A guarantee issued by a Chinese entity to secure contractual
obligations or repayment of debt is not an unfamiliar subject for
people in the shipping industry. The uncertainty for a foreign
party with Chinese guarantees, is that as the guarantee is given in
a foreign currency (usually in United States dollars), it may well
be subject to the foreign exchange control regulations in the
People's Republic of China (PRC or
China). This can present problems when it comes to
enforcement. The Chinese guarantor may deny liability on grounds
that the guarantee is invalid if it has not been approved by (or
registered with) China's State Administration of Foreign
Exchange (SAFE), or if the guarantee has not been
issued with proper corporate authorisation, in accordance with the
Chinese guarantor's articles of association, or internal rules.
Although the effectiveness of the guarantee is a matter of Chinese
law, the guarantee contract itself is usually governed by English
law and
