The URDG 758 Compared with ISP98 and UCP600 - Webinar

  • ID: 2193009
  • Webinar
  • 450 Minutes
  • Institute of International Banking Law & Practice
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The Uniform Rules for Demand Guarantees (URDG 758) approved by the International Chamber of Commerce (ICC) entered into force in July 2010. Many banks are requested to take counter guarantees that are subject to URDG 758 and to issue local guarantees subject to the rules. To help specialists gain understanding of URDG 758, this 7.5 hour programme available as a 4-disc DVD set features presentation slides and an objective audio analysis by a lawyer who is intimately familiar with guarantee & standby practice.

Throughout its in-depth look at URDG's treatment of Introductory Issues, Obligations, Examinations, Compliance, Extend & Pay, and Miscellaneous Issues, this programme compares these rules to the International Standby Practices (ISP98) and Uniform Customs and Practice for Documentary Credits (UCP600).

“The URDG 758 Compared with ISP98 and UCP600” confronts questions regarding the URDG 758 rules that should not be overlooked, including:

- The hidden documentary request in URDG 758: Is it a trap for “simple demand guarantees”?

- In what ways does URDG 758 represent a significant improvement compared to URDG 458?

- What are URDG's many advantages over UCP600 for guarantees?

- Does the URDG offer direction in most “extend or pay” situations?

- Is the URDG slanted in favour of the applicant?

- Does the URDG increase the risk of guarantors being precluded?

- Do the “Force Majeure” rules realistically protect beneficiaries?

- What are the possible candidates for exclusion from the rules?

- What is the purpose of requiring a notice without delay that documents have been presented?

- How is URDG useful for standard performance guarantees?

- How are URDG's choice of law and jurisdiction provisions useful?
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Session One: Introductory Issues

-URDG 458
-Drafting History
-Relation to UCP600

B.Application of URDG (URDG Article 1) [ISP98 Rule 1.01 Scope and Application]
-To what undertakings do the rules apply (Article 1(a))?
-Application to Counter Guarantee if Guarantee subjects (Article 1(b))
-Which URDG version (Article 1(d))
-Modification or Exclusion

C.The Undertaking Defined (URDG Article 2) [UCP600 Article 2]
-What is a “Guarantee”? (Article 2 “Demand Guarantee”) [ISP98 Rule 1.01(d)]
--Names: Demand; 1st Demand; Bank; Independent
--Other Names: Bond; Indemnity
--Standby; LC
--No Name
-Definition: Is a commercial LC a “demand guarantee”?
-What is a “Counter Guarantee”?
--Can it back a non-independent obligation?
--Can a “Counter Guarantor” act for its own account?
-Other Definitions in context

D. Parties (URDG Article 2)
-“Counter Guarantor”
-“Instructing Party”
-“Advising Party”

E. Independence of the Undertaking & What it Signifies (URDG Articles 5 & 6) [ISP98 Rule 1.06 & 1.07] [UCP600 Articles 4 & 5]
-Is a “Guarantee” independent “by its nature”?
-Dependent & Independent Undertakings
-Accessory/Suretyship Obligations
-Non-Documentary Conditions (Article 7)
--“Should not” contain Non-Documentary conditions
--Non-conflicting data [See ISP98 Rule 4.03]
-“Presentation Alone” (Article 19(a))

F. Interpretation (URDG Article 3) [UCP600 Article 3]
-Interpretation of what? The rules? The guarantee?
--Different countries
-Term “Guarantee” signifies counter guarantee or amendment; “Beneficiary”
-“Before/After”; exclude date

G. Law & Jurisdiction (URDG Article 34)
-Meaning of the Terms
--As provided
--If not, Guarantor's location
--Counter Guarantee: Similar
--As provided
--If not, Guarantor's location
--Counter Guarantee: Similar

