By: Sheilar T. Shaffer

As a necessary companion to the UCP, the ISBP has proved to be a valuable aid for L/C users. It is sophisticated enough to cover a range of issues concerning documentary examination, even some expressions that the UCP has not defined. For example, "shipping documents", the phrase "freight forwarder's bill of lading acceptable" and "house air waybill is acceptable". These expressions can be ambiguous; ISBP 681 paragraph 21 even states that some of them "should not be used as they are not defined in UCP 600".

Some question whether a revised ISBP should address these expressions, simply ignore them or urge that they be abandoned.

As a banker handling documents every day, I partly share the latter view. But the position that questionable wording should be abandoned may not be workable. This article considers whether a new ISBP will still need to address some phrases that UCP 600 has not defined, and to what extent should we expect ISBP to go further in this direction. In doing so, it is well to note that some of these phrases have increasingly appeared in L/Cs and have been addressed in ISBP. I have divided these into several groups below.

Terminology from other businesses

The phrase "freight forwarder's/house bill of lading acceptable" concerns forwarder's transport documents. It generated several queries to ICC, including numbers R 225, R 221, R 230 and TA 651rev, the latter of which is linked to UCP 600. The interpretation favoured by the ICC Banking Commission is that such a term only impacts the signature requirements of UCP 600 subarticle 20 (a) (i)2. This interpretation is repeated in ISBP 681 paragraph 138.

Terminology customarily used

ISBP 681 paragraph 21 addresses some wording customarily used, such as "shipping documents", which is also the terminology found in Incoterms 1953. If the ISBP had not clarified this phrase, there would be disputes over its scope. The core controversy remaining is whether "shipping documents" excludes drafts.

Expressions inappropriately drafted

The phrase "third party documents acceptable" (R 557 in ICC Publication No. 660) is primarily used in credits in which the beneficiary is an intermediary and the supplier effects the shipment3. It's widely believed that this stipulation, without specifying any parties, could a) allow for documents to be issued by a party other than the beneficiary, and b) for that party to be shown as the shipper. In short, it is apparently intended to address two situations: 1) third party as shipper and/or 2) third party as issuer. However, there is an obvious ambiguity in the construction of the wording. Indeed, to an inexperienced banker or trader who has little knowledge of its background, the intention behind this simple stipulation will be unclear. Personally, I treat the phrase as a technical mistake, a defect in drafting.

Apparently, these troublesome phrases generate discrepancies due to different interpretations. To clarify them, the ISBP has affixed a standard meaning to them. I assume that most of the ISBP interpretations are traceable to the official opinions of the Banking Commission: "third party documents acceptable" from ICC Opinion R 557; "exporting country" from R 392; "freight forwarder's bill of lading acceptable" from R 225. The end result of the ISBP interpretations is to affirm ICC's stand on these controversies.

Delete from ISBP?

Since these terms are not defined by UCP and lead to confusion, why not omit them from the next ISBP? But could the silence of ISBP really help?

Take for instance "forwarder's bill of lading not acceptable" (TA 572). This phrase has appeared in L/Cs for years. The UCP never defines it and ISBP is also silent about it. ICC Opinion TA 572 states that the terminology "transport document issued by freight forwarder not acceptable" is an ambiguous term that does not clearly define the type of document that would be acceptable. With regard to this phrasing, the bank would be obliged to accept a bill of lading that was signed "as carrier" irrespective of any knowledge it may have as to the capacity of the issuer.

The Banking Commission's conclusion to this Opinion affirmed that 1) the phrase is ambiguous; and 2) it would not prevent a forwarder from signing the bill of lading. (Note: ICC linked the phrase to the signing capacity and regarded it as merely stating the proposition that the bill of lading must appear to be issued by or on behalf of a named carrier4.) However, it is not surprising that the phrase has continued to appear in L/Cs from time to time, and queries on it published in FAQ under UCP 600 have never ceased since the implementation of the new UCP. Therefore, one could argue that the silence of ISBP would not discourage use of this phrase. Instead, it is likely to remain an ongoing concern until it is clarified. Apparently, if L/C issuers fully understood the ICC position, then incorporating this phrase would be superfluous.

