A Study On The Bank Risks Of Refund Guarantee In Shipbuilding

Refund Guarantee in shipbuilding plays a vital role in balancing the risks of the two parties under Shipbuilding Contract and ensuring the smooth process of contract,which is considered as essential document in shipbuilding project and stipulated as one of precedent conditions making the Contract effective.However,the awareness of Refund Guarantee is lacked for the Shipyard and the domestic Bank guaranteed and there is a big difference between Chinese law and English law where Refund Guarantee is applied,which confused Shipyards and Banks who have no accurate knowledge of international business "rules of the game",for whom risks arising for Refund Guarantee is not sufficiently predictable,so recently our domestic Bank often have been taken to the British Court or Tribunal.Therefore,it is strongly theoretical and practical significant to study systematically on the Bank risks of Refund Guarantee in Shipbuilding.This paper combines international conventions and traditions,the legislative and latest judicial precedent and the latest trend of judicial explanation in China to analyze and discuss the risks of bank in respect of the nature affirmed,alteration of contract,and improper claimant of Refund Guarantee.This paper aims to provide some reference and advice of risk prevention for Bank from issuing to the end of effectiveness of Refund Guarantee.This paper consists of five parts:The first part is an overview of Refund Guarantee in Shipbuilding.The paper summarizes the legal relationship among parties and the two forms and effectiveness of Refund Guarantee and is noted that accessory Refund Guarantee cannot meet the financing needs of Shipbuilding market and independence Refund Guarantee became indispensable product in international shipping trade.In addition,make brief analysis and the classification based on risk factors of Bank risks.The second part is the Bank risks caused by the difference in identifying the nature of Refund Guarantee.Because of different standards of the nature of Refund Guarantee in kinds of national laws and lacking of uniform standards identified,based on the introduction of types of guarantees in Chinese and English law,this paper discusses Chinese and English legislation,jurisprudence and contract interpretation identified the nature of the independent Guarantee to illustrate the nature of the bond should be affirmed by comprehensive interpretation combining with the entire guarantee terms and commercial purposes,common sense.On that basis,it is concluded that the standards of identification and matters needing attention in independent guarantee.Finally,make introductions of Bank risks and risk prevention arising for strict payment of demand guarantee.The third part is the risks of Bank caused by alteration of Shipbuilding Contracts.Compared with different rules in alteration of contract in Chinese and English law,the general principles of English law against alteration of contract is described.On this basis the Bank risk arising due to alteration of contract is pointed out.The consequences of alteration of contract are cleared by Bank to take defenses against the owner's claims actively.The fourth part is bank risks caused by claimant under Refund Guarantee.Compared with standards of improper claims affirmed in Chinese and English law,the English identification standards of improper claims is the most stringent.The bank risk due to the owner's improper claims and expression forms are researched.By the latest British judicial precedent,the legal consequences and the nature of backdating contracts is illustrated.The fifth part is to propose specific preventive measures respectively to reduce Bank risk on the basis of Bank risk of Refund Guarantee as mentioned earlier,breaking the financing deadlock of the shipbuilding industry.