Revised publication codifies international bank guarantee law

Available now at www.iccbooks.com

Paris, 1 October 2004 - ICC Publishing's latest publication, the revised "Bank Guarantees in International Trade", examines how the practical applications of bank guarantees have established a pattern of law.

Drawing on case law and legal writing from five European countries --The Netherlands, Germany, France, Belgium, and England -- Roeland F. Bertrams's treatise offers practitioners in international trade law the most complete and up-to-date analysis of banking law in the field.

ICC spoke to Mr Bertrams about the motivation behind the book, as well as the latest developments in banking guarantees and standby letters of credit included in this third edition.

Could you describe your book in a few lines?

Bertrams: It is a comprehensive treatise on independent (first demand) guarantees and standby letters of credit in which I have tried to achieve two objectives in particular. Bank guarantees and standbys is one of those subjects where the law and practice are intricately intertwined with each other. They are a creation of practice in international trade and business, and the law had to be shaped from those grass roots. So, one objective was to describe, analyze and develop the law and, at the same time, to pay close attention to actual practice and to provide insight into "the daily life" of the world of independent (first demand) guarantees and standbys. I find it fascinating to observe how certain areas are still not covered by precise rules of law but only by certain practices, be they good or bad, sometimes clear and fixed and at other times rather imprecise and variable. To some extent, I think, this is going to be a permanent feature.

The second objective was to write a book that could be used in both Continental law and Common Law jurisdictions. Although difficult, this proved to be possible, as a significant degree of uniform law across jurisdictional boundaries has spontaneously emerged. This could only happen because independent (first demand) guarantees and standbys developed autonomously and independently of national law with its traditional concepts, categories and domestic peculiarities. I find it most rewarding that this book is being used in more than 40 countries spread over all continents.

What are the most important developments since the date of the second edition?

Bertrams: As this book is a comprehensive and detailed treatise, it will always need a thorough revision at regular intervals in order to remain reliable and to represent the state of the art. In fact, this third edition was long overdue as the second edition dates from 1996. If one compares the first edition of 1990 with the third edition of 2004 one is bound to notice the vast differences in respect of numerous subjects. I don't think there is one single page that has remained unchanged.

If I have to mention certain important developments of a general nature since the second edition, I can think of three. First, there is the introduction of the 1998 International Standby Practices (ICC publication no. 590) and the entry into force of uniform legislation on independent guarantees in the 15 West African OHADA member states which is directly derived from the 1992 ICC Uniform Rules for Demand Guarantees. Second, there is the increasing use of first demand guarantees in the domestic markets where, outside the United States, its use was largely confined to cross-border transactions, and the growing use of such guarantees as financing instruments which enables contracting parties to allocate the burden of financing transactions in a more efficient way while maintaining the function of security required in such transactions.

The most important development, in my opinion, is the fact that certain countries, mainly in the Middle East and North Africa, by now also recognize that expiry dates are enforceable, where this did not use to be the case. This new development should certainly have an impact on certain banking practices in relation to guarantees in favour of these countries.