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I NTERNAT I ONAL COMMERC I AL LAW
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is “
The beneficiary wishes to be secured against the risk of the
principal’s not fulfilling his obligations towards the beneficiary
in respect of the underlying transaction for which the demand
guarantee is given. The guarantee accomplishes this by providing the
beneficiary with quick access to a sum of money if these obligations
are not fulfilled.”
In Article 2(a) the demand guarantee is defined
as “
a written demand for payment and such other document(s) (for
example, a certificate by an architect or engineer, a judgment or an
arbitral award.
” The reference to “
a judgment or an arbitral award
”
has been criticized as there are new procedures for the settlement
of disputes as to international construction contracts which can be
referred to, such as “expert determination” or ”adjudication” where
FIDIC conditions for international construction contracts provide
for the initial settlement of disputes by a “Dispute Adjudication
Board”.
By simplifying the definitions part, URDG 758 provides a solution
to the problem mentioned above. In Article 2 of URDG 758,
the beneficiary is defined simply as “the party in whose favor a
guarantee is issued”. URDG 758 also defines “the document” as
an
“assigned or unsigned record of information, in paper or in
electronic form that is capable of being reproduced in tangible form
by the person to whom it is presented. In these rules, a document
includes a demand and a supporting statement.”
There is no
reference to
a judgment or arbitral award in URDG 758. Article
15 (Requirements for demand) of URDG 758 permits judgment,
arbitral award or Dispute Adjudication Board resolution or other
documents in demanding payments as sub-paragraph (a) states that
“
a demand under the guarantee shall be supported by such other
documents as the guarantee specifies.
”
2. Article 4 URDG 458 states that “
the Beneficiary’s right to make a
demand under a Guarantee is not assignable unless expressly stated
in the Guarantee or in an amendment thereto. This article shall not
however affect the Beneficiary’s right to assign any proceeds to
which he may be, or may become, entitled under the Guarantee.
”
This is an important stipulation if contractors agree to provide for
issuance of an on-demand guarantee since a contractor is doing so
in light of the particular identity of the owner or the beneficiary.