Banks decide whether a presentation is complying or not by checking the documents only under a letter of credit transaction. Banks should be able to read and understand the documents which have been presented to them. Otherwise they can not check them. As a result issuance of the documents with correct language is the first requirement for a complying presentation. On this article I will explain the language of the documents according to ICC rules and regulations.
What UCP 600 is telling us about the language of the documents ?
Surprisingly there is no article exist in the latest letter of credit rules regarding the language of the documents. For this reason we have to look at the international standard banking practices to understand ICC Banking Commission's perspective on this matter.
ISBP 2007 Regulations
ISBP 2007 has a very limited coverage about the language of the documents. We can see related regulation only in article 23. Article 23 of ISBP 2007 tells us that "it is expected that documents issued by the beneficiary will be in the language of the credit" and "when a credit states that documents in two or more languages are acceptable, a nominated bank may, in its advice of the credit, limit the number of acceptable languages as a condition of its engagement in the credit."
Perhaps It is understand from the practice that these wordings are not enough to clarify language of the docs subject. As a result ICC banking Commission has made a significant change on this subject when they were renewing the international standard banking practices.
ISBP 2013 Regulations
ISBP 2013 is the revised and updated version of ISBP 2007. Since the beginning of June 2013 it has been effective and in use instead of ISBP 2007. Unlike previous version new international standard banking practices has a detailed explanation on the topic.
ISBP 2013 encourages issuing banks to specify the language of the credit with these wordings "when a credit stipulates the language of the documents to be presented, the data required by the credit or UCP 600 are to be in that language." If the issuing bank would not specify the language of the credit than the documents may be issued in any language.
Even if the issuing bank allows presentation of documents issued more than one language, nominated bank or confirming bank may restrict the number of acceptable languages as a condition of its engagement in the credit. For example issuing bank may allow presentation of documents issued either English or French but the confirming bank can restrict the letter of credit for the documents only issued in English language. In such a case the data contained in the documents are only to be in the acceptable English language.
ISBP 2013 states that banks do not examine data that have been inserted in a language that is additional to that required or allowed in the credit. As an example let us assume that the credit calls for documents issued in English language only. If we present a commercial invoice issued in English language but having additional Arabic information, banks do not control the Arabic written parts. They check the English parts only.
There is one more sub-article exists in ISBP 2013 which is clarifying the language of stamps, legalizations and endorsements but I would like to write about this subject on the next page with an example.
Case Study : What Commerzbank thinks regarding the language of the documents?
Before finalizing this article let me give you a real life example which is defining the stance of a reputable bank on this matter : "Thus it is essential that the participating banks are able to determine that the documents are complying. Commerzbank does not believe it is reasonable to expect them to have documents translated before their conformity can be checked, a process that might result in deadlines for checking documents being exceeded. It is for that reason that Commerzbank rejects documents which language cannot be checked or honours them under reserve only."
According to HBR the fastest-spreading language in human history, English is spoken at a useful level by some 1.75 billion people worldwide—that’s one in every four of us. There are close to 385 million native speakers in countries like the U.S. and Australia, about a billion fluent speakers in formerly colonized nations such as India and Nigeria, and millions of people around the world who’ve studied it as a second language. An estimated 565 million people use it on the internet.