International Standard Banking Practice (ISBP)

International Standard Banking Practice (ISBP)

Publication No.681

ISBP and UCP 600

v   Title of the Publication: International Standard Banking Practice for the examination of documents under Documentary Credits, 2007 revision for UCP 600.

v   International Standard Banking Practice documented in this publication (ISBP 681) are consistent with UCP 600 and the opinions and Decisions of the ICC Banking Commission.

ISBP and UCP 600

v   Complying Presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice.

v   Data in a document, when read in context with the credit the document itself and International Standard Banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit.

Application and Issuance of the Credit

v   To avoid unnecessary costs, delays and disputes in the examination of documents, the applicant and beneficiary should carefully consider which documents should be required, by whom they should be produced and time frame for presentation.

v   The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit.

Application and Issuance of the Credit

v   A request to issuer amend credit authorizes an issuing bank to supplement or develop the terms........of the credit

v   Some terns of UCP 600, defined in a manner, may produce unexpected results unless the applicant fully acquaints itself with these provisions.

Application and Issuance of the Credit

v   A credit should not require presentation of documents that are to be issued or countersigned by the applicant

v   Many of the problems that arise at the examination stage could be avoided or resolved by care full attention to detail in the underlying transaction, the credit application and issuance of the credit.

General Principles

v   Abbreviations for example Ltd in stead of Limited

v   A certification, declaration or the like may either e a separate document or contained within another document as required by the credit

v   Correction or alterations in documents, created other than the beneficiary, must be authenticated by the issuer or a party authorized be the issuer to do so

General Principles

v   Drafts, transport documents and insurance documents must be dated even if a credit does not expressly so required

v   Some expressions not defined in the UCP 600 and should not be used: shipping documents, stale documents acceptable, third party documents acceptable, exporting country

v   Issuer of Documents, Language or Typing Error

General Principles

v   Multiple pages, Original and copies of Documents, Shipping marks

v   Even if not stated in the credit, drafts, certificates and declarations by their nature require a signature

v   A signature on a company letterhead paper will be taken to be the signature of the company, a company name need not be repeated next to the signature

Drafts and Calculation of Maturity

v   “From” and “After” have got same meaning while calculating the maturity date of draft

v   In case of complying documents, the maturity date will be XXX days after the date of receipt of documents by the drawee bank

v   In case of non complying documents, the maturity date will be at the latest XXX date of acceptance of the draft by the drawee bank

v   A credit may be issued requiring a draft drawn on the applicant

Invoice

v   A document titled ‘Invoice’ will be acceptable in place of ‘Commercial Invoice’

v   The description of the goods in the invoice must correspond with the description in the credit, and there is no requirement of mirror image

v   Unless required by the credit, an invoice need not be signed or dated

Transport Document

v   A document need not be titled' multimodal transport document' or combined transport document’ to be acceptable under UCP600 article 19

v   The issuance date of a multimodal transport document will be deemed to be the date of dispatch, taking in charge or shipped on board unless it bears a separate dated notation evidencing dispatch, taking in charge or shipped on board, in which event the date of the notation is the shipment date

Transport Document

v   A bill of lading must appear to cover  a port-to- port shipment but need not be titled ‘marine bill of lading’, ‘Ocean bill of lading', port-to-port bill of lading’ or similar

v   The issuance date of B/L’s the date of shipment unless it bears a separate dated on board notation

v   The term ‘clean’ need not appear on a bill of lading; and shipment on more than one vessel is partial shipment

Transport Document

v   The date of issuance of an air transport document is the date of shipment unless the document shows a separate notation of the flight date

v   A Road transport document must appear to be the original for consignor or shipper or bear no marking for whom the document has been prepared

v   The railway bill can be a duplicate or carbon copy duly authenticated by the railway company's stamp

Insurance Document

v   An insurance document must be signed and must cover the risks defined in the credit

v   The insurance document must be issued in the currency of, and, as a minimum for, the amount required by the credit

Certificate of Origin

v   A certificate of origin must be issued by the party stated in the credit

v   If a credit does not state who is to issue the certificate, then a document issued by any party including the beneficiary, is acceptable

