Majid Sarbazian; Seyyed Raza Hashemi
Abstract
Bank guarantees are one of the most effective international instruments used incommercial contracts. Without bank guarantees, it would not be possible to fulfilobligations of the parties or the parties would encounter potential risks. Bankguarantees provide the beneficiary with a certain and immediate ...
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Bank guarantees are one of the most effective international instruments used incommercial contracts. Without bank guarantees, it would not be possible to fulfilobligations of the parties or the parties would encounter potential risks. Bankguarantees provide the beneficiary with a certain and immediate payment of awealthy sponsor in his country. The only exception to the principle of independenceis the issue of fraud, which has universally been recognised. This exception couldprevent claim and payment to beneficiaries. The question addressed in this articleis: What are the international rules on the issue of fraud in bank guarantees and whatmeasures have been taken by the UN Convention on Independent Guarantees andCredit Guarantees ? International Chamber of Commerce has been silent on thisissue or at least has not dealt with it expressly . However, the aforementionedConvention is the only document that contains provisions regarding fraud, eventhough it does not provide an exhaustive list and exact details. It neverthelessprovides a useful guidance for courts.
