ISBP revision process – v3 out for comments
As you may know, there is an ongoing revision of ISBP 821 – (International Standard Banking Practice for the Examination of Documents under UCP 600).
As a short background, the ICC National Committees were asked to provide feedback on their preferred option from the below choices:
* maintain the current version of ISBP 821
* initiate a limited revision of the identified issues
* move forward with a full, formal revision process.
The majority response was to proceed with a limited revision of ISBP 821, based upon identified issues.
On the back of that, January 2025 a version of ISBP was circulated with suggested changes on the identified issues. The deadline for comments to this was end March 2025.
Already beginning April a new version was circulated (V3). This version was updated based on the received feed-back from ICC National Committees. The updated version was accompanied by “ISBP Revision Draft 1 NC feedback”. This is a comprehensive document that include all NC comments – with ICC comments to the NC comments.
On the back of the above, please find an overview of the suggested changes in V3:
ISSUING BANK AND AMBIGUITY
It is suggested to add words to the effect that the issuing bank bears the risk of ambiguity or conflict in the LC terms and conditions. (This in addition to the applicant bearing the risk of any ambiguity in its instructions to issue or amend the LC).
EXCESSIVE DETAIL
It is suggested stating that LCs containing excessive details should be avoided
PREVIOUSLY ACCEPTED DISCREPANCIES
It is suggested adding that the fact that a bank may have previously accepted discrepant documents, with or without an applicant waiver, does not bind that bank to accepting a similar discrepancy on any future drawing.
IN CONTEXT WITH
It is suggested defining “when read in context with” (reference to UCP 600 article 14 (d)).
The suggested definition takes outset in the requirements in the LC, the structure and purpose of the document, UCP 600, and international standard banking practice. All of which must be assessed, understood and be taken into consideration in determining compliance of a document.
ALL DOCUMENTS
It is suggested to define "all documents" (when used in an LC – e.g.., “all documents to indicate invoice number”).
It is suggested to define it to include all documents required by the LC except drafts.
DETAILED
It is suggested to define “detailed” (when used in the context of qualifying a document – e.g., “detailed Packing List”). It is suggested to define it to the effect that it has no meaning and is to be disregarded unless otherwise defined in the LC.
NON-DOCUMENTARY CONDITIONS
It is suggested to add an opening to the paragraph on non-documentary conditions and conflict of data.
The suggested addition is more a “warning” to the effect that
1: Issuing banks and applicants should ensure that any term or condition stated in a documentary credit is clearly linked to a stipulated document, and
2: That when a non-documentary condition is incorporated into an LC, banks and the beneficiary should pay attention to UCP 600 articles 14 (d) and 14 (h).
PHOTOCOPY OR FACSIMILE COPY
It is suggested adding that when an LC requires a photocopy or facsimile copy of an original document and the original document is required to be signed, then such copy must show that the original document was signed.
WITHOUT DELAY
It is suggested to define “without delay”. The suggested definition takes outset in the places in the UCP 600 where the term is used (e.g., in UCP 600 article 9 and the scenario where a bank that is authorized or requested by the issuing bank to confirm a credit but is not prepared to do so. In such case it must inform the issuing bank without delay).
The term is suggested to mean that the concerned bank must complete an action as soon as practicable for that activity and with due consideration to any given circumstance(s).
DRAFTS
Perhaps where the most changes are suggested are to section B regarding Drafts.
A new opening has been suggested to set the scene, e.g., saying that a UCP 600 LC need not require a draft to be presented together with the stipulated documents, except if available by acceptance and recommending that the habit of requiring a draft for an LC available at sight be curtailed, particularly sight drafts drawn on an issuing bank, confirming bank, or a bank nominated to pay.
It has also been suggested that in the event that an LC is issued using an authenticated SWIFT message, any requirement for a draft should only appear in the designated fields of the SWIFT message.
Finally, the wording “A draft is to be endorsed, if necessary” is suggested changed to “A draft need not be endorsed, unless required by the credit”.
TITLE OF INVOICE
It is suggested to add words to the effect that the terms “invoice” and “commercial invoice” are, for the purpose of LCs and UCP 600, interchangeable.
FREE OF CHARGE
It is suggested to clarify the wording around goods being include into the invoice “free of charge”. Basically saying that, unless specifically allowed by the LC, any items which are stated to be free of charge are not allowed.
MMTD AND SHIPMENT COMMENCING FROM A PORT
It is suggested to clarify the scenario where an LC requires a Multimodal Transport Document (MMTD) and shipment to commence from a port: First leg of the journey (as required by the LC), is by sea. In such case the MMTD is to indicate that the goods have been shipped on board a named vessel at the port of loading stated in the LC, and in this event paragraph E6 will also apply.
A revised draft of ISBP 821 has been sent to ICC National Committees for feedback by 31 July 2025.
From the changes – and the received comments to V2 the clear impression is that the changes are rather mature so it will be interesting to see if another round of comments will be necessary. Personally, I doubt it.
Kind regards
Kim