International Standard Banking Practice. When the publication International Standard Banking Practice for the Examination of Documents under Documentary Credits was approved by ICC in , it was widely acclaimed by letter of credit practitioners worldwide. The ISBP, as it is commonly called, provided an intelligent checklist of items document checkers could refer to in determining how ICC's rules on documentary credits, at the time called UCP , applied in daily practice. As such, it filled a needed gap in the market between the general principles in the UCP and the daily job of the practitioner.
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International Standard Banking Practice. When the publication International Standard Banking Practice for the Examination of Documents under Documentary Credits was approved by ICC in , it was widely acclaimed by letter of credit practitioners worldwide. The ISBP, as it is commonly called, provided an intelligent checklist of items document checkers could refer to in determining how ICC's rules on documentary credits, at the time called UCP , applied in daily practice.
As such, it filled a needed gap in the market between the general principles in the UCP and the daily job of the practitioner. Though much of the ISBP remains unchanged from the version, certain alterations have had to be made. These are essentially to remove paragraphs from ISBP where the principle has been incorporated in UCP ; to make technical adjustments in capitalization; to substitute UCP article references for those of UCP ; to change dates from to ; and to incorporate changes in ISBP paragraphs necessary to bring the wording in line with wording in UCP Though some of these changes are minor, practitioners would be well advised to have this latest version of the ISBP at hand.
In addition to giving needed guidance to the practitioner, the ISBP was originally created to help reduce the large percentage of documents refused for discrepancies on first presentation.
Anecdotal evidence suggests that this objective has been partially attained. Though refusals remain a serious problem with letters of credit, their numbers appear to be declining, in part because of the effectiveness of the checklist contained in the ISBP.
Practitioners are urged to refer to this publication whenever doubts arise as to how to structure and check documents in credits utilizing UCP Their contribution in time and effort is gratefully acknowledged, and their names and professional affiliations appear below. Participants in ICC seminars and workshops have indicated that rejection rates have dropped due to the application of the practices that are detailed in ISBP.
Where it was felt appropriate, paragraphs that appeared in Publication No. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit. It is the expectation of the Drafting Group and the Banking Commission that the application of the principles contained in the ISBP, including subsequent revisions thereof, will continue during the time UCP is in force. At the time UCP is implemented, there will be an updated version of the ISBP to bring its contents in line with the substance and style of the new rules.
This document does not amend UCP It explains how the practices articulated in UCP are applied by documentary practitioners. This publication and the UCP should be read in their entirety and not in isolation. It is, of course, recognized that the law in some countries may compel results different from those stated here. No single publication can anticipate all the terms or the documents that may be used in connection with documentary credits or their interpretation under UCP and the standard practice it reflects.
However, the Task Force that prepared Publication No. It should be noted that any term in a documentary credit which modifies or excludes the applicability of a provision of UCP may also have an impact on international standard banking practice. Therefore, in considering the practices described in this publication, parties must take into account any term in a documentary credit that expressly modifies or excludes a rule contained in UCP This principle is implicit throughout this publication.
Where examples are given, these are solely for the purpose of illustration and are not exhaustive. This publication reflects international standard banking practice for all parties to a documentary credit. Since applicants' obligations, rights and remedies depend upon their undertaking with the issuing bank, the performance of the underlying transaction and the timeliness of any objection under applicable law and practice, applicants should not assume that they may rely on these provisions in order to excuse their obligations to reimburse the issuing bank.
The incorporation of this publication into the terms of a documentary credit should be discouraged, as UCP incorporates international standard banking practice, which includes the practices described in this publication. The terms of a credit are independent of the underlying transaction even if a credit expressly refers to that transaction.
To avoid unnecessary costs, delays and disputes in the examination of documents, however, the applicant and beneficiary should carefully consider which documents should be required, by whom they should be produced and the time frame for presentation.
The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. Unless expressly stated otherwise, a request to issue or amend a credit authorizes an issuing bank to supplement or develop the terms in a manner necessary or desirable to permit the use of the credit. The applicant should be aware that UCP contains articles such as 3, 14, 19, 20, 21, 23, 24, 28 i , 30 and 31 that define terms in a manner that may produce unexpected results unless the applicant fully acquaints itself with these provisions.
For example, a credit requiring presentation of a bill of lading and containing a prohibition against transhipment will, in most cases, have to exclude UCP sub-article 20 c to make the prohibition against transhipment effective. A credit should not require presentation of documents that are to be issued or countersigned by the applicant. If a credit is issued including such terms, the beneficiary must either seek amendment or comply with them and bear the risk of failure to do so.
Many of the problems that arise at the examination stage could be avoided or resolved by careful attention to detail in the underlying transaction, the credit application and issuance of the credit as discussed. The use of generally accepted abbreviations, for example "Ltd" instead of "Limited", "Int'l" instead of "International", "Co.
A certification, declaration or the like may either be a separate document or contained within another document as required by the credit.
If the certification or declaration appears in another document which is signed and dated, any certification or declaration appearing on that document does not require a separate signature or date if the certification or declaration appears to have been given by the same entity that issued and signed the document. Corrections and alterations of information or data in documents, other than documents created by the beneficiary, must appear to be authenticated by the party who issued the document or by a party authorized by the issuer to do so.
Corrections and alterations in documents which have been legalized, visaed, certified or similar, must appear to be authenticated by the party who legalized, visaed, certified etc.
The authentication must show by whom the authentication has been made and include the signature or initials of that party. If the authentication appears to have been made by a party other than the issuer of the document, the authentication must clearly show in which capacity that party has authenticated the correction or alteration. Corrections and alterations in documents issued by the beneficiary itself, except drafts, which have not been legalized, visaed, certified or similar, need not be authenticated.