URR-725

THE UNIFORM RULES FOR BANK-TO-BANK REIMBURSEMENTS UNDER DOCUMENTARY CREDITS (URR 725)

ICC UNIFORM RULES FOR BANK-TO BANK REIMBURSEMENTS (URR 725)

v Direct Reimbursement.

v Bank to Bank Reimbursement

v URR 725 and UCP 600

v Effective Date: October 01, 2008

Article 1: Application of URR

The Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits, ICC Publication No.725, Shall apply to any bank-to- bank reimbursement when the text of the reimbursement authorization expressly indicates that it is subject to these rules. They are binding on all parties thereto, unless expressly modified or excluded by the reimbursement authorization.

The issuing bank is responsible for indicating in the credit that reimbursement is subject to these rules. And then, the reimbursing bank acts on the instructions and under the authority of the issuing bank.

These rules are not intended to override of change the provisions of the UCPDC

Article 2: Definitions

v Issuing Bank

v Reimbursing Bank

v Reimbursement Authorization

v Claiming Bank

v Reimbursement Claim

v Reimbursement Undertaking

v Reimbursement Undertaking Amendment

For the purposes of these Rules branches of a bank in different countries are considered to be separate banks.

Article 3: Reimbursement Authorizations Versus Credits

v Reimbursement Authorization is separate from the credit

v Reimbursing Bank is not concerned with or bound by the terms and conditions of the Credit, even if any reference whatsoever is included in the Reimbursement Authorization

Article 4 : Honour of a Reimbursement Claim

v Except as provided by the terms of Reimbursement Undertaking a Reimbursing Bank is not Obligated to honour a Reimbursement Claim.

Article 5 :Responsibilities of the Issuing Bank

v Issuing Bank is responsible for providing the information required in both the Reimbursement Authorization and Credit, and responsible for any consequences resulting from non-compliance with this provision

Article 6 : Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment

v All reimbursement authorization and reimbursement amendments must be issued in the form of an authenticated teletransmission of a signed letter

v An issuing bank must not sent t RB:

v A copy of the credit of any part thereof, or a copy of an amendment to the credit in place of or multiple reimbursement authorization ( if not agreed).

Article 6 : Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment

v An issuing bank shall not require a certificate of compliance with the terms and conditions of the credit in the reimbursement authorization

v A reimbursement authorization must state : Credit number; currency and amount; additional amounts payable and tolerance, if any; claiming bank or, in the case of a freely available credit, that claims can be made by any bank. In the absence of any such indication, the reimbursing bank is authorized to pay any claiming bank; parties responsible for charges. A reimbursement amendment must state only the relative changes to the above and the credit number.

Article 6 : Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment

v If the Reimbursing Bank is requested to accept and pay a time draft (s), the Reimbursement Authorization must also indicate : Tenor of Draft (s) to be drawn; Drawer Party responsible for acceptance and discount charges, if any

v An issuing bank should not require a sight draft to be drawn on the reimbursing bank

Article 6 : Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment

v Any requirement for :

Pre-notification of a reimbursement claim to the issuing bank must be included in the credit and not in the reimbursement Authorization

Pre-debit notification to the issuing bank must be indicated in the credit

Article 7 : Expiry of a Reimbursement Authorization

v The reimbursement authorization should not be subject to an expiry date or latest date for presentation of a claim, except as indicated in Article 9.

v The issuing bank must cancel its reimbursement authorization for any unutilized portion of the credit to which it refers, informing the reimbursing bank without delay.

Article 8 : Amendment of Cancellation of Reimbursement Authorizations

v The issuing bank may issue a reimbursement amendment or cancel a reimbursement authorization at any time upon sending notice to RB

v The issuing bank must send notice of any amendment to the nominated bank or ; in the case of a freely available credit, the advising bank. In case of cancellation of the reimbursement authorization, the issuing bank must provide the nominated bank or the advising bank with new reimbursement instructions.

v The issuing bank must reimburse the RB for any reimbursement claims honored or draft accepted by the RB prior to the receipt by it of a notice of cancellation or amendment.

