Standby Letter of Credit subject to UCP 600 , ISP 98

AugustineArulnesan · Post by **AugustineArulnesan** » Fri Feb 08, 2013 12:00 am

Can a standby letter of credit be issued subject to ISP 98, UCP 600 and local laws? Has anyone ever issued such an instrument?

Appreciate comments from the members of this forum.

NigelHolt · Post by **NigelHolt** » Mon Feb 11, 2013 12:00 am

Not only can a standby subject to UCP600 or ISP98 be stated to be subject to the law of a particular jurisdiction (e.g. the law of England) but it can also be stated to be subject to the jurisdiction (whether exclusive or non-exclusive) of the courts of a particular jurisdiction (e.g. the English courts). Such a condition avoids the possibility of dispute as to which jurisdiction’s laws apply and –possibly more importantly- which courts have jurisdiction to hear any disputes between the parties.

It is a routine matter for my bank to issue such standbys.

asamaha · Post by **asamaha** » Tue Feb 12, 2013 12:00 am

But it cannot be subject at the same time to UCP600 and ISB98.
Regards
Antoine

asamaha · Post by **asamaha** » Tue Feb 12, 2013 12:00 am

Read ISP and not ISB

AugustineArulnesan · Post by **AugustineArulnesan** » Tue Feb 12, 2013 12:00 am

Thanks Smith. I understand that it can be issued subject to UCP or ISP and local laws and we do it all the time however can it be subject to both UCP and ISP.

NigelHolt · Post by **NigelHolt** » Tue Feb 12, 2013 12:00 am

Rajan, sorry your query was not clear to me. Whether or not theoretically possible (see Rule 1.02(b) of ISP98 for example) I find the idea of making a standby subject to both sets of rules utterly absurd and would refuse outright.

GlennRansier_olsABN · Post by **GlennRansier_olsABN** » Tue Feb 12, 2013 12:00 am

It cannot be subject to both. There are far too many inconsistencies between them such as examination processes, force majeure, document descriptions, etc., etc., etc. LC's really can only be governed by one rule set.

AugustineArulnesan · Post by **AugustineArulnesan** » Tue Feb 12, 2013 12:00 am

Thanks to both of you. I agree with you that it must be issued subject to one set of rules however we were given to understand that other banks are doing it hence the query.We refused to do it.

RitaRicci · Post by **RitaRicci** » Fri Feb 22, 2013 12:00 am

I'm not aware of any law or rule that says that it cannot be issued subject to both. The question is whether it is practical or prudent to do that? It can happen inadvertantly or intentionally. A standby subject to ISP98 may exclude certain ISP98 rules and state that certain articles of UCP shall apply instead or visa versa. A common example is when the Standby is subject to UPC600 but excludes Art. 36 for force majeure, and will instead state that ISP98 Rule 3.14 applies. Finally in the event that the standby is issued subject to more than one set of rules, including ISP98, Rule 1.02b of ISP98 states that the ISP98 will supercede conflicting provisions in any other rules of practice to which a standby letter of credit ''is also made subject''.
Best regards, Rita

GSham · Post by **GSham** » Mon Feb 25, 2013 12:00 am

From a practical perspective, a standby LC should not be stated as being issued subject to two sets of rules, e.g., UCP 600 and ISP 98. What is the rationale for subjecting a standby LC to two different sets of rules? However, as Rita pointed out, a certain article can be expressly excluded and substituted by an article taken from another set of rules. For example, exclude article 36 for a standby LC issued subject to UCP 600, and incorporate the provisions under rule 3.14 of ISP 98. The rationale for this is clear.

Regards, Gabriel