How UCP 600 and ISBP 681 help with documentary credits
Documentary credits are a common method of payment in international trade, where a bank guarantees the payment of a seller (beneficiary) by a buyer (applicant) upon the presentation of certain documents. However, documentary credits can also involve various risks and challenges, such as discrepancies, fraud, delays, or interpretation issues. To mitigate these risks and ensure uniformity and clarity in the practice of documentary credits, the International Chamber of Commerce (ICC) has developed two sets of rules: UCP 600 and ISBP 681.
What is UCP 600?
UCP 600 stands for Uniform Customs and Practice for Documentary Credits, which is the latest revision of the rules published by ICC in 2007. UCP 600 covers the following aspects of documentary credits:
Definitions and interpretations (articles 2 and 3)
Obligations and liabilities (from article 4 to 13)
Examination and dealing with documents (from article 14 to 17)
Documents including commercial invoice, transport documents and insurance document (from article 18 to 28)
Miscellaneous Provisions (from article 19 to 33)
Disclaimers (from article 34 to 37)
Transfer and assignments (articles 38 and 39)
UCP 600 aims to provide easier language and address the developments in banking, transport and insurance industries. It also incorporates or relates to other ICC rules, such as ISBP 745, URR 725, ISP 98 and eUCP[^1^].
What is ISBP 681?
ISBP 681 stands for International Standard Banking Practice for the Examination of Documents under Documentary Credits, which is an update of the first version published by ICC in 2003. ISBP 681 provides guidance on how to apply UCP 600 in specific situations and how to examine various types of documents under documentary credits. It covers the following topics:
Drafts and calculation of maturity date
Transport documents covering at least two different modes of transport
Bills of lading
Non-negotiable sea waybills
Charter party bills of lading
Air transport documents
Road, rail or inland waterway transport documents
Insurance documents and coverage
Certificates of origin
Analysis, inspection, health, phytosanitary, quantity and quality certiïcates
Clean reports of ïndings issued by inspection companies acting as agents for another entity
Clean reports of ïndings issued by inspection companies acting on their own behalf
Certificates issued by a chamber of commerce or other similar body
Certificates issued by a third party or an agent for a third party conïrming performance or non-performance of a speciïed act or event
Certificates issued by a third party or an agent for a third party conïrming compliance with speciïcations or standards
Certificates issued by a third party or an agent for a third party conïrming shipment or packing details relating to goods placed on board a vessel or other means of conveyance
Certificates issued by a third party or an agent for a third party conïrming loading on board/dispatch/taking in charge from a speciïed location within a speciïed period relating to goods placed on board a vessel or other means of conveyance
Certificates issued by a third party or an agent for a third party conïrming receipt at destination relating to goods placed on 0efd9a6b88