Independent Guarantee Of The International Trade In Banking System

In order to control international trade risk effectively, a new form of bank guarantee which is independent of underlying transactions has come into being. Upon issuance of Bank Independent Bond or Standby Letter of Credit, Bank Independent Guarantee integrate all the functions as guarantee, financing and payment under an uniformed business system, which is based on the traditional undertaking nature and independent principals of documentary credits. As a new kind of guarantee, it differs from the traditional guarantee in nature. Since the 1970s, the system of Bank Independent Guarantee has supported various kinds of transaction and at the same time gained a rapid self-development. Bank Independent Guarantee has been put into application in the international trade because of its independence, efficiency, convenience and protection for the credit or benefit.As a novelty developed in bank practice, Bank Independent Guarantee has set up a complete business system with unique legal natures and legal relations. The basic nature of Bank Independent Guarantee is the independence, which means the payment obligation of the bank under Bank Independent Guarantee is independent from the underlying transaction contract between the applicant and the beneficiary. The documentary nature of the payment conditions can fully displayed the independent nature of Bank Independent Guarantee in bank practice. As the foundation of it, the principal of independence ensures the various functions, the powerful payment guarantee and efficient transaction in the practice.At present, most countries including China have not made formal stipulations about Bank Independent Guarantee. So far, only three international usuages, ICC Uniform Rules for Contract Guarantees, ICC Uniform Rules for Demand Guarantees and Uniform Rules for Contract Bond, and one international convention, United Nations Convention on Independent Guarantees and Standby Letters of Credit, are files that specially regulate such guarantees. So, the legal precedent and the scientific theory or principals in various countries also have diferent opinions in the regard, and many disputes have not yet been solved. Therefore a study of this question is necessary. Though comparative and analytical approach, based on every country's legal parctice and statute law in Bank Independent Guarantee, this article makes a comprehensive and profund study of the legal problems on Bank Independent Guarantee in international trade. This article consists of five parts:Chapterâ… specializes Bank Independent Guarantee's definition, history, origin and use for clarifying its quality and characters. The emphasis is to study the definition of it. Such guarantee includes two basically characters: first, the only condition of the guarantor exercising his obligation of payment is that the documents presented by beneficiary conform to the provision of contract of Bank Independent Guarantee. Second, the guarantor can not invoke demur of obligor in primary contract to resist the obligee.Chapterâ…¡studies classification of Bank Independent Guarantee. According to different principals, it can been divided into several types. Such as according to the conditions of payment exist in international usuage and convention, they are payment of first demand, payment upon submission of third-party documents and payment upon submission of on arbitral or court decision. In addition, Bank Independent Guarantee can be classificated by the use way.Chapterâ…¢introduces the sources of law of Bank Independent Guarantee, including domestic law, international usuage and international convention.Chapter IV studies a principal of fraud exception. This article attempts to examine a number of specific factual situations that constitute fraud Bank Independent Guarantee and their remedies on the basis of comparing and analyzing the concept of fraud of every country. First, the article studies the determination offraud. Then the article introduces three kinds of remedial measures--CourtInjunction, Conservatory Attachment Orders and Marava Injunction.Chapte V presents a brief summary and analysis of China's current legislation and practice of Bank Independent Guarantee. Giving an over view of curtent judicial practice of Bank Independent Guarantee and uncovers disadvantages and potential financial risks in terms of both law theories and financial order. Refering to foreign legal practices, related international conventions and commercial practices, put forward the author's preliminary proposals for perfecting the relevant legislation and practice in our country.