The first clause of the short form bill of lading — the anatomy of the single sentence that transfers the law, arbitration, and jurisdiction clause in the charter party to the bill of lading holder.
Short Answer
The incorporation clause is the first and most critical clause of the charter party bill of lading. It transfers all terms, conditions, liberties, and exceptions of the charter party — including the law and arbitration/jurisdiction clause — to the bill of lading. The fundamental question in practice is: Does this incorporation bind the holder who acquired the bill of lading by endorsement and has never seen the charter party?
In current Turkish practice, the direction is as follows: if the reference is sufficiently clear and specific (if the bill of lading states “this will be used together with the charter party” and the reverse side contains the phrase “including the governing law and arbitration clause has been made effective”), and if the holder has taken delivery of the goods by presenting the bill of lading, the arbitration/jurisdiction clause in the charter party may also bind the holder, and a Turkish court may issue a decision of dismissal on the grounds of duty/jurisdiction. In contrast, the scope of the reference, the specificity of the charter party, and the objection regarding general terms and conditions are discussed separately in each case.
First task for the practitioner: Identification of the referenced charter party and its date, and obtaining a complete copy. Without this document, the applicable law, dispute resolution forum, and liability regime cannot be known.
1. Function and Text of the Clause
The function of the clause incorporates all terms, conditions, liberties, and exceptions of the charter party, dated on the front, — including the law and arbitration/dispute resolution clause — into the bill of lading. A short form bill of lading does not contain an independent contract text; it derives its content through this reference.
In charter party bills of lading (CONGENBILL type), this clause is standard. The front of the bill of lading also contains the notations “to be used with charter parties” (to be used with the charter party) and “freight payable as per charter party dated…” (freight to be paid according to the charter party dated…). These three elements together aim to make the charter party an integral part of the bill of lading.
2. Why is This Clause the Heart of a Short Form Bill of Lading?
Unlike a long form (liner) bill of lading, a charter party bill of lading cannot stand alone. The main content of the contract — laytime and demurrage regime, FIO/FIOS arrangement, limits of liability, applicable law, and dispute resolution forum — is found in the charter party and enters the bill of lading only by reference. Therefore:
The bill of lading cannot be read without the charter party being provided.
The scope of the reference determines whether the case will be heard in Turkey or in a foreign court/arbitration.
Since the reference also carries the applicable law, the compensation cap and the statute of limitations are indirectly determined by this clause.
3. Does the Reference Bind the Holder? Required Conditions
A charter party is an independent contract binding its parties (owner/charterer). The bill of lading, on the other hand, passes to a third party by endorsement, and the new holder has often never seen the charter party. In doctrine and practice, the main conditions required for the reference to bind the holder are:
Clear and specific reference: The bill of lading must explicitly refer to the charter party and its dispute resolution clause. Phrases such as “including applicable law and arbitration clause” ensure this specificity.
Ascertainability of the charter party: The date and identity of the referenced charter party must be specific.
The clause must be meaningful in the context of the bill of lading: The attributed clause must be adaptable to the bill of lading relationship; it should not be a charter party-specific arrangement that cannot be transferred to the bill of lading.
The holder’s use of the document: If the holder has taken delivery of the goods by presenting the bill of lading, they may be deemed to have accepted the content of the document and the attributed terms.
Doctrine: The effect of an arbitration clause in a charter party on the holder of a bill of lading is a deeply discussed topic in Turkish maritime law doctrine (Atamer, Ülgener, Damar, and others). The general tendency is that the arbitration clause is also binding on the holder when the above conditions are met.
Source: academic publications. In the specific case file, the current case law should be verified via UYAP.
4. Approach of the Turkish Judiciary
Turkish courts evaluate the reference clause and the related arbitration/jurisdiction objection according to the specific circumstances of the case. The tendency in practice is as follows:
Judicial practice: The Istanbul Maritime Specialization Court, in a decision dated June 2024, ruled that; due to the phrases “to be used with charter party” and “see reverse side for carriage terms” on the front of the bill of lading, the referenced charter party was considered an annex to the bill of lading, and given that the holder had taken delivery of the goods by presenting the bill of lading, the arbitration clause in the charter party was valid and binding on the holder, thereby ruling that the dispute should be resolved by arbitration.
Source: open-source legal publications (Ülgener Legal Consultants assessment). The decision’s reference details should be verified via UYAP.
Judicial practice: In a file brought before the Constitutional Court, the process of rendering a decision of refusal on grounds of jurisdiction came to the fore, by deeming the arbitration clause in the charter party valid, given the presence of the clause “to be used with charter parties” and the phrase “freight will be paid according to the charter agreement dated 25/10/2010” on the bill of lading, and the statement in the first article of the terms and conditions of carriage on the reverse side: “all terms and conditions, rights and exceptions, including the governing law and arbitration clause of the charter party specified on the front page, are hereby incorporated”.
Source: open-source legal publications (Constitutional Court individual application assessment). The application details must be confirmed via the Constitutional Court Decisions Database.
5. Which Charter Party? The Blank Date Problem
The most frequently exploited weakness of the incorporation clause is leaving the charter party date on the front page blank. If there is a chain of charter parties (head charter – sub charter), it becomes unclear which contract is being referred to. This uncertainty:
For the plaintiff’s counsel: it gives rise to the argument that the arbitration/jurisdiction objection should be rejected due to the uncertainty of the reference.
For the defendant’s counsel: if the date is blank in current templates, reliance can be placed on the provision that the relevant voyage charter party will be considered.
Application note: Which version of the template is being used is crucial here. Current versions explicitly stipulate that if the date is blank, the relevant voyage charter party will be considered; whereas in older versions, the issue is resolved entirely through interpretation. The print year of the document must be determined.
