Study On Occurrence Of Applicant’ Legal Risk In Independent Guarantee Business

As an overthrow to traditional guarantee system, Independent Guarantee, its basic features characterized by independence, unconditional and guarantors’ demand guarantee. At present, legal application of Independent Guarantee is limited in international trade and commerce in China, all the traditional domestic warranty business is dependent guarantee. With respect to the legal application of Independent Guarantee, the definition adopts from Uniform Rules for Demand Guarantees because there is no unified applicable substantive law regulated the Independent Guarantee right now. Domestic courts hold the Independent Guarantee Business combining the most closely related principle and the principle of Parties’ Autonomy referring to the regulations in URDG458.In generally, the majority of domestic applicant are enterprises or individuals, they acquaint with the domestic law rather than the related law abroad, especially when they confront with the legal application of different countries. Therefore, as for applicant, grasping the law in different countries is the basic element of preventing legal risks. Meanwhile, the guarantor shall negotiate the jurisdiction and the certain international rules, confirm the explicit right and obligation with the applicant in case of avoiding the ambiguity when ensure the legal application. Moreover, the applicant shall advice the guarantor to protocol the provisions rigorously and supervise guarantors investigating the provisions. At the same time, investigating creditworthiness of beneficiary and ascertain the way of claim indemnity are necessary to avoid the fraud. Once the Independent Guarantee is issued, the judicial remedy is the most effective way to restrict the beneficiary’s fraud.