The use of multiple type styles or font sizes or handwriting in the same document does not, by itself, signify a correction or alteration. Where a document contains more than one correction or alteration, either each correction must be authenticated separately or one authentication must be linked to all corrections in an appropriate way. For example, if the document shows three corrections numbered 1, 2 and 3, one statement, such as "Correction numbers 1, 2 and 3 above authorized by XXX" or similar, will satisfy the requirement for authentication.
Drafts, transport documents and insurance documents must be dated even if a credit does not expressly so require. A requirement that a document, other than those mentioned above, be dated may be satisfied by reference in the document to the date of another document forming part of the same presentation e. Although it is expected that a required certificate or declaration in a separate document be dated, its compliance will depend on the type of certification or declaration that has been requested, its required wording and the wording that appears within it.
Whether other documents require dating will depend on the nature and content of the document in question. Any document, including a certificate of analysis, inspection certificate and pre-shipment inspection certificate, may be dated after the date of shipment. However, if a credit requires a document evidencing a pre-shipment event e. A requirement for an "inspection certificate" does not constitute a requirement to evidence a pre-shipment event. Documents must not indicate that they were issued after the date they are presented.
A document indicating a date of preparation and a later date of signing is deemed to be issued on the date of signing. Phrases often used to signify time on either side of a date or event:. If an advice must not be dated prior to a specific date, the credit must so state. There is no limit as to how early it may take place. The term "within" when used in connection with a date excludes that date in the calculation of the period.
Dates may be expressed in different formats, e. Provided that the date intended can be determined from the document or from other documents included in the presentation, any of these formats are acceptable. To avoid confusion it is recommended that the name of the month should be used instead of the number.
Some documents commonly used in relation to the transportation of goods, e. As such, UCP sub-article 14 c would not apply to these documents. Therefore, these documents will be examined in the same manner as other documents for which there are no specific provisions in UCP , i.
In any event, documents must be presented not later than the expiry date for presentation as stated in the credit. Copies of transport documents are not transport documents for the purpose of UCP articles and sub-article 14 c. The UCP transport articles apply where there are original transport documents presented. Where a credit allows for the presentation of a copy transport document rather than an original, the credit must explicitly state the details to be shown.
Where copies non-negotiable are presented, they need not evidence signature, dates, etc. Expressions such as "shipping documents", "stale documents acceptable", "third party documents acceptable" and "exporting country" should not be used as they are not defined in UCP If used in a credit, their meaning should be made apparent.
If not, they have the following meaning under international standard banking practice:. If it is the intention of the issuing bank that the transport or other documents may show a shipper other than the beneficiary, the clause is not necessary because it is already permitted by sub-article 14 k.
If a credit indicates that a document is to be issued by a named person or entity, this condition is satisfied if the document appears to be issued by the named person or entity. It may appear to be issued by a named person or entity by use of its letterhead, or if there is no letterhead, the document appears to have been completed or signed by, or on behalf of the named person or entity.
Under international standard banking practice, it is expected that documents issued by the beneficiary will be in the language of the credit. When a credit states that documents in two or more languages are acceptable, a nominated bank may, in its advice of the credit, limit the number of acceptable languages as a condition of its engagement in the credit.
Detailed mathematical calculations in documents will not be checked by banks. Banks are only obliged to check total values against the credit and other required documents. A misspelling or typing error that does not affect the meaning of a word or the sentence in which it occurs does not make a document discrepant.
For example, a description of the merchandise as "mashine" instead of "machine", "fountan pen" instead of pen" or "modle" instead of "model" would not make the document discrepant. However, a description as "model " instead of "model " would not be regarded as a typing error and would constitute a discrepancy.
Unless the credit or a document provides otherwise, pages which are physically bound together, sequentially numbered or contain internal cross references, however named or entitled, are to be examined as one document, even if some of the pages are regarded as an attachment.
Where a document consists of more than one page, it must be possible to determine that the pages are part of the same document. If a signature or endorsement is required to be on a document consisting of more than one page, the signature is normally placed on the first or last page of the document, but unless the credit or the document itself indicates where a signature or endorsement is to appear, the signature or endorsement may appear anywhere on the document.
Documents issued in more than one original may be marked "Original", "Duplicate", "Triplicate", "First Original", "Second Original", etc. None of these markings will disqualify a document as an original.
The number of originals to be presented must be at least the number required by the credit, the UCP or, where the document itself states how many originals have been issued, the number stated on the document. It can sometimes be difficult to determine from the wording of a credit whether it requires an original or a copy, and to determine whether that requirement is satisfied by an original or a copy. For example, where the credit requires:. Where an original would not be accepted in lieu of a copy, the credit must prohibit an original, e.
Where a credit calls for a copy of a transport document and indicates the disposal instructions for the original of that transport document, an original transport document will not be acceptable. Copies of documents need not be signed. For the content of the Policy Statement refer to the Appendix of the publication.
International Standby Practices - ISP98
Uniform Customs and Practice for Documentary Credits
The course is divided into 5 Modules Examines each of the documents that can be presented. Case studies Enables users to put the understanding of the course and the applications into practice. Assessment Enables the trainee to test their understanding of the course. It is designed to enhance the knowledge and skills of documentary credit professionals. Consistency As the training is delivered online, each member of your staff can be trained to an ICC approved standard regardless of location.
ISP 98 – International Standby Practices
The UCP is utilized by bankers and commercial parties in more than countries in trade finance. Historically, the commercial parties, particularly banks, have developed the techniques and methods for handling letters of credit in international trade finance. The result is the most successful international attempt at unifying rules ever, as the UCP has substantially universal effect. This latest version, called the UCP, formally commenced on 1 July A significant function of the ICC is the preparation and promotion of its uniform rules of practice.