6. Objection to General Terms and Conditions
Bills of lading and charter parties are standard forms. Therefore, the validity of an arbitration/jurisdiction clause incorporated by reference is debatable in light of the provisions of the Turkish Code of Obligations concerning general terms and conditions. In the past, some courts deemed these clauses invalid, finding them contrary to general terms and conditions. Conversely, in current practice, when the reference is clear and specific, and the holder takes delivery of the goods by presenting the bill of lading, the arbitration clause can be considered valid. Therefore, an objection based on general terms and conditions should be raised according to the specific circumstances of the case; it should not be assumed to yield a result on its own.
7. Subrogation of the Insurer and Reference
If the cargo is insured, the insurer often initiates the lawsuit. Since the insurer is subrogated to the rights of its insured, it is generally bound by the arbitration/jurisdiction clause to which the insured is subject. However, in practice, whether the insurer is bound by a clause in a charter party to which it is not a party is also debated. This discussion revolves around the scope of subrogation and the extension of the reference to the insurer.
8. Priority in Case of Conflict
If the standard terms of the bill of lading conflict with the charter party terms incorporated by reference, as a rule, the provisions of the bill of lading itself take precedence. Similarly, a Paramount clause in the bill of lading overrides the corresponding provision in the charter party. Therefore, the incorporation clause should be read in conjunction with the other clauses of the bill of lading.
9. Strategy for Defendant and Plaintiff’s Counsel
| Role | Strategy |
|---|---|
| Defendant’s (Carrier’s) Representative | Raises the arbitration/jurisdiction objection as a preliminary objection in the reply petition and within the specified period; emphasizes the clarity of the reference, the definitiveness of the charter party, and that the holder used the document. If the period is missed, the objection will not be heard. |
| Plaintiff’s (Cargo Interest’s) Representative | Argues for the ambiguity of the reference, that the charter party date is blank, the nature of the clause as a general business condition, and the precedence of the bill of lading’s own provisions. Furthermore, considering that the one-year period continues to run, even if the objection is rejected, they file the main lawsuit on time. |
10. Checklist
Is there a “to be used with charter parties” clause on the face of the bill of lading?
Is the date of the referenced charter party filled in the freight box?
Does clause 1 on the reverse side include the phrase “including applicable law and arbitration clause”?
Has the referenced charter party been obtained? What does the arbitration/jurisdiction clause state?
Did the holder take delivery of the goods by presenting the bill of lading?
What is the print year of the template? (In terms of blank date regulation)
Was the objection raised within the period (in the reply petition)?
Relevant articles from 2M Hukuk:
- How Are Disputes Resolved According to Freight Contract Types?
- Freight Contracts
- Provisional Arrest of Ships
Why is Expert Lawyer Support Necessary?
Bills of lading clauses can change the country where the case will be heard, the applicable law, the scope of liability, and the upper limit of compensation with a single sentence. While Turkish law regulates some of these clauses with mandatory provisions, others retain their validity; establishing the correct strategy requires reading the document line by line and comparing each entry with the legal regime.
2M Law Firm, with its Tuzla-based structure and field experience in the shipyard region, provides legal services in matters such as bills of lading and freight contract disputes, cargo damage and loss claims, late delivery compensation, laytime and demurrage calculations, general average, forwarder liability, provisional arrest of ships, and the collection of maritime claims.
Our areas of service: bill of lading disputes lawyer, maritime law lawyer, charter party disputes lawyer, Istanbul cargo damage lawyer, freight and demurrage claims lawyer, ship arrest lawyer, general average lawyer, shipyard lawyer — We operate in the regions of Tuzla, Pendik, Kartal, Maltepe, Aydınlı, Tepeören, Orhanlı, Gebze, Darıca, Çayırova, Dilovası, and Kocaeli.
Legal consultancy is provided in English, French, and Arabic for foreign clients. To learn which law and which court your bill of lading binds you to, you can contact our lawyer team.
Frequently Asked Questions
What is the reference clause in a bill of lading?
It is the first clause of the short-form bill of lading and incorporates all the terms, conditions, and exceptions of the charter party – including the law and arbitration/jurisdiction clause – into the bill of lading. The short-form bill of lading derives its contractual content from this clause. Does the arbitration clause in the charter party bind the bill of lading holder?
If the reference is sufficiently clear and specific, and the holder has taken delivery of the goods by presenting the bill of lading, the arbitration clause may also bind the holder; the Istanbul Maritime Specialized Court has issued decisions in this regard. The scope of the reference and the objection to general terms and conditions are also discussed separately. What happens if the date of the referred charter party is blank?
It becomes uncertain which contract is being referred to. In current templates, if the date is blank, the charter party for the relevant voyage is taken as a basis; in older versions, the issue is resolved by interpretation. Uncertainty gives rise to an argument for narrowing the scope of the reference. I don’t have the charter party, what should I do?
A short-form bill of lading cannot be analyzed without the charter party. The charter party and its date should be requested in writing from the carrier, agent, or forwarder; if not provided, the submission of the document should be requested from the court. Can the incorporation clause be considered a general term and condition and thus be invalid?
In the past, some courts have found arbitration clauses to be contrary to general terms and conditions and deemed them invalid. In current practice, however, an arbitration clause may be considered valid when the reference is clear and specific, and the holder has taken delivery of the goods.
Confirmation note: The bibliographical information of the mentioned court and Constitutional Court (AYM) decisions should be confirmed via the Supreme Court Decision Search, AYM Decisions Database, and UYAP before being used in a petition or publication.
