Demanding Payment under Bank Guarantee: Trends in Russian and International Judicial Practice
Abstract
Demand of payment and the payment under bank guarantees is an integral part of legal relations related to securing obligations in Russia and under international practice. It is emphasized that the call on payment occurs very seldom, but the possibility to obtain payment has an essential impact on security function. The analysis of judicial practice as to securing obligations in Russia and abroad shows different trends and represents a variety of elements determining the possibility of payment. The possibility of payment is determined by the actions of beneficiary who should prepare the documents properly for the payment. The payer on its behalf analyzes their content and studies the balance the secured and principal obligation. This is one of the key questions determining the performance of payment under bank guarantee. On the basis of Russian judicial practice, the author concluded that two opposite trends are emerging. In private law obligations, bank guarantees get more independent from secured obligation. Some courts even consider that bank guarantees secure a certain type of principal's obligation, in particular customs payments for a certain period independent of any specific agreement. In private law, judicial practice is opposite, i.e. judges require a strict correlation between guarantee obligations and secured legal arrangement. In any case, the possibility to pay is determined by a correct reference to the secured obligation. Afterwards, the paper examines relevant to payments elements such as form of demand, reasons to default etc. The circumstances affecting payments include: legal status of subject claiming the demand and the authorities of the party. The article examines the cases when during the guarantees the status changes and the authorities of the party are determined erroneously. Besides, the performance of payment depends on the documents confirming violation of the obligation by the debtor. The problems examined in the paper include the issues of the ban on payment etc.
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