Dates

When the charter party bill of lading does not bear a shipment date, or the shipment date is later than the latest shipment date stated in the credit, the document is discrepant. Article 14(c) reinforces this: a document must not bear a date of shipment later than the date specified in the credit.

Failure Mode 5: Reference to a Non-Credited Port

If the charter party bill of lading indicates a transshipment port not contemplated by the credit, or if it shows an additional port of discharge not permitted under the credit terms, the document may be rejected. ISBP 745 Paragraph E19 addresses transshipment under charter party bills specifically.

Deterministic Resolution Architecture

Step 1: Verify Document Type Classification

Confirm that the document presented is indeed a charter party bill of lading. ISBP 745 Paragraph A25 states that banks determine compliance based on the document's content, not its name. A document named "bill of lading" that contains charter party language may need to be treated as a charter party bill of lading.

Step 2: Check Carrier and Issuer Identity

Confirm that the document is issued by or on behalf of the carrier as required by Article 22(a). The carrier is the entity that undertakes to perform the carriage. If the document is signed by a party other than the carrier, verify that the signatory is acting as agent for the carrier.

Step 3: Validate On-Board Status

Look for an on-board notation or equivalent wording confirming the goods have been loaded on board the named vessel. Check that the notation is dated. If the document is an on-board document, verify that the date of on-board notation is not later than the latest shipment date under the credit.

Step 4: Confirm Port Consistency

Match the port of loading and port of discharge on the charter party bill of lading against the ports stated in the credit. Any deviation — including conditional language — is a discrepancy.

Step 5: Verify Vessel Name

If the credit specifies a vessel, confirm the named vessel on the document matches. If the credit does not specify a vessel, accept any vessel name.

Step 6: Examine All Originals

Verify that all originals of the charter party bill of lading have been presented, or that the sole original has been presented, as required by Article 22(d). An incomplete set of originals is a discrepancy.

Step 7: Cross-Reference with Commercial Invoice and Packing List

Compare the goods description, quantity, and value on the charter party bill of lading with the commercial invoice and packing list. While Article 14(d) permits a description of goods that is not identical to the credit, the transport document must reflect the same goods being shipped.

Step 8: Check for Charter Party Clause Compliance

If the credit expressly requires a charter party bill of lading, confirm that the document is subject to a charter party. If the credit does not require it but a charter party bill is presented, it must be the type of document the credit permits. Under Article 22(e), a document bearing the phrase "subject to a charter party" is acceptable only when the credit requires such a document.

Step 9: Apply the Five Banking Days Timeline

Under Article 14(b), the examining bank has a maximum of five banking days following the day of presentation to determine if the presentation is compliant. Charter party bills of lading often require additional time for verification due to the cross-referencing required with charter party terms.

Conclusion

Article 22 defines the precise parameters within which a charter party bill of lading must be presented under a documentary credit. The article's requirements — on-board notation, named vessel, specified ports, complete originals, and carrier identification — form a rigid compliance framework. Failure to meet any single requirement results in a discrepancy that can delay or prevent payment. Banks, beneficiaries, and applicants must coordinate closely to ensure that charter party bills of lading align with the credit terms before presentation. Pre-presentation document checking, guided by ISBP 745, is the most reliable method to avoid rejection.

Frequently Asked Questions

Q1: Can a bank accept a charter party bill of lading if the credit calls for a regular bill of lading?

No. Under Article 14(a), the nominated bank must act on the basis of the documents alone, and Article 22 explicitly addresses charter party bills of lading. If the credit requires a regular bill of lading (Article 20), a charter party bill of lading is a different document type and would be discrepant unless the credit expressly permits substitution.

Q2: What happens if the charter party bill of lading shows "transshipment permitted" but the credit is silent on the matter?

Under ISBP 745 Paragraph E19, when the credit is silent on transshipment, a charter party bill of lading is acceptable provided the goods are carried from the port of loading to the port of discharge stated in the credit. Transshipment is allowed unless the credit expressly prohibits it.

Q3: Is an electronic charter party bill of lading acceptable?

Yes, provided the credit permits electronic presentation under eUCP Version 2.1. The electronic document must comply with all data content requirements of Article 22 and carry a valid electronic signature or authentication as required by the credit terms.

Q4: Can a charter party bill of lading reference a charter party that modifies the carrier's obligations?

The existence of a reference to a charter party does not, by itself, render the document discrepant. However, ISBP 745 Paragraph E20 and Article 22(e) address when such references are permissible. Banks examine the document on its face and are not bound by the terms of any underlying charter party agreement.

Q5: Does a charter party bill of lading need to indicate the full name of the carrier?

Article 22(a) requires the document to be issued by or on behalf of the carrier. The carrier must be identifiable from the face of the document. ISBP 745 Paragraph A25(a) confirms that banks verify compliance based on the document's content, so an identifiable carrier is a minimum requirement.

Q6: What is the difference between a charter party bill of lading and a negotiable sea waybill?

A charter party bill of lading is a document of title governed by Article 22, typically issued in the context of a vessel charter arrangement. A non-negotiable sea waybill (Article 21) is a transport document that is not a document of title and does not require the original to claim delivery of goods. The two serve different commercial and legal purposes.

Source Notes

Context only. Sources referenced in this guide are ICC publications (Incoterms® 2020, UCP 600 eBook, ICC Academy guides, Certified UCP 600 Specialist materials, and UCP 600 including eUCP Version 2.1). These sources provide the framework for the analysis above but do not contain topic-specific source text. All article citations reference the published text of UCP 600 (ICC Publication No. 600), ISBP 745 (ICC Publication No. 745), eUCP Version 2.1 (ICC Publication No. 600/701), and URDG 758 (ICC Publication No. 758).