• 무역상무연구
• /
• 제39권
• /
• pp.59-85
• /
• 2008

An independent bank guarantee(aka an independent guarantee) is provided as an security on a principal obligor's performance of his obligation, and a guarantor should pay the guaranteed amount only upon a beneficiary's written demand. A standby letter of credit has been used in the United States, since it was construed that a bank should not issue a guarantee. There was wide misunderstanding that a standby letter of credit differs from an independent bank guarantee. However, a standby letter of credit is the same security as an independent bank guarantee, and in international business a standby letter of credit is not differentiated from a independent bank guarantee. An independent bank guarantee are independent from the underlying contract, unconditional, and irrevocable. And a guarantor should pay upon written demand without proving a principal obligor breaches the underlying contract. These features of an independent bank guarantee has been abused in international transactions. Thus it has been proposed that some exceptions to the features of an independent bank guarantee should be allowed. United Nations Convention on Independent Guarantees and Standby Letter of Credit(1995) stipulates some exceptions to payment obligation. Export bond insurance, a part of export insurances, operated by the Korea Export Insurance Corporation under the Export Insurance Act, is used as a security for unfair calling by a beneficiary under an independent bank guarantee. Most of the export subsides by the government are prohibited under WTO's Agreement on Subsidies and Countervailing Measures. However, as export insurance is allowed under the WTO, it operates a significant role in enhancing the export. In the event that export bond insurance is provided for a guarantor, an obligor who is subject to recourse by a guarantor, can be exempt from the recourse in case of unfair calling. The Korea Export Insurance Corporation, an insurer, bears unfair calling risk by a beneficiary. Generally it is understood that a demand shall be made before the expiry of an independent bank guarantee. However this is not absolutely true, it shall be decided by URDG, ISP98, the governing law.

• 무역상무연구
• /
• 제58권
• /
• pp.179-213
• /
• 2013

While a performance type guarantee is required as a security for non-performance risk by a seller, a payment guarantee is used as a security for non-payment risk by a buyer(or a borrower in a loan agreement). A payment guarantee is a type of independent bank guarantee, bank guarantee, bond, demand guarantee, or standby letter of credit. A guarantor accepts a credit risk of a principal which is normally a buyer in a contract for sale of goods. A payment guarantee is independent of the underlying relationship between the applicant and the beneficiary. The guarantor is only empowered to examine the beneficiary's demand and determine the payment on its face to the terms of the guarantee. A payment guarantee is thus different from a suretyship. The principle of independence carries a significant advantages for a guarantor as well as for a beneficiary. While a documentary credit requires B/L, commercial invoice, packing list, inspection certificate, etc., a typical payment guarantee does not require any evidence for a seller's performance of the underlying contract other than written demand. In this respect payment guarnatee can be a more secured facility than a documentary credit. A payment guarantee normally comes into force from the issuing date and shall remain in effect until all sums guaranteed shall be paid in full by a buyer(or a borrower) or by a guarantor. Although a guarantor shall pay a demand made in accordance with the terms and conditions of the payment guarantee, a payment demand may be denied when it is determined to be abusive or unfair.

