An ISP, or International Standby Practices, is a set of rules established by the International Chamber of Commerce (ICC) for the management of standby letters of credit. ISPs provide clear guidelines for banks and parties involved in the transaction to ensure a smooth and efficient process.
The ISP98 rules were developed by the United Nations Commission on International Trade Law (UNCITRAL) to govern the use of StandBy Letter of Credit (SBLC) in international business transactions. These rules have been adopted by a large number of countries around the world, including many countries in Africa.
As a reminder, the United Nations Commission on International Trade Law (UNCITRAL) is an intergovernmental commission created by the United Nations General Assembly in 1966 to promote the harmonization and progressive unification of international trade law. UNCITRAL is made up of 60 member states elected by the General Assembly for six-year terms.
UNCITRAL’s mission is to promote the harmonization and unification of international trade law by developing legal instruments such as conventions, model laws, rules and recommendations. UNCITRAL has worked on issues such as contracts for the international sale of goods, transportation of goods, international payments, international commercial arbitration, security in leasing transactions and debt restructuring.
UNCITRAL’s work has led to the adoption of several important international conventions, including the United Nations Convention on Contracts for the International Sale of Goods (CISG), the United Nations Convention on the Limitation Period in the International Sale of Goods and the United Nations Convention on International Commercial Arbitration.
UNCITRAL’s work is widely recognized as being at the forefront of the development of international trade law and is closely followed by legal and trade communities around the world.
The International Standby Practices (ISP) are primarily used to govern the use of Stand-by Letter of Credit (SBLC) in international business transactions. The SBLC is a bank guarantee that allows a buyer to obtain a payment guarantee from a bank, in the event of non-compliance with the terms of the contract by the seller.
ISPs provide internationally recognized standards for the practice of SBLC, which helps reduce risk and ensure consistent and efficient use of this financial instrument. ISP rules are widely used in the following industries:
The International Standby Practices (ISP) are rules established by the United Nations Commission on International Trade Law (UNCITRAL) to govern the use of Stand-by Letter of Credit (SBLC) in international business transactions. The ISP rules are described in the official UNCITRAL publication entitled “International Standby Practices 2020” (ISP98).
The ISP98 rules consist of 89 articles which cover the following aspects:
The ISP98 rules were designed to be used voluntarily, but their adoption may be required by contract or national law. The rules of the ISP98 are also compatible with the rules of the International Chamber of Commerce (ICC), in particular the Uniform Rules and Practices relating to Documentary Credits (RUU).
It should be noted that the ISP Rules do not supersede national legislation or specific contractual rules, but rather provide international standards for the practice of the SBLC in international business transactions.
Many African countries have adopted the ISP98 rules in their national legislation or included them in their commercial contracts. This enables African businesses to benefit from consistent and efficient use of the SBLC in international business transactions and reduce the risks associated with such transactions.
The ISP98 rules are compatible with the Uniform Customs and Practices for Documentary Credits (RUU) of the International Chamber of Commerce (ICC), which are also widely used in international business transactions in Africa.
However, it should be noted that the ISP98 rules do not replace national legislation or specific contractual rules. Therefore, parties involved in international business transactions in Africa should always consider their country’s specific laws and rules, as well as common business practices in their industry.
In sum, the use of ISP rules can help ensure the security and reliability of international transactions involving Stand-by Letters of Credit. ISP rules ensure consistent and effective use of this financial instrument.
