Home Mr Old Man Articles CAN A BANK REFER TO THE PROVISIONS OF ISBP IN ADDITION TO UCP WHEN CHECKING DOCUMENTS?

CAN A BANK REFER TO THE PROVISIONS OF ISBP IN ADDITION TO UCP WHEN CHECKING DOCUMENTS?

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QUESTION

Dear Mr. Old Man,

When the LC only indicates UCP 600 as governing rule but not ISBP, should a bank also make references to ISBP provisions in addition to UCP when checking documents to determine clean/discrepant?

Please also advise on what other occasions do we use ISBP.

Thanks.

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ANSWER

Hi,

According to ISBP 745’s introduction, the international standard banking practices documented in ISBP 745 are consistent with UCP 600 and the Opinions and Decisions of the ICC Banking Commission.

It is noted that ISBP 745 does not amend UCP 600. It explains how practices articulated in UCP 600 are to be applied by documentary credit practitioners. This ISBP and the UCP should be read in their entirety and not in isolation.

However, it is also noted that the incorporation of this publication into the terms of a documentary credit is deemed inappropriate, as the requirement to follow agreed practices is implicit in UCP 600.

Documents should be examined in accordance with international standard banking practice as stated in UCP 600. However, there is no harm in explaining to another party which paragraph of the ISBP supports a particular position the Banking Commission has taken in applying the UCP (ICC Opinion R599/TA562rev).

You are kindly recommended to read the introduction of ISBP 745.

Kind regards,

Mr. Old Man

 

 

 

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2 Comments

  1. Prabhath Thilakahewa

    October 26, 2017 at 7:21 pm

    Hi !
    We always talk about incurring a deferred payment undertaking but how exactly is it done ? is there any specifically worded document that should be given to the Beneficiary ?
    regards
    Prabhath

    Reply

    • mroldman

      October 26, 2017 at 8:23 pm

      Like L/C available by acceptance, the issuing bank or the nominated bank under L/C available by deferred payment upon receipt of the complying documents (not including time draft) will confirm under a tested telex/swift to the presenter that it has incurred deferred payment undertaking and the maturity date is…. or wording of similar effect.

      Reply

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