• 무역상무연구
• /
• 제42권
• /
• pp.133-160
• /
• 2009

In International trade the buyer and seller are normally separated from on another not only by distance but also by differences in language and culture. It is rarely possible for the performance of obligations to be simultaneous and the performance of contracts therefore calls for trust in a situation in which the parties are unlikely to feel able to trust each other unless they have a longstanding and successful relationship. Thus the seller under an international contract of sale will not wish to surrender documents of title to goods to the buyer until he has at least an assurance of payment, and no buyer will wish to pay for goods until he has received them. A gap of distrust thus exists which is often bridged by the undertaking of an intermediary known and trusted by both parties who will undertake on his own liability to pay the seller the contract price in return for the documents of title and then pass the documents to the buyer in return for the reimbursement. This is a common explanation of the theory behind the documentary letter of credit in which the undertaking of a bank of international repute serves as a "guarantee" to each party that the other will perform his obligations. The independence principle, also referred to as the "autonomy principle", is at the core of letter of credit or bank guarantee law. This principle provides that the letter of credit or bank guarantee is independent of the underlying contractual commitment - that is, the transaction that the credit is intented to secure - between the applicant and the beneficiary ; the credit is also independent of the relationship between the bank and its customer, the applicant. The most important exception to the independence principle is the doctrine of fraud in the transaction. A strict interpretation of the rule that the guarantee is independent of the underlying transaction would lead to the conclusion that neither fraud nor manifest abuse of rights by the beneficiary would constitute an objection to payment. There is one major problem related to "Independent guarantees", namely abusive or unfair callings. The beneficiary may make an unfair calling under the guarantee. The countermeasure of beneficiary's unfair calling divided three cases. First, advance countermeasure namely by contract. In other words, when the formation of the contract, the parties must insert the Force Majeure Clause, Arbitration Clause to Contract, and clear statement to the condition for demand calling. Second, post countermeasure namely by court. Many countries, including the United States, authorize the courts to grant an order enjoining the issuer from paying or enjoining the beneficiary from receiving payment under the guaranty letter. Third, Export Insurance. For example, the Export Credit Guarantees Department is prepared, subject to certain conditions, to cover the risk of unfair calling. Of course, KEIC in Korea is cover the risk of the all things for guarantees. On international projects, contractor performance is usually guaranteed by either a standby letters of credit or Independent guarantee. These instruments will be care the parties.

• 무역상무연구
• /
• 제46권
• /
• pp.133-158
• /
• 2010

Independent guarantee is a creation of the need from the both sides, i.e. the applicant (principal debtor) and the beneficiary (creditor). The former used to have to deposit cash in favor of the beneficiary in case of his default, which laid a burden on his liquidity while the latter still wanted to have the equivalent to cash. Independent guarantee satisfied the both parties by freeing the applicant of a deposit and maintaining the beneficiary's right at the same time. The fact that independent guarantee has three payment mechanisms is not widely known to the public. They are (i) payment on first demand, (ii) payment upon submission of third-party documents, (iii) payment upon submission of an arbitral or court decision. From the applicant's point of view, the order in his favor is (iii), followed by (ii) and (i). As there shouldn't be a case where one party is at a disadvantage against the other, useful insight is being sought for the benefit of the applicant. First, the applicant can offer his intention to provide a payment mechanism (ii) or (iii) rather than (i) if he must deliver it. Second, if the beneficiary still wants to have (i) and the applicant is in a position not to reject it, the latter should thoroughly check any provisions that may work against him later. Third, the applicant could use counterbalancing provisions in underlying contract to cope with protective clauses in the guarantees. Forth, the applicant should review the beneficiary's sincerity to prevent unfair calling risks. The applicant may use an ECA(Export Credit Agency) in his country to which he can transfer not only unfair calling risks, but also political risks. On the other hand, a bank needs to keep the following advice in mind. The foremost important thing for the bank not to forget is that it provides a guarantee as a service provider, not as a responsible party for the feasibility of the project, etc. Credit risk of the applicant should require the greatest attention when issuing a guarantee: the bank should look into the possibility that it can procure immediate reimbursement from its customers after payment to the beneficiary. Second, the applicant's ability to complete the project should be reviewed by checking its track records, techniques and reputation, etc. Third, the bank may also use an ECA to cover the beneficiary's unfair calling risks as well as political risks. In the case of Korea, as Korea Export Insurance Corporation(KEIC) can cover all the risks mentioned above, the bank could use its service called 'Export Bond Insurance.' What's better for the bank is that ECA cover can enhance the bank's asset quality by putting it zero on its risk weighted asset.

