Is it a Charter Party B/L – or is it a B/L issued subject to a Charter Party?
The great
Soh Chee Seng recently posted a video on the social medias – such as Facebook:
https://www.facebook.com/photo.php?v10152352670320490
In the
video he argues the recently approved ICC Opinion TA793rev. Please watch this
before reading the below which is – my take on the matter.
In short
the case is as follows:
LC
requirements
Under
documents required
Full set of
clean on-board marine bills of lading consigned to order, blank endorsed,
notify applicant and marked “freight payable as per charter party”
Under other
conditions
Charter
Party BL acceptable
The
presented Bill of Lading indicated “Freight payable as per charter party” and
was signed by XXX Logistics Co Ltd as agent for carrier YYY Shipping Lines Ltd.
The reverse
page showed shippers blank endorsement as well as the typical shipping contract
terms & conditions (i.e. not the usual Charter Party Bill of Lading terms
& conditions).
Now – the
question is if the presented transport document is signed correct.
In essence:
* If the
document is examined according to UCP 600 article 20 (Bill of lading) then it
is signed correct (i.e. as agent for a named carrier), however
* if it is
examined according to UCP 600 article 22 (Charter Party Bill of lading) – then
it is not – as UCP 600 article 22 does not cater for signing by a carrier or
its agent.
The
analysis and conclusion from the ICC Banking Commission includes the following
statements
Quote
The credit
required a marine bill of lading marked „freight payable as per charter party‟.
In this respect, the credit was badly worded. The presented bill of lading was
marked “freight payable as per charter party”.
[….]
Subsequently,
the bill of lading presented under this credit is to be considered as a CPBL
and checked under UCP 600 Article 22.
[….]
The
discrepancy raised by the issuing bank, “Charter Party BL signatory‟s capacity
not as master, owner, charterer or agent for any of the aforesaid”, is correct.
Unquote
There are a
couple of issues that are interesting in this case.
First of
all which transport article will be used for the examination of the document –
article 20 (Bill of Lading) or 22 (Charter Party Bill of Lading)?
In order to
answer that one must understand how transport documents are being examined
under UCP 600 (which is not totally in line with the shipping industry’s
understanding of transport documents):
1: The
LC is the pointer:
The LC
requirements will dictate the transport article to be used for the purpose of
the examination. That sounds easy – but it may not be easy at all.
For example
there are many ways to require a “bill of lading” such as:
* “Full set
of bill of lading made out to the order of the issuing bank notify applicant,
showing freight collect”
* “Ocean
bill of lading”
*
“Port-to-port bill of lading” or
* “Marine
bill of lading”
However –
sometimes that does not even offer a precise answer. For example D1(c) reads:
Quote
When a
credit requires the presentation of a transport document other than a
multimodal or combined transport document, and it is clear from the routing of
the goods stated in the credit that more than one mode of transport is to be
utilized, for example, when an inland place of receipt or final destination are
indicated, or the port of loading or discharge field is completed but with a
place which is in fact an inland place and not a port, UCP 600 article 19 is to
be applied in the examination of that document.
Unquote
So even if
the LC calls for a “bill of lading” – the examination of the transport document
may still be subject to UCP 600 article 19 (Transport Document Covering at
Least Two Different Modes of Transport) – if the routing of the goods (e.g. as
reflected in SWIFT fields 44A, 44E, 44F and 44B) makes it clear that more than
one mode of transport is to be utilized.
This of
course places a great responsibility on the issuing bank to clearly express the
transport document requirement in a clear and unambiguous manner, so that the
nominated bank and the beneficiary fully understand the intention of the
issuing bank. I.e. simply which article to use when examining the presented
transport document.
2: The
however named principle
When the
UCP 600 transport article to be used to examine the document has been
identified, then the “however named principle” applies. For example UCP 600
article 20 (Bill of lading) opens as follows:
Quote
A bill of
lading, however named, must appear to:
Unquote
This mean
that the transport document presented need not be titled as the identified UCP
600 article or for that matter as stated in the LC. It must however comply with
the requirements of the transport document to be used for the examination (i.e.
the article identified in 1 above).
So for
example if the LC calls for a bill of lading, the transport document presented
may be titled “Multimodal transport document” as long as it complies with UCP
600 article 20.
…
So for the
case in question: The transport requirement in the LC is:
Full set of
clean on-board marine bills of lading consigned to order, blank endorsed,
notify applicant and marked “freight payable as per charter party”
The good
question is if this requirement points towards article 20 or article 22
UCP 600
article 22 opens as follows:
Quote
A bill of
lading, however named, containing an indication that it is subject to a charter
party (charter party bill of lading), must appear to:
Unquote
So if one
takes away the words “marine” and “on-board” then the LC requirement is quite
close to the opening of article 22.
