WHETHER THE ISBP IS BINDING IN THE SAME MANNER AS THE UCP

QUERY

zac writes:

Dear Mr Old Man,

When the LC only indicates UCP600 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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COMMENT

Dear Zac,

As seen from the ISBP’s introduction, the international standard banking practices documented in ISBP 681 are consistent with UCP 600 and the Opinions and Decisions of the ICC Banking Commission. ISBP does not amend UCP 600. It explains how the practices articulated in UCP 600 are applied by documentary practitioners. The ISBP and the UCP should be read in their entirety and not in isolation. The incorporation of the ISBP into the terms of a credit should be discouraged, as UCP600 incorporates international standard banking practice, which includes the practices described in the ISBP.

It is the UCP, not the ISBP, that are the binding rules for a credit that incorporates them. Documents should be examined in accordance with international standard banking practice as stated in UCP 600. However, any refusal of documents should be completed according to UCP 600 Article 16. ICC Opinion R599/TA562rev says 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.

Best regards,
Mr. Old Man