ISP98 and UCP 600: which clock applies
Two ICC books, two undertakings
A commercial credit that incorporates UCP 600 is examined under UCP 600. A standby that incorporates ISP98 is examined under ISP98. Banks get into trouble when a standby is written on an MT700 skeleton and somebody applies Article 14 because the message type looks familiar. The incorporation sentence controls. If both texts are cited and they conflict, the credit should have said which one prevails. If it did not, do not invent a winner in the checker’s note. Ask for an amendment or escalate.
Independence looks similar and is not the same clock
ISP98 Rule 1.06 describes a standby as irrevocable, independent, documentary, and binding when issued. The issuer does not look through to the applicant’s reimbursement or to the underlying dispute. That independence resembles UCP Articles 4 and 5. The timetable does not transfer. UCP gives five banking days following the day of presentation and then requires a refusal notice under Article 16. ISP98 Rule 5.01 requires notice of dishonour in a time that is not unreasonable. Notice within three business days is deemed not unreasonable. Notice beyond seven business days is deemed unreasonable.
Expiry
UCP credits must state an expiry and a place for presentation. ISP98 Rule 9.01 requires the standby to contain an expiry date or to permit the issuer to terminate it on reasonable prior notice or payment. A standby that states neither does not satisfy that rule. It does not become a three-year instrument under URDG 758 Article 25. URDG is a third book. Do not repair an undated ISP98 standby by quoting a demand-guarantee article.
Extend or pay
ISP98 Rule 3.09 treats a request to extend the expiry or, alternatively, to pay as a presentation demanding payment. It is examined as a presentation. URDG Article 23 is the demand-guarantee version, with a suspension of not more than 30 calendar days. The numbers and the labels differ. Quote the rule that the instrument incorporates.
What the Bangladesh desk should write on the file
State the rules incorporated, the date of presentation, and the notice date. If you are under ISP98, do not write “within five banking days under Article 14”. If you are under UCP, do not write “seven business days is unreasonable” as if Rule 5.01 applied. This page is an educational comparison. It is not a refusal message and it is not an opinion on whether a particular standby claim should be paid.
Source
ICC, ISP98 Rules 1.06, 5.01 and 9.01, contrasted with UCP 600 Articles 14 and 16. Summaries only. iccwbo.org. Open the cited source.
Frequently asked questions
Is a standby independent of the contract?
Yes. ISP98 Rules 1.06 and 1.07: the issuer’s obligation depends on a complying documentary presentation, not on reimbursement from the applicant or on the underlying performance.
How fast must dishonour be notified?
Rule 5.01: within a time after presentation that is not unreasonable. Three business days is deemed not unreasonable. Beyond seven business days is deemed unreasonable. The count starts on the business day after the business day of presentation.
What if the standby states no expiry?
Rule 9.01 requires an expiry date or a right for the issuer to terminate on reasonable prior notice or payment. Do not borrow URDG’s three-year fallback or UCP’s five banking days.