It offers crucial guidance on the documents presented against letters of credit. There are ten major changes in ISBP Even though it is not a definitive guide as such, they are worth emphasising. The accepting beneficiary requires a document to be issued and signed or countersigned by the applicant.
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International Standard Banking Practice publication 6th February qq. A fully revised version of ISBP, ICC publication is now available, after a series of draft versions, with the first draft produced in May through to the 5th draft in November This article will highlight some of the key changes in the revised guide but it is worth emphasising why the first ISBP was produced back in , and the objectives were ; To encourages a uniformity of practice worldwide to reduce the number of credits rejected by banks owing to discrepancies.
These objectives remain very much the same today, when the powers that be were drawing up the revised guidelines. It is not intended to be a definitive guide, rather a personal interpretation of changes which, having discussed the matters with a number of my clients, are worth emphasising to ensure that documentary presentations are compliant when they are examined by banks.
In the Preliminary Considerations section there is an expanded paragraph on the risks that arise when a beneficiary accepts a Letter of Credit which requires the presentation of a document that is to be issued, signed or countersigned by the applicant.
The expanded text in the revised ISBP emphasises that the beneficiary of the Letter of Credit should consider the appropriateness of this requirement carefully or seek an amendment.
I sincerely hope that they obtain this document signed in accordance with those terms and get paid! ISBP provides guidance that the documents presented could evidence only Red or only Blue or only Yellow, or any combination of them.
This is valuable clarification for every documentary credit practitioner. Certificates, Certifications, Declarations and Statements. The ISBP now states that when a certificate, declaration or statement is required by the Letter of Credit, the document is to be signed. Most of my clients have told me that they would of course routinely sign such documents, but again this elucidation is helpful. It is unusual to come across a Letter of Credit which does not call for some form of certificate evidencing that …..
Copy Transport Documents. If the Letter of Credit calls for copy transport documents rather than originals, the ISBP states that UCP articles which relate to transport documents does not apply.
Copy transport documents are to be examined only to the extent expressly stated in the credit, otherwise according to UCP sub-article 14 f , which effectively means that the documents appears to fulfil the function of the required document and that there is no conflict regarding the data on the document, with any other document stipulated in the Letter of Credit.
The ISBP contains an expanded segment which refers to expressions which should not be used in UCP , but if these expressions are used, how to interpret them. The ISBP provides clarity that if this expression is used a presentation may consist of one or more of the stipulated documents provided they are presented within the expiry date of the credit and the drawing amount is within that which is available under the credit.
The documents will not otherwise be examined for compliance under the credit or UCP , including whether they are presented in the required number of originals or copies. This fresh interpretation does at least provide some criteria, albeit very scant, should this set phrase be encountered.
Shipping Marks — As a former documentary examiner for a bank, I am conditioned to want to see exact mirror images when comparing documents to Letter of Credit. This is not necessarily the case or indeed correct, but it is, for me, a natural reaction. With this in mind, the ISBP indicates that if a Letter of Credit states that the details of a shipping mark are to be evidenced on specific documents, these details must be shown but not necessarily in the exact same sequence as expressed in the Letter of Credit.
Some of my clients have commented that this is a surprise to them as they would never consider presenting documents which contain shipping marks in any other sequence to that required in the Letter of Credit, but it is worth noting these revised guidelines in the ISBP.
Perhaps one of the areas that causes the most debate amongst documentary credit practitioners is the description of goods on the invoice compared to the description as stated within the Letter of Credit. The previous version of ISBP mentions there is no need for a mirror image when comparing the description of goods on the invoice to the description on the Letter of Credit. The ISBP expands upon this by mentioning that invoices may also indicate data in respect of the goods, services or performance, provided that they do not appear to refer to a different nature, classification or category of the goods, services or performance.
This would be considered unacceptable as ISBP deems that this would represent a change in nature, classification or category of the goods. The tried and tested policy of quoting goods description on the invoice verbatim, as per the description on the Letter of Credit is still the best course of action.
Bills of Lading. In the absence of these requirements,such a stipulation is to be disregarded, and the bill of lading presented is to be examined according to the requirements of UCP article So in effect such clauses are totally superfluous and will be disregarded. This interpretation has been warmly welcomed, rather unsurprisingly by many freight forwarders as this is a very clear section and leaves the documentary practitioner in no doubt about what is acceptable.
Country named on bills of lading. The ISBP is quite clear on this issue —. A bill of lading is to indicate the port of loading stated in the credit.
When a credit indicates the port of loading by also stating the country in which the port is located, the name of the country need not be stated. So the bank in question has erroneously raised this as a discrepancy. This interpretation also applies to air waybills, with no need for a country to be stated on the document. Air Waybills. There are some very important elements in the ISBP which relate to air waybills. These ten elements of the ISBP are not placed in any order of importance but as previously mentioned they have all come up in conversations with clients since the introduction of the revised ISBP.
My personal opinion is that these revised guidelines had a very soft launch after their approval in April this year, and it appears that many companies who use Letters of Credit are unaware of the revision and some are totally unaware of ISBP in any event. There is an official launch arranged by the ICC in London in October but this seems a little late since the latest version will have been in existence for a number of months when that launch takes place.
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