Study On The Independent Guarantees In International Project Financing

In the international project financing, the fact of the huge amount and the long time limit of contracts, and the differences on varies legal systems, cultures, political and economic backgrounds in distinct countries add more commercial risks to parties. So a prompt and assuredly realizable guaranty is required in order to avoid and relieve the non-performance risk, and ensure the security of the transaction and the successful performance of all contractual duties. A new type of guaranty, named as Independent Guarantees was born for this requirement. It is an irrevocable undertaking issued by the guarantor, upon the instructions of the principal to pay to beneficiary any sum that may be demanded by that beneficiary up to a maximum amount determined in the guarantee, upon presentation of a demand conforming with the terms of the guarantee. Independent Guaranty matches the needs of international project financing more sufficiently than Dependent Guaranty.We began to use demand guarantee in international economic practice in the early 1980s, however, we have no statutes for independent guarantee in our legislative system at present. Since we are not the member country of UNCITRAL CONVENTION, we can not treat this convention as our legislation in independent guarantee area. Unfortunately, the URDG is not widely recognized because it only exists for a comparatively short time. So it is not familiar with by our legislature and judiciary. But beyond any doubt, this kind of guarantee will be more used with our entrance to WTO, so it is more important to study the legal problems of independent guarantees.There are four chapters in this article: Chapter 1 is the introduction of the relation of the international project financing and independent guarantee; Chapter 2 is the analysis of the exertion problem of the independent guarantees on the internationalproject financing; Chapter 3 is the analysis and summarization of the participant's the rights and obligations of the independent guarantees; Chapter 4 is the conclusion of how to construct the system of independent guarantees in our country. In this chapter I indicate the necessity and reality of building this system, and also gave the ideas of how to construct this system and the content of it.