The Injunction to Pay under a Bank Guarantee as a Procedural Means of Interference in Guarantee Legal Relations

Abstract

The paper analyzes the balance between the procedural institution of acceptance of interim measures by the courts and the material institution of ensuring the fulfillment of obligations by issuing independent (bank) guarantees. The author raises the issue of the intrusion of interim measures into the independent nature of the guarantee relationship and justifies the approach according to which such interim measures may be permissible if there are signs of abuse of the right by unscrupulous beneficiaries. The paper analyzes the practice of both arbitrazh courts and courts of general jurisdiction and the approaches of courts to the adoption of interim measures prohibiting banks from making payments under a bank guarantee. The author also touches upon the issues of the standard of proof when courts apply interim measures in guarantee relations. In conclusion, it is substantiated that alternative methods of restoring the rights of the principal or guarantor in the form of collecting unjustified enrichment from an unscrupulous beneficiary may not be effective enough.