Article 9: Reimbursement Undertakings

v An authorization or request by the issuing bank to the reimbursing bank to issue a reimbursement undertaking is irrevocable and must contain the following: credit number; currency and amount, additional amounts payable and tolerance, if any; full name and address of the claiming bank to which the reimbursement undertaking should be issued; latest date for presentation of a claim, including any usance period, parties responsible for charges ( claiming bank’s and reimbursing banks’ charges and reimbursement undertaking fee ) in accordance with article 16 of these rules.

Article 9: Reimbursement Undertakings

v A reimbursement undertaking must indicate the terms and conditions of the undertaking and credit number and issuing bank; currency and amount of the reimbursement authorization; Additional amounts payable and tolerance, currency and amounts, Latest date for presentation of a claim; the party to pay the fee, if other than the issuing bank. The reimbursing bank must also include its charges, if any, that will be deducted from the amount claimed.

v If the latest date for presentation of a claim falls on a day when the reimbursing bank is closed, the latest date for presentation of a claim will be extended to the first following banking day

Article 9: Reimbursement Undertakings

v A reimbursing bank is irrevocably bound to Honour a reimbursement claim as of the time it issues the reimbursement undertaking.

v An irrevocable reimbursement authorization cannot be amended or cancelled without the agreement of the reimbursing bank

Article 10: Standards for reimbursement claims

v The claiming bank’s claim for reimbursement: must be in the form of a teletransmission, unless specifically prohibited by the reimbursement authorization or an original letter.

v Must clearly indicate the credit number and the issuing bank; must separately stipulate the principal amount claimed, any additional amount due and charges, must not be a copy of the claiming bank’s advice of payment, deferred payment, acceptance multiple reimbursement claims under on teletransmission or letter.

v Must, in the case of a reimbursement undertaking, comply with the terms and conditions of reimbursement undertaking

Article 10: Standards for reimbursement claims

v When a time draft is to be drawn on the reimbursing bank, the claiming bank must forward the draft with the reimbursement claim to the reimbursing bank for processing and include, where appropriate, the following : general description of the goods, services or performance, country of origin; place of destination or performance

v If the transaction covers the shipment of merchandise : date of shipment ; place of shipment

Article 11: Processing Reimbursement Claims

v A reimbursing bank shall have a maximum of three banking days following the day of receipt of the reimbursement claim to process the claim

v A reimbursement claim received outside banking hours will be deemed to be received on the next following banking day

v If a pre-debit notification is required by the issuing bank, this pre-debit notification period shall be in addition to the processing period.

Article 11: Processing Reimbursement Claims

v When a reimbursing bank has not issued a reimbursement undertaking : the reimbursement claim must specify the predetermined reimbursement date; the reimbursement claim should not be presented to the reimbursing bank more than ten banking days prior to such predetermined date. If a reimbursement claim is presented more than ten banking days prior to the predetermined date, the reimbursing bank may disregard the reimbursement claim. If the reimbursing bank disregards the reimbursement claim, it must so inform the claiming bank by teletransmission or other expeditious means without delay.

Article 12: Duplications of Reimbursement Authorizations

v An issuing bank must not, upon receipt of documents, give a new reimbursement authorization or additional instructions unless they constitute an amendment to, or a cancellation of, an existing reimbursement authorization. The reimbursing bank assumes no liability or responsibility for any consequences that may arise from any such duplication

Article 13: Foreign Laws and Usages

v The issuing bank shall be bound by and shall indemnity the Reimbursing Bank against all obligations and responsibilities imposed by foreign laws and usages

Article 14: Disclaimer on the Transmission of Messages

Article 15: Force Majeure

Article 16: Charges

v A reimbursing bank’s charges are for the account of the issuing bank. If a reimbursement authorization states that the reimbursing bank’s charges are for the account of the beneficiary, they shall be deducted from the amount due to a claiming bank when reimbursement is made. When a reimbursing bank follows the instructions of the issuing bank regarding charges and these charges are not paid, or a reimbursement claim is never presented to the reimbursing bank, the issuing bank remains liable for such charges.

Article 17: Interest Claims / Loss of value

v Any claim for loss of interest, loss of value due to any exchange rate fluctuations, revaluations or devaluations are between the claiming bank and the issuing bank, unless such losses result from the non-performance of the reimbursing bank under a reimbursement undertaking