Analysis and Insights on ISP98 Rule 2.07

DCW Editorial Note: This previously unpublished material reflects the thinking and writing of Professor James E. Byrne over the period of multiple years up to his passing in July 2018 in an effort to review and note usage of ISP98 during the first 20 years of the rules’ existence. Several leading bankers, lawyers, and corporate users of ISP98 offered constructive review and contributed valuable input to this material.

Throughout this 25th anniversary year of ISP98, DCW will be presenting additional writings of Professor Byrne on various rules. For more on the life and legacy of Professor Byrne, see DCW’s special tribute issue on the IIBLP website.

1.     Generally.

Rule 2.07 deals with routing amendments, cancellations, and notices of non-extension between issuers and nominated banks. Rule 2.07(a) requires that the issuer follow the routing used to advise a standby in advising a proposed amendment. When the issuer fails to do so, Rule 2.07(b) provides that the obligation of an issuer to a nominated person that has acted within the scope of its nomination is unaffected by a proposed amendment or cancellation of which it has not received notice. Rule 2.07(c) treats a notice of non-extension similarly where a nominated person is not given notice.

2.     Background of Rule 2.07.

Rule 2.07 was intended to ensure the orderly advice of amendments, cancellations, and notices of non-extension, a matter of considerable impor­tance to standby practice. It protects nominated persons who act on the nomination in the event that an issuer bypasses them regarding proposed amendments, cancellations, or notices related to automatic amendments.