Charter Party Bills of Lading: Know the Risk Mitigants

Most specialists in the trade finance industry are well aware of multiple court cases in recent years – many from Singapore – about the perils of letters of indemnity (LOIs) being used in lieu of original bills of lading. In a recent discussion, bankers were asked whether they would issue a commercial LC on behalf of a high-valued client which allowed for the presentation of a charter party bill of lading (CPBL), delivery order, or an LOI as a replacement for the full set of original bill of lading. What are the risks associated with issuing such an LC and how might those risks be mitigated?