Is a CPBL Acceptable When the LC Is Silent?

QUESTION

Dear Sir,

Need your expertise again as your explanations are always easy to understand for learners like us.

Just wanted to know if L/C is silent on the type of required B/L but a CPBL (chartered B/L) is presented I/O Normal B/L in the shipment of oil (mostly CPBL are presented in the case of shipment of Oil).

Can this be treated as discrepancy. Are there any article covering this situation cause UCPDC article 22 only suggests the features of CPBL.

So, need your guidance on this one sir.

Thanking You

Suraj Shrestha

TOC

Himalayan Bank Ltd.

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ANSWER

Hi Suraj,

You’re absolutely right that Charter Party Bills of Lading (CPBL) are commonly used for bulk shipments like oil. These B/Ls are issued under a charter party agreement, typically when the shipper has hired (chartered) the vessel.

How do we identify a CPBL?

As per ISBP 821, Paragraph G2, a transport document (however named) is deemed to be a Charter Party Bill of Lading if it:

• Contains any indication that it is subject to a charter party, such as:
  • “Freight payable as per charter party”
  • “Subject to charter party dated…”

Even if it is titled “Bill of Lading”, these phrases trigger its treatment as a CPBL.

 When is a CPBL acceptable?

Per ISBP 821 Paragraph G1:

“When a credit requires or permits a Charter Party Bill of Lading, the document is examined under UCP 600 Article 22.”

However, if the LC:

• Is silent about allowing a CPBL, and
• Does not explicitly require a CPBL,

then presenting a CPBL is not acceptable.

This is because:

• Article 22 only applies if a CPBL is required or permitted.
• If the LC requires a standard port-to-port bill of lading (examined under Article 20), and a CPBL is presented instead, this would be considered a discrepancy.

 Important Note:

Even if the LC does not state which type of bill of lading is required, most banks and examiners interpret this to mean a regular port-to-port bill of lading, unless otherwise specified. In such a case:

• Presenting a CPBL (i.e. a document indicating it’s subject to a charter party) would be non-complying.
• It would be examined under the wrong article (22), and thus considered discrepant.

This is further supported by ISBP 821, G3, which states:

“A charter party B/L is not acceptable under UCP 600 article 20… unless the credit expressly permits its presentation.”

Conclusion:

Since the LC does not state that a CPBL is allowed, and a CPBL was presented, this can be treated as a discrepancy.

Banks are within their rights to reject such documents unless the LC explicitly permits CPBLs.

Best regards,

Mr. Old Man