ISP98
ISP98 is the International Standby Practices, ICC Publication No. 590. It is the International Chamber of Commerce rule set written specifically for standby letter of credit practice. ICC materials state that although standbys share features with commercial letters of credit and other independent undertakings, differences in scope and practice required a dedicated rulebook, and that ISP98 distils practices used by bankers, corporates, rating agencies, regulators and other standby users.
ISP98 use on bank export finance desks
On EF desks, ISP98 is incorporated into standby credits that back payment, performance, advance-payment, bid or financial obligations where the beneficiary expects an independent bank undertaking rather than a commercial documentary credit paying against shipping documents. The standby functions economically like a demand guarantee, while remaining a letter-of-credit form. Loan agreements frequently specify that facility standbys are subject to ISP98 so presentation, examination, notice, transfer and expiry mechanics are standardised.
ISP98 was developed by the Institute of International Banking Law and Practice and endorsed through the ICC Banking Commission process. The English-language text is organised as Rules 1 to 10: General Provisions; Obligations; Presentation; Examination; Notice, Preclusion and Disposition of Documents; Transfer, Assignment and Transfer by Operation of Law; Cancellation; Reimbursement Obligations; Timing; and Syndication/Participation.
Mechanics compared with UCP and URDG
Like UCP 600 for commercial credits, ISP98 applies when the standby (or the facility that requires it) expressly subjects the instrument to the rules. ICC Switzerland materials emphasise precise definitions (including concepts such as an "original" and automatic amendment), coverage of the standby lifecycle through syndication, and basic definitions for electronic presentation. The rules are framed as neutral market standards intended to reduce drafting time and handling disputes that arise when standby practice is forced into commercial-credit templates.
Where the instrument is a demand guarantee rather than a standby credit, desks typically select URDG 758. Where the instrument is a commercial letter of credit paying against transport and invoice documents, UCP 600 remains the ordinary choice. UCP 600 Article 1 notes that the UCP may apply to a standby to the extent the rules are applicable, which is why many practitioners prefer ISP98's standby-specific drafting when the product is clearly a standby.
Boundaries and governing-law overlay
ISP98 does not replace the standby's text or mandatory law. Fraud exceptions, sanctions restrictions, insolvency stays and local formalities still sit outside the ICC rulebook. Syndication and participation provisions in Rule 10 address bank-to-bank risk sharing; they do not themselves create regulatory capital treatment. Desks therefore read the standby amount, expiry, evergreen language, drawing certificates and governing law together with the incorporated ISP98 rules.