Drafted a bank guarantee for over CNY 15 million for a Chinese counterparty

Our lawyers advised a Russian company on how international rules for bank guarantees (URDG 758) should be applied and were also involved in preparing a draft bank guarantee and in having it negotiated with the Chinese guarantor bank.

The client needed the bank guarantee to secure the obligations of a Chinese supplier to return an advance payment for the non-performance/improper performance of obligations under an agreement for the supply of equipment from China.

An increasing need of Russian companies to purchase goods from China on advance payment conditions entails the risk of monetary funds not being repaid if the counterparties fail to perform or properly perform their obligations. Securing obligations with a bank guarantee that is issued by the Chinese guarantor bank in accordance with URDG 758 constitutes a secure and easy-to-understand instrument which is recognised within the Chinese legal framework. This significantly reduces risks of Russian businesses even when they do not have any special knowledge regarding Chinese law.