- UN Convention on Independent Guarantees and Stand-by Letters of Credit 2007
- CHAPTER I. SCOPE OF APPLICATION
- CHAPTER II. INTERPRETATION
- CHAPTER III. FORM AND CONTENT OF UNDERTAKING
- CHAPTER IV. RIGHTS, OBLIGATIONS AND DEFENCES
- CHAPTER V. PROVISIONAL COURT MEASURESCHAPTER V. PROVISIONAL COURT MEASURES
- CHAPTER VI. CONFLICT OF LAWS
- CHAPTER VII. FINAL CLAUSES
- All Pages
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United Nations Convention on Independent Guarantees and Stand-by Letters of Credit
CHAPTER I. SCOPE OF APPLICATION
Scope of application
1. This Convention applies to an international undertaking referred to in article 2:
(a) If the place of business of the guarantor/issuer at which the undertaking is issued is in a Contracting State, or
(b) If the rules of private international law lead to the application of the law of a Contracting State, unless the undertaking excludes the application of the Convention.
2. This Convention applies also to an international letter of credit not falling within article 2 if it expressly states that it is subject to this Convention.
3. The provisions of articles 21 and 22 apply to international undertakings referred to in article 2 independently of paragraph 1 of this article.
1. For the purposes of this Convention, an undertaking is an independent commitment, known in international practice as an independent guarantee or as a stand-by letter of credit, given by a bank or other institution or persons ("guarantor/issuer") to pay to the beneficiary a certain or determinable amount upon simple demand or upon demand accompanied by other documents, in conformity with the terms and any documentary conditions of the undertaking, indicating, or from which it is to be inferred, that payment is due because of a default in the performance of an obligation, or because of another contingency, or for money borrowed or advanced, or on account of any mature indebtedness undertaken by the principal/applicant or another person.
2. The undertaking may be given:
(a) At the request or on the instruction of the customer ("principal/applicant") of the guarantor/issuer;
(b) On the instruction of another bank, institution or person
("instructing party") that acts at the request of the customer ("principal/applicant") of that instructing party; or
(c) On behalf of the guarantor/issuer itself.
3. Payment may be stipulated in the undertaking to be made in any form, including:
(a) Payment in a specified currency or unit of account;
(b) Acceptance of a bill of exchange (draft);
(c) Payment on a deferred basis;
(d) Supply of a specified item of value.
4. The undertaking may stipulate that the guarantor/issuer itself is the beneficiary when acting in favour of another person.
Independence of undertaking
For the purposes of this Convention, an undertaking is independent where the guarantor/issuer's obligation to the beneficiary is not:
(a) Dependent upon the existence or validity of any underlying transaction, or upon any other undertaking (including stand-by letters of credit or independent guarantees to which confirmations or counter-guarantees relate); or
(b) Subject to any term or condition not appearing in the undertaking, or to any future, uncertain act or event except presentation of documents or another such act or event within a guarantor/issuer's sphere of operations.
Internationality of undertaking
1. An undertaking is international if the places of business, as specified in the undertaking, of any two of the following persons are in different States: guarantor/issuer, beneficiary, principal/applicant, instructing party, confirmer.
2. For the purposes of the preceding paragraph:
(a) If the undertaking lists more than one place of business for a given person, the relevant place of business is that which has the closest relationship to the undertaking;
(b) If the undertaking does not specify a place of business for a given person but specifies its habitual residence, that residence is relevant for determining the international character of the undertaking.