What is the status of ISBP?

One interpretation of this question is "How has ISBP been received by the world banking community?"

The general response of banks has been rather muted. An indication of this is sales of the ISBP booklet, which insiders say have been way below expectations.

See the Trade Tutor forum for a rather sceptical view of ISBP from a trade specialist with a major UK bank.

Part of the banking community's difficulty with ISBP may arise from unclarity as to exactly how it sits in relation to UCP and other ICC pronouncements. ISBP is not intended to be incorporated into credits in the way that UCP is. Nor, apparently, can its provisions be cited as grounds for rejection of documents. But it contains some recommendations which are of the same general character as those within UCP, and it nonetheless represents ICC policy.

Some of these concerns were raised at recent meetings of the Export Club in London, at presentations given by Gary Collyer, Head of Trade Product Management at ABN Amro and a key member of the working party that produced ISBP.

The following summary and Q&A has been abstracted from these presentations.
In one sense, ISBP is ten years late. Article 13a of UCP says that documentary compliance is to be determined by international standard banking practice. But we all know that up to now there has never been any such thing!

It follows that there is no sense in incorporating ISBP within credits. It is already implicit in UCP

ISBP is as much about accurate drafting of letters of credit as it is about examining documents.

Many so-called discrepancies arise from making false assumptions about what a document needs to show.

For example, paragraph 14 deals with dates in inspection certificates and the like. A document dated after shipment of the goods is not necessarily discrepant - if the Applicant wants evidence of a pre-shipment inspection, then the credit has to ask for this
Inevitably, some of the principles set out in ISBP may be hard to apply in practice. For example, the apparently useful paragraph 28 says in effect that misspellings and typos can be ignored if the intention of the credit is clear from the context. But what is obvious to document examiners in New York may not be so obvious to their counterparts in Central Asia (or vice versa)
Naturally the ICC hopes that the recommendations of ISBP will be widely adopted and will come to carry some weight in dispute situations. But realistically it will be quite some time before we can judge its overall effect on documentary credit practice
Q Can the provisions of ISBP be cited by banks as grounds for rejecting documents?
A No. Rejection of documents should reference UCP if necessary
Q Our bank is considering modifying our standard letter of credit wording, so as to clarify our practices vis-a-vis certain ISBP provisions. If we do this, should we refer to specific ISBP paragraphs?
A No. Again, if a set of rules needs to be referred to, these should be UCP
Q Will some of the provisions and/or issues within ISBP be incorporated into the next UCP revision?
A Yes. However the process of UCP review has only just started. There is a target date for production of a final draft by June 2005, but this date is almost certain to slip.