It seems to
me that these words – especially “marine” – somehow “muddy” the discussion. The
reason for that dates back to pre-2007 – i.e. to UCP 500 (the predecessor to
UCP 600).
In the UCP
500 article 23 was titled “Marine/Ocean Bill of Lading.”
Therefore –
for LC people – the word “Marine” creates a “link” to a traditional bill of
lading – as opposed to a charter party bill of lading. There is however no
rational reason for this: Marine means that it is related to the “sea.” This
therefore applies to both the traditional bill of lading – as well as a charter
party bill of lading.
The words
“on-board” is also in LC transactions often used to identify a traditional bill
of lading – but in reality UCP 600 article 22 also requires an “on-board”
document (see UCP 600 article 22(a)(ii)).
For the
reasons mentioned above the words “marine” and “on-board” has no value in
determining if the presented transport document is to be examined according to
article 20 or 22.
So in
essence the LC calls for a bill of lading containing an indication that it is
subject to a charter party; i.e. a clear pointer to UCP 600 article 22!
Had the LC
had stopped there – it would have been a clear case: UCP 600 article 22 must be
used to examine the transport document. For that reason the document should be
rendered discrepant.
HOWEVER
under other conditions the LC indicated:
“Charter Party BL acceptable.”
This
requirement – to me – makes a mess because it confuses me as to what the
issuing bank expects. It makes no sense calling for a Charter Party Bill of Lading
– and then stating that Charter Party Bill of Lading is acceptable. This
indicates that there actually is a choice to be made – but it is in no way
clear what kind of choice that is. Is it between article 20 and 22? Or does
this allow for the document to be examined according to article 20 – modified
so that the transport document may indicate “freight payable as per charter
party?” A lot of guesswork…
In other
words: this requirement makes the LC ambiguous: The “transport document
pointer” simply is not clear. Such ambiguity – to me – falls back on the
issuing bank and the applicant.
For that
reason it is wrong to refuse the transport document for this reason! I there find
the conclusion of ICC Opinion TA.793rev to be wrong.
So coming
back to the Chee Seng; I agree with his conclusion – but for different reasons
….
There is
however one other thing that seems to have been forgotten in this discussion:
Why is it so wrong that a Charter Party Bill of Lading is signed by a carrier –
or by the agent of the Carrier? The obvious answer is because this is not
catered for in the UCP 600. Here a Charter Party Bill of Lading must be signed
by:
* The
master or a named agent for or on behalf of the master, or
* The owner
or a named agent for or on behalf of the owner, or
* The
charterer or a named agent for or on behalf of the charterer
I.e. NOT
the “carrier” – or a named agent for or on behalf of the carrier.
ICC Opinion
TA793rev address this issue by making reference to feedback received from the
ICC Commercial Law and Practice Commission for ICC Opinion TA.775rev which
stated:
Quote
“Where a
credit simply allows for or requires the presentation of a charter party bill
of lading (CPBL), a CPBL signed by a carrier or its agent is discrepant under
UCP 600 sub- article 22 (a) (i). The reason for excluding such CPBLs from this
sub-article was to avoid document examiners having to determine who, of a
possible number of different entities ranging from the owner to charterers and
sub-charterers, might be the contractual carrier under the contract of carriage
as evidenced by or contained in the CPBL….
Unquote
Hmm … this
is indeed an awkward argument.
Just look
to article 20: A bill of lading must indicate the name of the “carrier;” but
UCP 600 article 14(l) makes it clear that a transport document may be issued by
any party other than a carrier, owner, master or charterer provided that the
transport document meets the requirements of articles 19, 20, 21, 22, 23 or 24.
Or in
English: A bill of lading may be issued by a freight forwarder, NVOCC or the
like provided they state that they are “carrier” (or an agent for the carrier).
Of course there are many forms of carrier – and often a freight forwarder is a
“contractual carrier” (as it is not the owner of the vessel), but still the
bill of lading is accepted as long as the freight forwarder has signed it “as
carrier.” The document examiner does not use any energy determining what kind
of carrier the freight forwarder is ….
I can see
no good reason for refusing a Charter Party Bill of Lading because it is issued
by carrier or its agent – and the fact is that they are being issued that way
…. and that seems to work well…. except when presented under LCs issued subject to UCP 600.
This is the
challenge of having “evolving practices” documented in rules that are revised
evert 10 years or more. (more on this for example here: http://www.lcviews.com/index.php?page_id54)
Take care
of each other and the LC!
Best
regards
Kim