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Understanding Article 22 of UCP 600: Charter Party Bill of Lading

A Charter Party Bill of Lading (CPBL) is a transport document issued under a charter party contract—an agreement where a ship (or part of it) is hired by a charterer. Unlike a regular Bill of Lading, the CPBL is tied to the charter party, and banks do not examine the terms of the charter party itself.

Article 22 of UCP 600 sets the rules for when a CPBL is acceptable under a Letter of Credit (LC).

What Does Article 22 of UCP 600 Say?

To comply, a valid Charter Party Bill of Lading must:

1. Evidence of Shipment

  • Indicate that goods were shipped on board a named vessel at the port of loading stated in the LC.
  • Shipment date = date of issuance or on-board notation (if present).

2. Issuance & Signature

Must be issued and signed by:

  • The master (captain), or
  • The owner of the vessel, or
  • An agent on behalf of the master/owner.

⚠ The signatory’s capacity must be clearly shown.

3. Charter Party Reference

  • Must clearly state that it is subject to a charter party (e.g., “All terms and conditions as per charter party dated…”).
  • This distinguishes it from a regular Bill of Lading.

4. Ports of Loading & Discharge

  • Must state ports exactly as required in the LC.
  • Multiple ports only if permitted by the credit.

5. On-Board Notation

  • If not already part of the CPBL, an explicit “on board” notation is required.

6. Number of Originals

  • Must state how many originals are issued.
  • If it doesn’t, banks accept it as if a full set has been issued.

Breaking Down Article 22

Key Difference from Regular B/L (Article 20)

  • Regular B/L = receipt + contract of carriage + document of title.
  • Charter Party B/L = receipt + contract of carriage (under charter party).

The key distinction: It’s tied to a separate charter party contract, but banks do not review that contract.

Why Use a Charter Party Bill of Lading?

  • Common in bulk shipments (e.g., coal, oil, grain, iron ore).
  • Allows shippers and charterers to negotiate specific freight terms outside standard liner shipping.
  • Flexibility in costs and vessel use.

Exporter’s Responsibility

  • Ensure CPBL states it is “subject to a charter party.”
  • Verify it is signed by the correct authority (master/owner/authorized agent).
  • Match ports of loading and discharge with LC requirements.
  • Ensure the number of originals is indicated.

Bank’s Role

  • Banks only examine the CPBL document.
  • They do not check or interpret the separate charter party agreement.
  • Their focus = shipment evidence, signatures, ports, and formal compliance.

Practical Trade Example

A Bangladeshi coal exporter ships bulk cargo to a buyer in China under an LC requiring a Charter Party Bill of Lading.

The exporter presents:

  • CPBL signed by the shipowner’s agent.
  • States “Shipped on board MV Black Pearl – Chattogram – 10 Oct 2025.”
  • Clearly mentions “Subject to Charter Party dated 01 Oct 2025.”
  • Ports: Chattogram (loading) and Qingdao (discharge).
  • Originals: 3 issued.

✔ The bank accepts it because all Article 22 conditions are met.

If the exporter had presented a regular B/L instead of a CPBL → ❌ discrepancy, as it does not match LC requirement.

Why Article 22 Matters

  • Provides rules for using CPBLs in trade finance.
  • Protects banks from liability by limiting their review to the CPBL, not the underlying charter party.
  • Gives exporters/importers flexibility for bulk cargo trades.
  • Ensures documentary compliance while accommodating specialized shipping arrangements.

Final Thoughts

Article 22 of UCP 600 recognizes the role of Charter Party Bills of Lading in bulk commodity trade. While these documents are tied to separate charter agreements, banks’ role remains strictly documentary. Exporters and importers must carefully check LC terms to avoid confusion between a regular Bill of Lading and a CPBL, ensuring the CPBL is properly worded and signed for smooth payment under the LC.

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