H. Disclaimers & Indictments (URDG Articles 27-31)
-Effectiveness (Article 27) [ISP98 Rule 1.08 & 8.01] [UCP600 Article 34]
-Transmission & Translation (Article 28) [UCP600 Article 35]
-Acts of Another “Party” (Article 29) [UCP600 Article 37]
-No Exemption for “Failure to Act in Good Faith” (Article 30)
-Indemnity: Foreign Laws & Usage (Article 31) [ISP98 Rule 1.08(d)] [UCP600 Article 37(d)]

Session Two: Obligations

A. Issuance (URDG Article 4) [ISP98 Rule 2.03]
-When Issued (Article 4(a))
-Irrevocable (Article 4(b))
-Effective when Issued (Article 4(c))
-Non-Operative Conditions
--Not addressed [ISP Rule 2.03]

B. Obligation to Inform of Non-Issuance (URDG Article 9)
-What is an “Application”? For Counter Guarantee?
-“Without Delay”?

C. Advice (URDG Article 10) [ISP98 rule 2.05] [UCP600 Article 9]
-Obligation: “Satisfied Itself”
--Apparent authenticity and accurate reflection
-Non-Advice (Article 10(d))

D. Amendments (URDG Article 11) [ISP98 Rule 2.06] [UCP600 Article 10]
-Unprepared or Unable to Issue (“Without Delay” Article 11(a))
-The term “Amendment”
-Binding on Whom?
-Complies only with the amendment (Article 11(c))
-Duty (?) to inform of acceptance or rejection (Article 11(d))
-No automatic effectiveness clause (Article 11(f))

E. Obligation (URDG Article 12)
-“Up to the Guarantee Amount”
-Other Obligations?

F. Automatic Reduction or Increase (URDG Article 13)
-When: dates or “event” (?) Article 13 (12)

G. Presentation (URDG Articles 2 & 14) [ISP98 Rule 3] [UCP600 Articles 2 & 6]
-Incomplete? What if it is not? What if it says that it is incomplete? (Article 14(b)) [ISP98 Rules 3.02 & 3.11(i)
-ePresentation (Article 14(c))
--Interpretation of sentence 2 (eUCP)
-Option for ePresentation unless excluded (Article 14(d))
-- “Mode”? Snail mail?
--Correlation with (Article 14(e))
-Identify the Guarantee (Article 14(f)) [ISP98 Rule 3.03]
--Separately presented documents?
--Able to identify?
-Language of Documents (Article 14(g)) [ISP Rule 4.04]

H. Demand Requirements (URDG Article 2)
-Any documents? If a “Demand Guarantee” is a demand necessary if not required?
-Implied Document (Article 15(a))
--How in breach unless to expressly excluded
-Counter Guarantee (Article 15(b)) unless expressly excluded
--“Only against presentation of a simple demand and no other document”
-Pre & Post Dated Demands and other documents (Article 15(d))

I. Alerting the Principal (URDG Article 16)
-Obligation vs. Option [ISP98 Rule 3.10]
-Demand or Extend or Pay Request
-Guarantee & Counter Guarantee
-& Transmit “Copies” of “Complying Demand” (Article 22)
--but not withhold payment for transmission

J. Force Majeure (URDG Article 26)
-Defined Article 26(a)
--30 days
--effect on Guarantee or Counter Guarantee respectively
-Time for Examination
--resumption and impact on Counter Guarantee even if expired
--implied extension where force majeure re: guarantee

Session Three: Examination & Compliance

A. Definitions (URDG Article 2)
-“Complying Demand [which “demand”?]
-“Complying Presentation”
-“Expiry Date”
-“Expiry Event”
-“Supporting Statement”

B. Partial & Multiple (URDG Article 17(a)-(d)) [ISP Rule 3.08]
-“Partial Demands Prohibited”
-“Multiple Demands Prohibited”
-Silent (Article 17(a) & (b))
-Cure (Article 17(d))

