English Court considers the proper presentation of documents under the ICC Uniform Rules for Demand Guarantees


Our team: Tom Bolam


The recent decision in Tecnicas Reunidas Saudia For Services and Contracting Co. Ltd v The Korea Development Bank [2020] EWHC 968 (TCC), considered the meaning of the beneficiary’s obligations to present documents under a demand guarantee where the express requirements for a compliant demand were ambiguous. The judgment provides important guidance on the application of the ICC Uniform Rules for Demand Guarantees. Demand guarantees play a crucial role in international trade and major international projects. They are an important form of security offering protection for the proper performance of contractual obligations. Following a breach of contract, the beneficiary of a demand guarantee can make a demand to the issuer, usually a bank or other financial institution. The guarantor must pay-out upon receipt of a compliant written demand. Demand guarantees provide significantly greater protection for a beneficiary than an ordinary guarantee. The issuer of an ordinary guarantee can avoid liability to the beneficiary for a wide variety of reasons. Typically, the underlying breach of contract must first be established before the guarantor will pay. In contrast, the issuer of a demand guarantee is not entitled to investigate the underlying breach of contract and must pay-out if the written demand complies with the formalities expressly agreed in the demand. To read more – Click here

 

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