DAY ONE

INTRODUCTION: THE ROLE OF GUARANTEES IN INTERNATIONAL TRADE

• The nature of risk in international trade
• Payment and performance obligations
• The role of guarantees in risk allocation

WORKSHOP 1: THE NATURE OF THE UNDERTAKING

Delegates will be presented with various documents for analysis regarding the nature of the obligations created under them.

THE DEVELOPMENT OF GUARANTEES

• Guarantees proper
• Contracts of surety
• Indemnities
• Corporate guarantees and letters of comfort

LEGAL ANALYSIS AND TERMINOLOGY (1)

• Primary and secondary obligations
• Formal requirements
• Consideration and cause
• Subrogation
• The rule in Holme vs. Brunskill

Case Study: Mercers vs. New Hampshire

WORKSHOP 2: PRIMARY AND SECONDARY OBLIGATIONS

Delegates consider the implications of the decisions in Associated Japanese Bank vs. Credit du Nord, Gold Coast Limited vs.Caja De Ahorros Del Mediterraneo and Marubeni Hong Kong and South China Ltd vs. Government of Mongolia.

LEGAL ANALYSIS AND TERMINOLOGY (2)

Bankers autonomous undertakings

• Autonomy and conditionality
• Irrevocability
• Indirect guarantees and counter-guarantees
• Mandate and the basis of the guarantor’s obligation
• Common and civil law comparisons
• Consideration and cause in tripartite relationships
• The origin of ‘bonds’

DAY TWO

CASE STUDY: INTERNATIONAL CONSTRUCTION CONTRACTS

• Bid and tender bonds
• Advance payment guarantees
• Retention money bonds
• Performance bonds
• Maintenance and warranty bonds

BANK GUARANTEES IN THE MIDDLE EAST

• Perceived problem areas
• Applicable law
• Statutory regulation
• Expiry dates
• ‘Pay regardless’ clauses

THE UNIFORM RULES FOR DEMAND GUARANTEES

• Scope and application
• Relationships and terminology
• Fundamental principles
• Irrevocability and effectiveness
• Nature of demand required
• Treatment of demand
• Extend or pay demands
• Expiry of guarantee
• Governing law and jurisdiction

STANDBY LETTERS OF CREDIT

• The origins, nature and use of standby letters of credit
• Comparison of standby and non-standby letters of credit
• Comparison of standby letters of credit and demand guarantees
• Standby letters of credit as payment mechanisms

Case Study: Development of Standby LCs in Oil Tradel Standby letters of credit as counter-guarantees

CASE STUDIES: NATURE OF STANDBYS : WICHITA EAGLE & BARCLAYS VS. MNB

WORKSHOP 3: ASSESSING COUNTER-GUARANTEE RISK

Delegates investigate the risk posed to the issuer of a demand guarantee by the terms of the standby LC offered as a counter-guarantee.

DAY THREE

THE SYNDICATION OF RISK IN LARGE GUARANTEES

• The nature of syndicated guarantees facilities
• When they are used
• Comparison of guarantees issued by a syndicate and an issuing bank
• Relationship between syndicate banks, issuing banks and the obligor

Guest speaker: Michael Kenny, Partner of Watson, Farley & Williams

THE INTERNATIONAL STANDBY PRACTICES (ISP98)

• Scope and application
• Relationships and terminology
• Fundamental principles
• Irrevocability and effectiveness
• Nature of document(s) required
• Treatment of document(s)
• Extend or pay demands
• Expiry
• Governing Law and Jurisdiction

STANDBY LCS UNDER ISP98 COMPARED TO UCP600

• Amendments

1. Normal SBLCs

2. Automatically amendable SBLCs

• Documentation

1. Demand required

2. Documentary compliance

• Consistency of documents
• All American Semiconductor vs. Wells Fargo Minn
• Time Limits
• Transfer

1. Transferability

• General rules
• Insolvency: FDIC vs. Bank of Boulder
• Assignment of proceeds
• Expiry

STANDBY LCS: POTENTIAL RISKS

• Financial

1. Revolving SBLCs: Nissho Iwai Europe vs. Korea First Bank (2002)

• Legal

1. Foreign attachment orders: Sabolyk vs. Morgan Guaranty Trust Co (1984)

2. Varying definitions of fraud in foreign jurisdictions

• Customer relations

1. Comparison of banks’ position under ISP98 & URDG

DAY FOUR

COURT INTERVENTION: COMMON LAW JURISDICTIONS

• Autonomy and the fraud exception
• The letter of credit analogy
• The standard of proof of fraud for an injunction
• The ‘balance of convenience’ test

COURT INTERVENTION: CIVIL LAW JURISDICTIONS

• Absence or illegality of cause
• Abuse of right and manifestly abusive callingCase Studies: The Russian Steel Case and Olex Focas
• Fraudulent and abusive calling

CASE STUDIES: PREVENTING CALLS ON THE GUARANTEE OR STANDBY

Considering the Themehelp, Bristol Meci, Czarnikow & TTI vs. Hutchinson cases.

FRAUD AND INTERNATIONAL BANK GUARANTEES

• Fraudulently issued standby credits
• Fraud in the transactionCase Studies: AJB v CDN
• Post-Iranian Revolution CasesCase Study: Actions against the proceeds of the guarantee
• Cargill v Bandladesh Sugar

APPLICABLE LAW IN INDIRECT GUARANTEES

• Conflict of laws in international trade transactions
• The EC Convention on the Law Applicable to Contractual Obligations
• Issuers Law – an unsafe assumption
• Proposed EU Regulation (‘Rome 1’)

WORKSHOP 4: APPLICABLE LAW IN BANK GUARANTEES

Delegates consider the decision on Marconi v Pan Indonesian Bank regarding the law applicable to bank guarantees in the absence of express party choice.

JURISDICTION UNDER THE BRUSSELS CONVENTION

• Domiciliary jurisdiction
• Special jurisdiction
• Jurisdiction under the EC ‘Brussels’ Regulation No 44/2001

CASE STUDY: JURISDICTION BASED ON PLACE OF PAYMENT

Delegates consider the decision in Chailease v Credit AgricoleIndosuez regarding special jurisdiction based on the place ofpayment.