UCP 600 Article 37 — Examining Bills of Lading Under Reimbursement Arrangements

Introduction

When a documentary credit is available by reimbursement, the nominated bank must examine bills of lading before requesting reimbursement under Article 37. The bill of lading is the most frequently disputed transport document in documentary credit practice, and errors in its examination directly affect the bank's ability to make a compliant Article 37(b) declaration. This guide addresses the specific examination requirements for bills of lading within the reimbursement framework.

Failure Mode Analysis

Failure Mode 1: Accepting a "Received for Shipment" Bill of Lading

The nominated bank examines a bill of lading that contains only a "received for shipment" notation without an on-board notation. Under Article 20(a)(ii), this is non-compliant. The bank proceeds to request reimbursement, but the reimbursing bank or issuing bank rejects the claim.

Failure Mode 2: Overlooking Missing On-Board Date

The bill of lading contains an on-board notation but lacks a date. ISBP 745 B8 requires the on-board date to be evidenced. Without it, the bank cannot confirm that shipment occurred within the credit's validity period.

Failure Mode 3: Accepting a Claused Bill of Lading

The bill of lading contains clauses indicating damage to goods or defective packaging. Under Article 20(a)(vi), the bill must not contain such clauses. The nominated bank overlooks the clause and submits a reimbursement request that is subsequently rejected.

Failure Mode 4: Failing to Verify Full Set Presentation

The credit requires presentation of a full set of originals (e.g., "3/3 original bills of lading"). The nominated bank presents only two of three originals but still claims compliance. This discrepancy invalidates the Article 37(b) declaration.

Failure Mode 5: Inconsistent Port of Discharge

The bill of lading indicates a port of discharge that differs from the credit's required destination. Under Article 14(f) and ISBP 745 B2, this constitutes a discrepancy that prevents reimbursement.

Deterministic Resolution Architecture

Step 1: Verify Carrier Identity

Confirm that the bill of lading identifies the carrier by name. If the carrier is identified only by logo or code without a legible name, request clarification from the shipper before accepting the document.

Step 2: Confirm On-Board Notation and Date

Check that the bill of lading contains an explicit on-board notation (not merely "received for shipment"). Verify that the on-board date is stated and is not later than the credit's latest shipment date.

Step 3: Examine for Claused Notations

Review the bill of lading for any clauses, stamps, or notations indicating damage, defective packaging, or other adverse conditions. If any such notation is present, reject the document and notify the presenter.

Step 4: Verify Original Count

Confirm that the number of originals presented matches the number required by the credit. Check that each original is clearly marked as such (e.g., "Original," "Duplicate," "Triplicate").

Step 5: Cross-Reference Port Details

Compare the port of loading and port of discharge on the bill of lading against the credit's requirements. Any deviation — unless permitted by the credit — constitutes a discrepancy.

Step 6: Document the Examination

Record the results of each verification step in the bank's examination file. Include the specific Article or ISBP paragraph that justifies acceptance or rejection of each element.

Step 7: Only Then Request Reimbursement

After confirming that the bill of lading complies with all applicable requirements, proceed to the Article 37(b) declaration and reimbursement request. Do not submit the request if any discrepancy remains unresolved.

Conclusion

The bill of lading is the document most likely to generate discrepancies in reimbursement transactions. A systematic examination process — verifying carrier identity, on-board notation, date, cleanliness, original count, and port details — ensures that the nominated bank can truthfully declare compliance under Article 37(b) and receive timely reimbursement.

Frequently Asked Questions

1. Can a clean bill of lading be supplemented with a separate inspection certificate?

Yes. If the credit requires both a bill of lading and an inspection certificate, the bill of lading must still be clean (free of adverse clauses). The inspection certificate is a separate document and cannot cure defects on the bill of lading itself.

2. What if the bill of lading indicates transshipment but the credit prohibits it?

Under Article 20(c), unless the credit specifically prohibits transshipment, banks must accept a bill of lading that indicates transshipment. If the credit prohibits it, the bill of lading is discrepant and reimbursement cannot be claimed.

3. Does the reimbursement request need to attach the bill of lading?

No. Under Article 37, the reimbursement request requires only the compliance declaration. The bill of lading and other documents are examined by the nominated bank and retained in its files. They are not transmitted to the reimbursing bank.

4. What if the bill of lading is issued by a freight forwarder?

Under Article 14(k), a bill of lading issued by a freight forwarder is acceptable only if it indicates the freight forwarder as carrier or as agent for a named carrier. Otherwise, it is discrepant.

5. How does UCP 600 handle bills of lading for container shipments?

UCP 600 Article 20 applies equally to container shipments. The bill of lading must still meet all Article 20 requirements. The fact that goods are containerized does not excuse non-compliance with on-board, carrier identification, or cleanliness requirements.

Source Notes

Context only — no primary source text was extracted for this guide. All references to UCP 600 Articles 14, 20, and 37, and ISBP 745 paragraphs B6–B14 are based on the well-known published rules. Source URLs from the batch data point to ICC and ICC Academy publications: "UCP 600 - Uniform Rules and Practice for Documentary Credits" (ICC, 2023); "Certified UCP 600 Specialist (CUCP)" (ICC Academy, 2025); "Incoterms 2020" (ICC, 2023).