The Second Unfair Yes-Vote

July 2007 I wrote an article titled “The Unfair Yes-Vote.” The background for the article was the fact that the UCP 600 had just been unanimously approved by the ICC Banking Commission, and what happened after the UCP 600 was approved by the ICC Commission on Banking Technique and Practice was that the documentary credit society spend most of its energy finding holes in the new rules.” [a “loose” quote from the article].


These days I am getting a déjà vu.


The ISBP was approved by the ICC Banking Commission at their meeting in Lisbon 17 April 2013 with 97.7% of the given votes. 69% of ICC National Committee voting rights being exercised. On real numbers: The vote was 87-1. Only one country – Singapore – voted “No” to ISBP 745.


I had the extreme pleasure of voting “Yes” on behalf of ICC Denmark. My vote represents 13 Danish trade finance banks, the Danish shipping industry as well as the Danish insurance industry! In other words: the 87 yes votes to the ISBP represent numerous banks and organisations from all over the world. This majority vote was given to the ICC – i.e. the body that have drafted the UCP 600.


So one would think that all was in perfect order! But no – that would be too easy!


As soon as the ISBP was approved, the trade finance community started to complain about the ISBP. Even those that approve it seem to do so with reservation. Here is a couple of quotes that reached my mailbox.


“A warm welcome to ISBP 745 - with several reservations”


“One thing disappointing to me is that ISBP745 was approved without further amendments.”


However the “complain” to top them all (and coming on strongest) is this one: It is wrong to have a “new” ISBP as there already is one ISBP supporting the UCP 600. You cannot have two (or worse – three) version of the ISBP co-existing with each other. I quote Mr. T.O. Lee from a LinkedIn Discussion group to elaborate on that view:



The problem is that some of the new paragraphs are introduced to resolve those disputes or grey areas surfaced in the middle of version 1 and version 2 or between version 2 and version 3 as the case may be. Hence for disputes or grey areas surfaced prior and up to that occurrence period, the old version rules but after the introduction of a new version dealing with that dispute or grey area, the new version rules. The fact is that it is difficult to determine a precise cut off period. That is the problem.


And the easy and lazy solution is to treat all 3 versions as evergreen. The side effect is that this would create a Pandora Box. Different parties may choose the version most beneficial to them. And which version overrides the other? No way, because they are all valid.


I am anticipating this to happen, sooner or later because LC practitioners are very smart people; particular those discrepancy manufacturers who will treat such task as a piece of cake

You can mark my words



This quote is added as an example of the argument. There were many others.


However, I must admit that I got really confused when I first heard this argument:


The revision of ISBP 681 was approved by the ICC Banking Commission … at one point the ICC National Committees even voted for a very expanded version of the ISBP. This was later taken off the table due to lack of input from the ICC National Committees. However no one (as far as I know) ever argued that you cannot revise the ISBP because there is already one out there.


Being part of the ISBP Drafting group I have read through all the comments received – and I do not recall ever having heard this complaint. There was thousands of comments; many of them strong … often pulling in different directions. But still comments that seemed to accept the premise that a new “collection” of practices will see the light of day at some point in time ….


These discussions questioning the very existence of a new revised ISBP are to me very disturbing!

There may be elements to which one may not agree – after all – this is a “compromise” between many countries, so it would be strange if everyone would agree to everything. But questioning the very existence of the publication. Huu … then more countries perhaps should have voted no!


But frankly – I do not really understand the argument. Or rather … to some extent I understand it, but if I take into account what in fact the ISBP is, then I do not understand it. Let me try to elaborate.


UCP 600 article 2 includes a definition of what constitutes a complying presentation under an LC. As follows:


“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.”


This definition provides a hierarchy on how to determine if a presentation is complying, i.e.:


1) First the wording of the LC. This means that any condition in an LC that excludes or modifies the UCP 600 will prevail.


2) Second the UCP 600.


3) Third – “international standard banking practice.”

This latter one is indeed the tricky part. As such it is a catch-all phrase that covers the various “practices” that apply to an LC. These may come from various sources such as ICC Opinions, DOCDEX Decisions, ICC Decisions, court cases – AND the ISBP. 


 In order to understand the ISBP – one must look at the difference between rules (UCP 600) and practices (international standard banking practice):


Ideally rules (in this case the UCP 600) are static! I.e. the basics that provide the foundation for any LC issued subject to them. Practice however moves with the relevant industry. Technology, processes etc., change over time. These changes means that practice change. Some of those changes come slowly, where others seem to appear out of the blue. An example of the latter is the signing of transport documents by a branch of the carrier. I did not see this in the market when ISBP 645 or ISBP 681 was drafted … but surely it was there when the ISBP 745 was drafted. Therefore it is now documented in ISBP 745.


But when would such new practice be applicable to an LC issued subject to UCP 600? I cannot say for sure … and therefore it makes no sense at all talking about an “in force” or “implementation date” of the ISBP.


The fact is that out there in the real world things change … and that change the practice … and that has an influence on “international standard banking practice.”


Just look at the ICC Opinions – those have changed practice many times. New ICC Opinions have “overruled” old ICC Opinions. Is this because the old one was wrong? No! It was because practice has changed.


This is the exact same with the ISBP 745. The ISBP 745 documents a Select^ed chunk of “international standard banking practice” as it is right now. Most is the same, a lot is expanded and elaborated upon, and a tiny bit has changed. Because practice really has changed.


I accept fully, that this way of thinking does not make it easier for the people working with LCs. But bear in mind that




The ISBP represents current practice, hence there is no implementation date – just as the LC’s issued need not be issued subject to it. The ISBP 745 applies today to any LC issued subject to the UCP 600. In other words ISBP 745 is THE practical interpretation of the UCP 600. There are NOT 3 versions of the ISBP in force right now. There is only one: the ISBP 745.


There is however one problem, and that is the form of the ISBP. It comes in books. Books are almost static, in any case hard to “update.” It is 6 years since ISBP 681 was published … and practice is not static for 6 years. Therefore the ISBP should come in a form that is easier and faster to update. Preferably an electronic version on the internet!

Publishing practice in books is by definition wrong. Some of the practice described therein may be out-dated the second it is published!


I will end this blog post with yet another quote. This one is also from a LinkedIn discussion. This time by Mr. Bob Ronai:



ISBP745 includes many existing practices not previously documented in say ISBP681 and conclusions made in ICC Official Opinions. It therefore has no "implementation date", simply because these practices already exist. The new publication puts these practices into one volume and explains concisely what these are. It is not the complete list of international standard banking practices, just the more important and commonly discussed ones.


It is a bit like publishing a book of ten works of say Picasso and claiming therefore that all of his paintings only came into existence on publication of that book.


Let's now just get over it, accept the that many National Committees contributed to them, the vast majority voted for them.


"The moving hand writes, and having writ moves on". And so should we.



Amen to that!


The article “The Unfair Yes-Vote” was originally published in LC Monitor July-September 2007 Volume 9, Issue 3 – and has later been published in my book “From Beginning to Beginning – Trade Finance Articles from 2003 to 2011” Page 172.


I refer also to the blog posts: “TFPD_02: ICC can only make money by high priced publications and hard protected copyrights – part 2 of 2” and “TFPD_03: ICC rule making – it takes the time it takes” both of which touches upon updating and the form of ICC rules, books and practices.


Take care of each other and the LC!





Ps. The quotes by T.O. Lee and Bob Ronai are published with the consent of both of those gentlemen. I thank both of them for that.

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