Back To Back Bank Guarantee Template for Saudi Arabia

The Back To Back Bank Guarantee is essential in international trade and large-scale projects where multiple jurisdictions are involved. This document type is particularly relevant when a local Saudi Arabian bank needs to support a guarantee issued by a foreign bank, or vice versa. It ensures compliance with Saudi Arabian banking regulations, SAMA directives, and Sharia principles while facilitating international business transactions. The document includes crucial elements such as guarantee amounts, validity periods, demand procedures, and counter-indemnity provisions. It's commonly used in situations where the beneficiary requires a guarantee from a local bank but the applicant's relationship is with a foreign bank, or when local regulations require a domestic bank's involvement in the guarantee structure.

1. Parties: Identification of all parties: Primary Bank (Guarantor), Second Bank (Counter-Guarantor), and reference to the underlying relationship

2. Background: Context of the guarantee, including reference to the underlying transaction and the primary guarantee

3. Definitions: Key terms used throughout the guarantee, including banking terms and relevant SAMA terminology

4. Guarantee Amount and Currency: Specific amount of the guarantee and currency, including any automatic reduction clauses

5. Scope of Guarantee: Detailed description of the guaranteed obligations and conditions for calling the guarantee

6. Duration and Validity: Term of the guarantee, including effective date, expiry date, and any extension provisions

7. Demand Requirements: Procedures and conditions for making a valid demand under the guarantee

8. Payment Terms: Timeline and process for payment upon valid demand, including Sharia-compliant payment mechanisms

9. Counter-Indemnity: Terms of counter-indemnity between the banks

10. Governing Law and Jurisdiction: Confirmation of Saudi Arabian law and jurisdiction, including reference to Sharia principles

11. Notices: Communication procedures between parties

12. Execution: Signature blocks and execution requirements