Bank Guarantees in China
When Chinese enterprises ("the contractor" or
"contractors") are providing engineering services such as
construction and shipbuilding ("the project" or
"projects") to foreign project employers ("the
employer" or "employers"), it is frequently the case
that the employer would demand the contractor to apply to certain
banks for the issuance of a bank guarantee which is independent
from the underlying contracting contract, irrevocable and on-demand
("foreign-related independent guarantees" or
"guarantees").
Due to their peculiar competitiveness in the field of
engineering (including but not limited to reasonable price,
convenient financing etc.), Chinese contractors have been taking a
rising share in the worldwide contracting market. They have
contracted projects worth larger and larger amounts of money, and
technologies involved therein are also more and more complex. Yet
such a trend has nevertheless brought certain problems. For
instance,
