Back To Back Bank Guarantee Template for Switzerland

Back To Back Bank Guarantee agreements are essential financial instruments used in international trade and complex commercial transactions where a local bank needs support from another financial institution to issue a guarantee. This document is particularly relevant when the beneficiary requires a guarantee from a specific bank (usually in their jurisdiction), but that bank seeks backing from another bank that has a relationship with the principal/applicant. The agreement, governed by Swiss law, comprehensively addresses the rights, obligations, and procedures between the banks, including payment mechanisms, documentation requirements, and risk allocation. It incorporates relevant Swiss banking regulations, including FINMA requirements and provisions of the Swiss Code of Obligations, while often also considering international banking practices such as the ICC Uniform Rules for Demand Guarantees (URDG 758).

1. Parties: Identification of all parties involved: Principal Bank (Issuing Bank), Counter-Guarantor Bank, and the Principal/Applicant

2. Background: Context of the transaction, including the underlying commercial relationship and purpose of the guarantee

3. Definitions: Key terms used throughout the agreement, including technical banking and guarantee-specific terminology

4. Structure of the Back-to-Back Guarantee: Detailed explanation of how the back-to-back guarantee mechanism works between the banks

5. Terms of the Counter-Guarantee: Specific conditions, amount, validity period, and trigger events for the counter-guarantee

6. Obligations of the Principal Bank: Duties and responsibilities of the bank issuing the primary guarantee

7. Obligations of the Counter-Guarantor Bank: Duties and responsibilities of the bank providing the counter-guarantee

8. Payment Mechanisms: Procedures and conditions for payment under both guarantees, including timing and documentation requirements

9. Representations and Warranties: Standard declarations by all parties regarding their capacity and authority

10. Fees and Costs: Details of all banking charges, commission, and other costs associated with both guarantees

11. Communications: Protocols for notices and communications between parties, including acceptable methods and timing

12. Governing Law and Jurisdiction: Specification of Swiss law as governing law and jurisdiction for dispute resolution

13. Term and Termination: Duration of the agreement and circumstances under which it can be terminated