Bank Counter Guarantee Template for Indonesia

A Bank Counter Guarantee is commonly used in international trade and business transactions where an Indonesian bank provides backing to a foreign bank's guarantee. This document is essential when local companies need to provide guarantees to international parties but prefer or are required to work through their local bank. The counter guarantee creates a chain of security, where the Indonesian bank commits to reimburse the foreign bank if a valid claim is made under the original guarantee. The document must comply with Indonesian banking regulations, particularly Bank Indonesia's prudential principles and foreign exchange regulations. It typically includes specific provisions for claim procedures, validity periods, and payment mechanisms, structured to protect all parties' interests while facilitating international business transactions.

1. Parties: Identifies all parties to the counter guarantee: the issuing bank, the principal (applicant), and details of the original guarantee beneficiary

2. Background: Explains the context of the counter guarantee, including reference to the underlying transaction and original guarantee

3. Definitions: Defines key terms used throughout the document, including technical banking terms and guarantee-specific terminology

4. Counter Guarantee Amount: Specifies the maximum amount of the counter guarantee and the currency

5. Scope of Counter Guarantee: Details the specific obligations being guaranteed and the conditions under which the counter guarantee can be called

6. Duration and Validity: Specifies the effective date, expiry date, and any automatic extension conditions

7. Claim Mechanism: Outlines the procedure for making claims under the counter guarantee, including required documentation and timeframes

8. Payment Terms: Details the payment obligations, including timing and method of payment upon receipt of a valid claim

9. Bank's Rights and Obligations: Specifies the rights and obligations of the issuing bank under the counter guarantee

10. Principal's Undertakings: Lists the commitments and obligations of the principal, including indemnification of the bank

11. Fees and Charges: Details all fees, charges, and commissions payable to the bank

12. Governing Law and Jurisdiction: Specifies Indonesian law as the governing law and defines jurisdiction for dispute resolution

13. Execution: Signature blocks and execution formalities