What is ISBP 745?
To understand what ISBP 745 is, we will first try to understand ISBP. The International Standard Banking Practice (ISBP) is published by the International Chamber of Commerce (ICC). It provides guidance on the examination of documents presented against letters of credit. It is important to emphasise the fact that ISBP cannot change the UCP 600 rules for letter of credit. It acts as a valuable companion guide to Uniform Customs and Practice (UCP)
ISBP 745 is an up gradation on the old ISBP 681. This updated versions is more than double the size of its predecessor. The paragraphs are described more elaborately in quite a few places. The drafting group of ISBP 745 have made sure to formulate the practices in a more direct and clear manner.
The structure and language of the paragraphs have changed. They have purposely added examples wherever they can to drive the point home clearly. Then language wise, they have started new paragraphs with the word “when”, which is done to explain the scenario covered by the paragraph. The drafting group thought that ISBP 681 had too many “vague” formulations and they wanted to get rid of them to the maximum extent possible. They wanted to replace them with firm wording. They have also tried to avoid words that require subjective evaluation.
Practices Documented by ISBP 745
There are a few major changes in ISBP 745. Many new practices are documented in addition to “old” practices being elaborated for the purpose of describing them in a clearer manner. Now let’s talk about all the things new in ISBP:
- Paragraph A19:
It is an expanded version of its predecessor. This paragraph defines “Expressions not contained in the UCP 600. It has elaborated upon some old “expressions” and some newer ones have been introduced.
- Shipping Documents:
This now contains all the documents required by the credit excluding teletransmission reports, drafts, courier receipts, postal receipts or certificates which provide evidence of sending documents sent. New to ISBP 745 is the fact that these aforementioned documents are excluded from the definition of shipping documents.
- Third Party Documents Acceptable:
Documents for which the documentary credit does not indicate an issuer may be issued by a named person or entity apart from the beneficiary. This means that if the invoice has to be issued by a party apart from the beneficiary, then the “third party documents acceptable” is not sufficient.
- Third Party Documents not Acceptable:
Since this definition is new and the expression is now “defined”, so it means that this expression doesn’t mean anything and need to be disregarded.
- Shipping Company:
This is new to ISBP 745. This is defined to be used in the context of the issuer. The issuer can be of a certificate, declaration or a certification with respect to a transport document. It may be any of the following: master, carrier or, when a lading charter party bill is presented. Or it may be the case that the master, owner or charterer, or any other agency which is identified as an agent of any of the aforementioned party. It doesn’t matter whether these parties have issued or signed the present transport document.
- Documents are Acceptable as Presented:
This is new to ISBP 745 as well. This means that the presentation may consist of one or more of the stipulated documents if they are presented before the expiry date of the LC and the amount which is being drawn is below which is available under the LC. If the conditions are not fulfilled, then the documents won’t be examined for compliance under the LC or UCP 600.
The topic of transport amounts to around 60% of ISBP 745 which is a big part of it. Most of the content is transport related.
So this was a general introduction to what is new in the ISBP 745. This was quite comprehensive but doesn’t claim to be containing all that is new in this.