• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.47
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• pp.129-156
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• 2010

Since the 1970s, international construction employers have commonly requested first demand guarantees upon their contractors as a form of security for due performance of their works. Contractors prefer the greater protection offered by more traditional forms of security requiring presentation of an arbitral award or other evidence of the caller's entitlement to compensation. Many contractors nonetheless feel that they have no alternative but to provide these unconditional guarantees in order to compete. However, these unconditional first demand guarantees are controversial and have given rise to numerous disputes both in arbitration and litigation. Disputes arising from first demand guarantees can be broken down into a) applications to prevent a perceived fraudulent or otherwise unfair or improper calling of a guarantee, b) claims arising from such abusive calls and c) claims relating to the consequences of such calls even if the call itself may not be abusive as such. The contractors should carefully assess the risk of an abusive call being made bearing in mind the difficulties he may face in seeking to prevent such a call. He should also bear in mind the difficulties, delays and cost he is likely to encounter in seeking to recover any monies wrongfully called. One option would be to provide that the call can only be made once and to the extent that the employer's damages have been assessed or even incurred or even for the default to have been established by an arbitral tribunal or court. Another option would be to provide that any call be accompanied by a decision of a competent and impartial third party stating that the contractor is in breach. For example, such a requirement could be incorporated into a construction contract based on the FIDIC Conditions by submitting this decision to a Dispute Adjudication Board. Another option would be to provide for the "ICC Counter-Guarantee Scheme". In sum, there would appear to be room for compromise between the employer and the contractor in respect of first demand guarantees by conditioning the entitlement to call such guarantees to the determination of a competent and impartial third party.

• Journal of Arbitration Studies
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• v.34 no.2
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• pp.45-64
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• 2024

In international transactions, a demand guarantee is commonly used as a so-called independent bank guarantee to protect against the other party's default under, or breach of, contract). However, there is a risk that the independence and the documentary character of the demand guarantee may be abused by the beneficiary of the guarantee, who may fall into the temptation to demand or call for payment under the guarantee by preparing documents that appear to constitute a complying demand for payment, even though the demand has no conceivable basis. In Korea, through case law, a legal rule has been developed to prevent such abusive calls for payment. This paper examines how such rule that prohibits abuse of rights is applying in the context of counter-guarantees. To this end, this paper first considers the concepts of a demand guarantee and a counter-guarantee and the basic legal principles applicable thereto. And then this paper considers abusive calls under the guarantees, that exceptionally works as grounds for refusal of payment by guarantors and counter-guarantors, further looking at some situations in which the calls amount to be abusive under counter-guarantees in particular.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.69
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• pp.261-301
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• 2016

Recently the abusive calls on on-demand bonds have been a critical issue among many engineering and construction companies in Korea. On-demand bond is referred to as an independent guarantee in the sense that the guarantee is independent from its underlying contract although it was issued based on such underlying contract. For this reason, the issuing bank is not required to and/or entitled to look into whether there really is a breach of underlying contract in relation to the call on demand-bonds. Due to this kind of principle of independence, the applicant has to run the risk of the on demand bond being called by the beneficiary without due grounds. Only where the call proves to be fraudulent or abusive in a very clear way, the issuing bank would not be obligated to pay the bond proceeds for the call on on-demand bonds. In order to prevent the issuing bank from paying the proceeds under the on-demand bond, the applicant usually files with its competent court an application for injunction prohibiting the beneficiary from calling against the issuing bank. However, it is in practice difficult for the applicant to prove the beneficiary's call on the bond to be fraudulent since the courts in almost all the jurisdictions of advanced countries require very strict and objective evidences such as the documents which were signed by the owner (beneficiary) or any other third party like the engineer. There is another way of preventing the beneficiary from calling on the bond, which is often utilized especially in the United Kingdom or Western European countries such as Germany. Based upon the underlying contract, the contractor which is at the same time the applicant of on-demand bond requests the court to order the owner (the beneficiary) not to call on the bond. In this case, there apparently seems to be no reason why the court should apply the strict fraud rule to determine whether to grant an injunction in that the underlying legal relationship was created based on a construction contract rather than a bond. However, in most jurisdictions except for United Kingdom and Singapore, the court also applies the strict fraud rule on the ground that the parties promised to make the on-demand bond issued under the construction contract. This kind of injunction is highly unlikely to be utilized on the international level because it is very difficult in normal situations to establish the international jurisdiction towards the beneficiary which will be usually located outside the jurisdiction of the relevant court. This kind of injunction ordering the owner not to call on the bond can be rendered by the arbitrator as well even though the arbitrator has no coercive power for the owner to follow it. Normally there would be no arbitral tribunal existing at the time of the bond being called. In this case, the emergency arbitrator which most of the international arbitration rules such as ICC, LCIA and SIAC, etc. adopt can be utilized. Finally, the contractor can block the issuing bank from paying the bond proceeds by way of a provisional attachment in case where it also has rights to claim some unpaid interim payments or damages. This is the preservative measure under civil law system, which the lawyers from common law system are not familiar with. As explained in this article, it is very difficult to block the issuing bank from paying in response to the bond call by the beneficiary even if the call has no valid ground under the underlying construction contract. Therefore, it is necessary for the applicants who are normally engineering and construction companies to be prudent to make on-demand bonds issued. They need to take into account the creditability of the project owner as well as trustworthiness of the judiciary system of the country where the owner is domiciled.

• Journal of the Korea Safety Management & Science
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• v.24 no.4
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• pp.85-93
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• 2022

Today's customer service providers, who have the greatest impact on customer satisfaction, are experiencing severe stress and job burnout due to various causes. Unlike general companies, the corporation has a relatively high level of dissatisfaction with customer service since there is a large conflict between the provision of kindness and the reasonable handling of civil complaints according to laws and regulations. In order to analyze the environment of the NPS' customer service providers, 5.583 branch employees working at the National Pension Service and 407 call center employees were surveyed online using the questionnaire function of the Enterprise resource planning system. The contents of the survey consisted of a survey on customer-facing employees, the level of awareness of customer-facing workers protection measures, and opinions on improvement and supplementation related to customer-facing workers protection measures. As a result of the survey, 72.8% of the total respondents experienced grievance complaints, and the proportion of call center employees was even higher at 89.0%. In addition, both the branch and the call center had the largest share of complaints about obstruction of business, unreasonable demands, abusive language, and verbal abuse. More than 40% of call center employees in their 20s and 30s experienced the highest frequency of complaints 13 or more times a year. The most difficult thing in the process of responding to complaints was that both branch offices and call centers had insufficient psychological recovery time, lack of space, and lack of help from colleagues and superiors. Based on the survey analysis, it is suggested to establish a countermeasure through case analysis rather than the right to suspend work for civil complaints that cannot be handled, such as customized manuals and action strategies for the age group with high grievance complaints.