Bank Counter Guarantee for United Arab Emirates

Bank Counter Guarantee Template for United Arab Emirates

A Bank Counter Guarantee is a financial instrument issued under UAE law where one bank (counter-guarantor) provides a guarantee to another bank (original guarantor) to cover the risk of a guarantee issued by the latter. This document, governed by UAE Federal Laws and Central Bank regulations, provides security to the original guarantor bank against any claims made under the primary guarantee. It includes specific terms regarding payment conditions, validity period, and claim procedures, while ensuring compliance with both UAE banking regulations and international banking practices.

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What is a Bank Counter Guarantee?

The Bank Counter Guarantee is a crucial financial instrument in UAE banking practice, typically used when a bank issues a guarantee on behalf of its client but requires backing from another bank. This document type is particularly relevant in international trade and large commercial projects where multiple banking institutions are involved across different jurisdictions. A Bank Counter Guarantee provides assurance to the original guarantor bank that it will be reimbursed if called upon to pay under its guarantee. The document must comply with UAE Federal Law No. 18 of 1993 (Commercial Code) and UAE Central Bank regulations, while often incorporating international banking practices. It includes essential details such as the guarantee amount, validity period, payment terms, and specific conditions for claims. This instrument is commonly used in construction projects, international tenders, and large commercial transactions where enhanced security and risk mitigation are required.

What sections should be included in a Bank Counter Guarantee?

1. Bank Details and Reference: Letterhead and reference number of the issuing bank

2. Date: Date of issuance of the counter guarantee

3. Beneficiary Details: Full name and address of the bank receiving the counter guarantee

4. Counter Guarantee Number: Unique identifier for the counter guarantee

5. Reference to Original Guarantee: Details of the primary guarantee being counter-guaranteed, including its reference number and parties

6. Amount and Currency: The maximum amount and currency of the counter guarantee

7. Purpose of Guarantee: Description of the underlying transaction or reason for the guarantee

8. Terms of Payment: Conditions under which the counter guarantee can be called and payment procedures

9. Validity Period: Effective date and expiry date of the counter guarantee

10. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant jurisdiction

11. Authentication: Official bank signatures, stamps, and SWIFT codes where applicable

What sections are optional to include in a Bank Counter Guarantee?

1. Language Clause: Required when the counter guarantee is issued in multiple languages, specifying which version prevails

2. Reduction Clause: Used when the counter guarantee amount can be reduced over time according to specific conditions

3. Assignment Restrictions: Include when there are specific restrictions on the assignment or transfer of the counter guarantee

4. Force Majeure Provisions: Added for international counter guarantees to address unforeseen circumstances

5. Electronic Presentation Clause: Required when allowing electronic presentation of documents

6. Claim Period Extension: Used when specific post-expiry claim periods are allowed

What schedules should be included in a Bank Counter Guarantee?

1. Copy of Original Guarantee: Attached copy of the primary guarantee being counter-guaranteed

2. Payment Instructions: Detailed banking coordinates and procedures for payment

3. Required Claim Documents: List of documents required to be presented with any claim

4. Authority Documents: Proof of authority of bank signatories

5. SWIFT Messages: Copies of relevant SWIFT messages if the counter guarantee is issued via SWIFT

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Genie AI

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

Construction and Infrastructure

International Trade

Oil and Gas

Real Estate Development

Government and Public Sector

Manufacturing

Energy

Telecommunications

Maritime and Shipping

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Trade Finance

Corporate Banking

International Banking

Credit Administration

Operations

Relevant Roles

Chief Financial Officer

Treasury Manager

Trade Finance Manager

Bank Guarantee Officer

Risk Management Officer

Legal Counsel

Corporate Banking Manager

Financial Controller

Credit Risk Manager

Compliance Officer

Project Finance Manager

International Banking Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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