ICC Digital Library Forum

ISP98 recognize that any person whether or not a "bank" can issue an independent undertaking subject to the ISP. If a corporate issues a guarantee on its own behalf and not on behalf of any other party and if the beneficiary accepts the risk on the corporate issuer, would there be possibility that an applicable law would not recongnize such undertaking just because it is subject to ISP 98 and does not make it enforceable in case there is a dispute?

The undertaking is an independent, documentary and payable on demand.

The applicable law here is English Law and Courts of England to settle any dispute arising out of or in connection with the standby. The issuer and the beneficiary are not incorporated in England but they might have branches or subsidiaries in England.


regards
Abdulkader
[edited 4/9/2007 6:34:21 AM]

Abdulkader,

I am led to believe that under English law an entity cannot guarantee its own obligations. If true, I cannot see the rules, if any, to which the undertaking was subject would have any relevance, except possibly where issuing bank and confirming bank were the same. However, I cannot quote any law on the subject and can only suggest the relevant party seeks legal advice on the question.

Regards, Jeremy
[edited 4/9/2007 10:39:36 AM]

Jeremy,

Thanks very much.

If in the below case the corporate, which is neither a bank nor a financial institution, has issued the guarantee in favour of a beneficiary, who is willing to accept the risk on the issuer, to secure a facility (such as supplies of goods, services or performance) granted to another entity and the undertaken is made subject to ISP 98, would it be acceptable? The applicable Law is English Law.

Appreciate your feedback.

Best regards
Abdulkader

Abdulkader,

The fact of a ‘non-bank’ issuing an on-demand guarantee / standby is, I believe, not a problem in itself under English law. The POSSIBLE problem here is that you say the ‘corporate’ is issuing the instrument on its OWN behalf, as opposed to -say- a subsidiary.

Regards, Jeremy

Jeremy,

Thanks for your valuable in put.

regards
Abdulkader
[edited 4/10/2007 8:10:27 PM]