September Roundup
September's DCW is live! We have an exciting fresh batch of content that's just launched. Scroll
On 31 March, 2021, the long-awaited International Standard Demand Guarantee Practice (ISDGP) Publication No. 814E, a complement to URDG758 documenting practices in relation to demand guarantees, was approved by the ICC Banking Commission. Among the fundamental issues that ISDGP sought to shed light upon is when a guarantee is deemed to have left the issuer’s control and thus is irrevocably issued.
As URDG758 article 4(a) states: “A guarantee is issued when it leaves the control of the guarantor.” The question then arises as to when a guarantee leaves the control of the guarantor. Going beyond strict physical control of the original guarantee by the issuer, ISDGP seeks to provide examples of practices where the control is a “legal” or a presumed control, often exercised through an intermediary acting on behalf of the issuer, rather than a physical control by the issuer alone. ISDGP Paragraph 70 makes this explicit when it clarifies that “control is not restricted to the physical possession of the guarantee. The guarantor’s transmission of the original, signed guarantee in paper form to its agent, with instructions for transmission to the beneficiary, does not meet the requirement for issue, as the agent acts under the guarantor’s control.” It further specifies that: “[E]xternal legal counsel representing the guarantor and courier companies entrusted with the delivery of the guarantee are generally deemed to be an agent of the guarantor … .”
Sign up to receive occasional DCW emails highlighting content