C. Amounts (URDG Article 17(e))
-Demand More
-Other Documents

D. Separateness (URDG Article 18) [ISP98 Rule 3.07]
-Non “Instalment”
-Cure [but see Article 17]
-Waiver by Payment
-Repudiation of other presentations? [ISP Rule 3.07(c)]

E. Examination (URDG Article 19)
-Standard: URDG Article 19(a) [UCP600 Article 14(d)]
--that document and others
-“Signed”: URDG Article 2
-“Signature Required”? (article 19(c))
--Not necessarily required [ISP98 Rule 4.20(b)]
--Demand/supplementary statement
-“Extraneous Documents”: Article 19(d)
-“Calculations”: Article 19(e) [ISP Rule 4.11(d)]
-“Legalized”, etc.: Article 19(f) [ISP98 Rule 4.12]
-Authority/Agency: not addressed [ISP98 Rule 4.07 & 4.12]

F. Time for Examination (URDG Article 20(a))
-Five (5) business days (Article 2)
-Subsequent Expiry
-“Completed Later” no examination until “completed”

Session Four: Payment, Extend or Pay, & Miscellaneous Issues

A. Payment (URDG Article 20(b) & (c))
-When and where
-Question: how?

B. Currency (URDG Article 21)
-If unable or illegal to pay in currency of guarantee,
--currency of place of payment notwithstanding exclusive requirements
-Rate of exchange

C. Extend or Pay (URDG Article 23) [ISP98 Rule 3.09]
-“Complying Demand”
--Optional (Article 23(e)) but inform (Article 23(f))
--Alternative: Can suspend for 30 days (Article 23(a))
-What about the demand and Counter Guarantee (Article 23(b))?
-Inform “Without Delay” (Article 23(c))
-Deemed withdrawn (Article 23 (g)) [ISP98 Rule 3.09(b)(iii)]
-No liability? (Article 23(g))
-What if not complying?

D. Non Complying Demand, Waiver, & Notice (URDG Article 24) [ISP98 Rule 5.01] [UCP600
Article 16]
-Reject or Waiver (URDG Article 24(a))
-How much time to give notice?
--”Without delay but not later than...” Close of 5th bank day (Article 24(e))
-Preclusion (Article 24(f))
-Waiver by Applicant/Instructing Party (Article 24(c))
-Disposition of Documents (Article 24(g))

E. Reduction & Termination (URDG Article 25)
-Reduced by Amount (Article 25(a))
--paid, automatic reduction, or partial “release”
--without regard to return (Article 25(b)), expiry, exhausted, “release”
--what is forged?
-No expiry date or “event” (Article 25(c))
--3 years from date of issue of counter guarantee plus 30 days
--what about automatic extension without final date?
--what is an “expiry event”?
-Extension of Non Business Day? (Article 25(d)) [ISP98 Rule 3.13]
-Notice (Article 25(e))
F. Charges (URDG Article 32)
-For Another (Article 32(a)) [ISP98 Rule 8.02]
-Not Collected: Guarantor or Counter Guarantee
-But ISP98 Rule 4.21(a)
-Obligation conditional: Shouldn't but what if they do? (Article 32(c))

G. Transfer (URDG Article 33) [ISP98 Rule 6.01 ff] [UCP600 Article 38]
-Must so state (Article 33(a))
-More than once (Article 33(a))
-Counter Guarantee: not transfer Article 33(a) but what if it says so?
-Guarantor not obliged (Article 33(c))
-If Transferred:
--includes “agreed” amendments
--signed statement by transferor to guarantor re: transfer (Article 33(e))
--who signs (Article 33(f))
+demand supporting statement
+other document
-Assignment (Article 33(g)) [ISP98 rule 6.06 ff] [UCP600 Article 39]
--Regardless of whether transferred
--Guarantor not obligated to pay unless so agreed (Article 33(g)(ii))
-Transfer by Operation of Law [ISP98 Rule 6.11 ff]
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