What Is ISP98 and How Does It Apply to SBLCs?
What Is ISP98 and How Does It Apply to SBLCs?
ISP98 (International Standby Practices) is a globally recognized legal framework governing standby letters of credit (SBLCs). It provides standardized rules for issuing, presenting, and enforcing SBLCs across jurisdictions.
Standby Letters of Credit (SBLCs) are powerful tools—but only when they’re issued under the right legal framework. That’s where ISP98 comes in. If you're dealing with an SBLC and don’t see ISP98 mentioned, stop and ask questions.
What Is ISP98?
ISP98 stands for International Standby Practices, established by the International Chamber of Commerce (ICC). It sets out the rules and guidelines that govern how SBLCs are issued, called, and honored across borders. It ensures clarity, consistency, and enforceability in what would otherwise be a very grey space.
Why It Matters
- Eliminates ambiguity in how SBLCs are interpreted
- Gives all parties (issuer, applicant, beneficiary) legal protection
- Ensures standard practices across banks, jurisdictions, and institutions
- Reduces disputes over what documents are required to trigger payment
ISP98 vs URDG 758
- ISP98: More commonly used in the U.S., and focused on financial standby credits (SBLCs issued for payment, not performance)
- URDG 758: Typically governs demand guarantees—more commonly used in infrastructure, construction, or international tenders
Both are ICC rulebooks. Both are valid. The key is knowing which one fits your use case—and making sure it’s explicitly mentioned in the SBLC language.
Examples of Where ISP98 Applies
- Payment guarantees in long-term procurement contracts
- Advance payment guarantees tied to delivery milestones
- Private credit deals where the SBLC secures bridge funding
- Structured trades where the SBLC is the fallback payment trigger
What Happens If ISP98 Is Not Mentioned?
You’re relying on local contract law or custom practice—which varies wildly. Without ISP98, interpretation becomes subjective, timelines blur, and enforcement becomes a mess.
If you’re dealing with a real SBLC, issued through SWIFT (MT760), it should clearly state the applicable rulebook: “This standby letter of credit is subject to ISP98” or URDG 758.
How Financely Uses ISP98
Every SBLC we help structure is issued under ISP98 or URDG—never outside of internationally recognized rulebooks. Whether you're securing a grid connection, bidding on a tender, or structuring a credit-backed trade, we ensure your instrument is not just valid—but enforceable.
Need a Standby Letter of Credit That Holds Up?
We issue SBLCs that are fully SWIFT-verified and governed by ISP98 or URDG. No fluff. Just clean, enforceable guarantees issued by real institutions.
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