Blog

Timelines

• Standard Banking Practices for the Examination of Documents (SBPED) - standard banking practices: US Council on International Banking / Mexican Bankers Association - issued in 1997
• ISBP 645 published in 2003
• ISBP 681 released 2007, to bring it in line with UCP 600: much of the ISBP text remained unchanged although certain alterations had to be made.
• ISBP 745 - Approval on 17th April 2013. Note that there was no release or implementation date. If a publication, such as ISBP 745, explains how to apply the rules in UCP 600 and the practices that prevail thereunder, it does not have an implementation date that is post the date of approval.

Usage

• Outlines standard practice globally, based on worldwide feedback from ICC National Committees
• An intelligent checklist of procedures for document checkers to follow in examining documents presented under LC's
• Created to help reduce the large percentage of documents refused for discrepancies on first presentation
• Explanation of how the rules articulated in UCP 600 are to be applied by documentary practitioners
• Provides a framework under which a beneficiary may prepare its documents to a certain standard that can be accepted on a global basis.

Content

• Preliminary Considerations
• General Principles
• Drafts and Calculation of Maturity Date
• Invoices
• Transport Document covering at least two different modes of transport (Multimodal or combined transport Document)
• Bill of Lading
• Non-negotiable Sea Waybill
• Charter Party Bill of Lading
• Air Transport Document
• Road, Rail or Inland Waterway Transport Documents
• Insurance Document and Coverage
• Certificate of Origin
• Packing List, Note or Slip (Packing List)
• Weight List, Note or Slip (Weight List)
• Beneficiary's Certificate
• Analysis, Inspection, Health, Phytosanitary, Quantity, Quality and Other Certificates (Certificate)

The introduction to UCP 600 states:

"During the revision process, notice was taken of the considerable work that had been completed in creating the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 645. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit."

These comments have equal applicability to ISBP 745.  As mentioned in the introduction to ISBP 745:

"This publication and the UCP should be read in their entirety and not in isolation."

ISBP 745, Preliminary considerations paragraph (i), emphasises this point by stating that the publication is to be read in conjunction with UCP 600 and not in isolation.

Since inception, and in accordance with the wishes of ICC National Committees, ISBP has been restricted to the examination of documents under documentary credits. This has continued throughout the various revisions.

However, a future revision should perhaps consider a wider application. Although it is accepted that approximately 50% of recognised problems (based on an analysis of ICC Opinions from 2012-2015) apply to presented documents, other issues often arise.

We mentioned in a previous blog that the majority of problems are caused by:

a)    Poor drafting of the credit;

b)   Lack of understanding of documentary credit workflows and the principles of UCP 600;

c)    Lack of attention to detail and management of the production, shipment and document collation processes;

d)   Excessive and unnecessary data being added to documents;

e)    Limited access to ISBP 745.

Each of the above problems is surmountable with more guidance, particularly with respect to an ‘enhanced' ISBP 745 which could potentially reduce discrepancy rates by:

• Improving drafting of LC's by issuing banks.
• Helping advising / confirming banks to understand the risks and implications.
• Assisting beneficiaries in understanding the implications of providing certain documents and ensuring they can meet timeframes and deadlines.
• Addressing problems prior to presentation of documents.
• Avoiding ... to the maximum possible ... LC's that exclude specific articles / sub-articles of UCP.

These issues go far wider than the examination of documents. We would argue that ‘International Standard Banking Practice' should be established much earlier in the process, i.e. at the time of drafting the credit. It should then extend throughout the various workflows: issuance, advising/confirming, amendment, etc.

An in-depth analysis of ISBP is available within our training modules.

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