• 무역상무연구
• /
• 제72권
• /
• pp.25-55
• /
• 2016

The Buyer shall demand to the Builder the repayment of the pre-delivery instalments paid in case of the Builder's default under a ship-building contract. The Buyer require a refund guarantee issued by a financial institution for a security for the repayment of the pre-delivery instalments paid. As the title of a refund guarantee, in practice, is various, we should look into the contents or the expressions in a guarantee to decide whether a guarantee is a refund guarantee. A refund guarantee, a sort of independent bank guarantee, has characteristic of abstractness, and is independent from the ship-building contract. A refund guarantee is available against the beneficiary's first written demand and signed statement certifying that the Builder failed to make the refund in accordance with the ship-building contract. The guaranteed amount of a refund guarantee will be automatically increased in accordance with the Builder's receipt of the respective instalment, which is not in the other advance payment guarantee. These characteristics of a refund guarantee are derived from the expressions in a refund guarantee rather than inherent therein. This illustrates that careful attention is required to the contents and expressions of the main clauses in a refund guarantee.

• 무역상무연구
• /
• 제39권
• /
• pp.87-103
• /
• 2008

Two kinds of security devices such as independent guarantees and standby letters of credit have been widely used in the international transactions. These devices design to protect one of the parties from a breach by its counter-party. Main uses of these guarantees and standby letters of credit are as follows : bid guarantee, performance guarantee, advance payment guarantee, payment guarantee, retention guarantee, etc. The standby letters of credit were first invented in the U.S.A. and have been widely used in the international and domestic contracts in the U.S.A. But the practical use of these credits is very unsatisfactory in Korea. The purpose of this study is to serve the increase of practical use of the standby letters of credit in Korea through the comparison study on the practical use of the credits between Korea and the U.S.A. Both devices are very similar in function, but they are very different in forms. The one has the form of letter of credits but the other has the form of guarantee. The letter of credit has the stability of governing rule, the legal certainty, and the preference in the field of the trade community comparing to the guarantee. I recommend to use standby letter of credit instead of bank guarantee in international transactions because of the merits of the credit aforesaid.

• 한국중재학회지:중재연구
• /
• 제34권2호
• /
• pp.45-64
• /
• 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.

• 한국산업정보학회논문지
• /
• 제6권2호
• /
• pp.54-62
• /
• 2001

본 논문에서는 웹 상에서 멀티미디어를 기반으로 한 문제은행 시스템을 제안하였다. 제안된 문제 은행 시스템은 객체-관계(Object-Relation)형 모델로 데이터베이스를 설계하고, 웹 환경에서 다수 클라이언트에 대한 무결성을 위해 독립적 실행이 되도록 Java 언어로 응용프로그램을 구현하였다. 문제 엔티티들은 객체로 정의하고, 이들간의 관계를 사용자 정의유형과 타입으로 설계 구현하였으며, DBMS의 스키마 객체와 JAVA Class를 매핑하여 DBMS와 어플리케이션 서버간에 체계화된 동작으로 객체를 전달할 수 있도록 하였다.

• 무역상무연구
• /
• 제69권
• /
• pp.261-301
• /
• 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.

• 플랜트 저널
• /
• 제11권1호
• /
• pp.30-38
• /
• 2015

본 연구는 최근 도입된 단기사채를 통해 한국수출입은행의 대외채무보증과 연계하여 자산유동화 구조에 접목한 자산담보부 단기사채의 금리를 추정하고 해외 투자개발형 민자발전사업의 수주 확대를 위한 프로젝트파이낸스의 한 방안으로 이용할 수 있는지에 대한 것이다. 회사채 신용등급 AA-부터 BBB+까지 건설사 자산담보부 단기사채와 비교한 결과, 자산 유동화 구조와 접목한 한국수출입은행의 대외채무보증부 자산담보부 단기사채는 금리 경쟁력이 있고, 프로젝트의 자기자본수익률이 개선됨을 확인할 수 있었다. 특히, 본 금융구조는 회사채 등급이 낮은 시공사에 적용할수록 더 높은 자기자본수익률 확보가 가능함을 알 수 있었다. 이를 통해, 경쟁력 있는 자산담보부 단기사채 금융조건은 수요 창출 및 수익성 확보는 물론 우리기업의 해외 투자개발형 민자발전사업 수주확대에 기여할 것으로 기대된다.