Charter Party Bill of Lading (CPBL) Operations: Navigating Risks and Mitigation Measures

Transport documents are essential in nearly all commercial documentary credit transactions. About a third of the UCP articles specifically address transport documents, with many others referring to them in supporting contexts. Each of these document types is tailored to specific purposes and closely tied to one or more modes of transport. These documents serve multiple critical functions, including:

1.      Evidence of transaction details: They act as proof of the contract of carriage, confirm receipt of goods, and verify freight payment status.

2.      Control over the goods: They enable actions such as redirecting shipments, appointing new consignees, halting goods in transit, or modifying payment terms.

3.      Transferability and ownership: Some documents are negotiable, allowing transfer of ownership, while others determine whether surrender is required to claim goods.

A charter party bill of lading (CPBL) is one of the transport documents called for under documentary credits. Shipment of bulk consignments (e.g., wheat, oil, steel, grains, gaseous cargo etc.) is not possible through container ships as they are designed to carry cargo in standardized containers. Therefore, specially designed vessel (e.g., bulk carrier or tanker vessel) may be hired by a charterer to affect the shipment of bulk consignments. This agreement of hiring a vessel is called 'charter party’, the entity hiring the vessel may enter into a contract of carriage with the vessel owner or its agent; this is called 'charter party contract/agreement’. This agreement outlines key terms such as the charter duration, loading and unloading arrangements, designated ports of loading and discharge, and the party responsible for bearing the freight charges.