The International Chamber of Commerce (ICC) has published the comprehensive ICC Guide to Uniform Rules for Demand Guarantees (URDG) to serve as a practical tool for users of the rules, which are rapidly gaining recognition as the main international standards for demand guarantee practice.
The extensively updated URDG 758 – which came into force on 1 July 2010 – reflect international practice in the use of demand guarantees and apply to all sectors of trade and industry including construction, banking, project, and trade finance. Clearer, more precise and more comprehensive than the URDG 458 they replaced, the new rules aim to maintain risk control through the high level of certainty and predictability that they foster.
Comprising 35 articles, the new URDG have been updated so as to describe more clearly each stage of the guarantee lifecycle, from drafting a guarantee and counter-guarantee, to making a presentation, examining it, making payment and termination of the undertaking.
The ICC Guide to Uniform Rules for Demand Guarantees is a practical companion to the URDG 758, and was written as a user-friendly, comprehensive resource for anyone wanting to put the rules into practice.
“The Guide is key to understanding how best to use ICC’s Uniform Rules for Demand Guarantees. It explains the fundamental principles of the URDG 758 rules, their scope and the advantages they offer to all parties involved,” said Georges Affaki, Chairman of the URDG drafting group. “It will help users and issuers of demand guarantees and counter-guarantees to make the most of URDG 758,” Affaki added. His co-author, Roy Goode, added: “Each word of the new URDG was chosen after meticulous examination by the Drafting Group in light of comments received from ICC national committees around the world. The Guide is not simply a straightforward analysis of the URDG; it penetrates below the surface to explain the nuances of the rules and their practical significance.”
Divided into five chapters, the Guide gives valuable information on what demand guarantees are and how they should be applied in daily practice. It provides an overview of the URDG 758, their main features, as well as the reasons that led to their adoption. A large part of the publication is dedicated to an article-by-article commentary of the rules, richly illustrated by case studies. Comparative tables offer, at a glance, the similarities and differences between the URDG 758 and the URDG 458, UCP 600, ISP98 and the UNCITRAL Convention on Independent Guarantees.
The publication also offers an engaging account of the approaches used by the ICC experts during the revision process that spanned two-and-a-half years. “The Guide leaves no secret as to the background of each policy choice and drafting decisions that we took when drafting the new rules,” said Affaki.
ICC’s Uniform Rules for Demand Guarantee, which were first published in 1992, apply to all independent guarantees, from those payable on simple written demand, to those requiring the presentation of a judgment or arbitral award.
They have been endorsed by the United Nations Commission on International Trade Law (UNCITRAL), and were adopted by the World Bank and the International Federation of Consulting Engineers in their model guarantee forms. National lawmakers have used them as a model for independent guarantee statutes.