On the other hand, what if the ISBP stated that such phrases should be disregarded (just as the words "immediately", "promptly", etc., in UCP 600 article 3)? It can be argued that specifying the ambiguous expressions in the text of the UCP might well make them null and void, but I believe this not the point. When they vanish from L/Cs, L/C issuers could come up with other expressions that generate new problems. The challenge lies in the differing interpretations of the same term.

Consequently, rather than deleting these expressions from the ISBP, it would be more practical to have the expressions clarified if they become a source of discrepancies.


Because ISBP should remain responsive to changes in documentary practice, it is necessary to reshape it by addressing new terminology that reflects documentary changes and by deleting superfluous expressions.

Among the categories of terms discussed above, the terminology derived from other business lines could be expanded. With the development of the transport industry, L/C cargo shipped by short sea voyages triggers new documentary practices.

Traditionally, original bills of lading have been required in most L/Cs, but other variants have appeared, for example, the "surrendered bill of lading". These expressions are rooted in other business lines that bankers are not familiar with. If an L/C requires a bill of lading and states "surrendered bill of lading acceptable", what is the criteria for examining such a document? UCP 600 article 20 is only applicable to original bills of lading.

Should a "surrendered bill of lading" be treated as nothing other than a copy of a bill of lading examined as per ISBP 681 paragraph 20 or as a document "other than a transport document, insurance document or commercial invoice", which falls under UCP 600 sub-article 14 (f )? This is not merely a linguistic issue; the question is: what is a "surrendered bill of lading" and what could make such a document acceptable under UCP 600? It would be helpful if this terminology, which derives from the transport industry, could be addressed in a revised ISBP.

Moreover, with the rapid development of e-commerce and the promotion of the Committee Maritime International Rules for Electronic Bills of Landing (1990), electronic bills of lading have evolved and have become useful innovations. However, the present ISBP only makes a rough reference to an electronic signature in the wording of paragraph 39: "any electronic means of authentication". If a revised ISBP were to provide further detail as to how to treat an electronic signature, it could create more commercial opportunities associated with documents electronically signed.

However, drafters of the next ISBP should also consider deleting some expressions, for example the poorly drafted wording "third party documents acceptable". ISBP never interprets the phrase; it only states that the effect of it is to allow documents excluding drafts to be issued by a third party. But UCP 600 sub-article 14 (f ) already allows documents (excluding transport documents, insurance documents or commercial invoices) to be issued by a party other than the beneficiary. The only merit of this phrase is to allow an invoice to be issued by a third party, i.e., to modify UCP 600 sub-article 18 (a) (i). If this is the real intention of the L/C issuer, then it should clearly state that requirement. I see little added value in retaining that phrase in the next ISBP.


Clearly, troublesome expressions are complicated in practice. This is partly because drafters are unfamiliar with other business lines, partly from different perceptions of the same term and even linguistic barriers in drafting L/Cs. To simplify matters, the next ISBP should continue to clarify some expressions that have not been treated by UCP 600, but are nonetheless being increasingly used and are apt to be misinterpreted. L/C transactions are a reflection of practices in international trade, practices that change over time. In order to promote more standard usage of L/Cs, an important task of the ISBP is how to define and what to define in the new terminologies.

Sheilar T. Shaffer is Senior Documentary Manager of Import/Export Documents in the International Department of the Agricultural Bank of China (ABC), Shantou Br. Her e-mail is

1. Special thanks to Neil Pickering, Deputy Chair ICC Australia (former), for his encouragement in writing this article.
2. UCP 600: An Analytical Commentary by Professor James E. Byrne with Vincent M. Maulella, SOH Chee Seng and Alexander Zelenov.
3. Vol.6 Spring 2000, DCInsight: The Phrase "Third Party Documents
Acceptable" by S.Khalid Iftikhar.
4. See note no.2.