Demand Guarantees Research Articles

The Identity of the Beneficiary or Presenter Calling for Payment under Demand Guarantees: A Purposive Approach

The Identity of the Beneficiary or Presenter Calling for Payment under Demand Guarantees: A Purposive Approach

A comprehensive methodology for optimal planning of remote integrated energy systems

Rational planning for remote integrated energy systems is of great importance for demand guarantee and sustainable development of remote areas. A critical challenge is that comprehensive factors, e.g., technical, economic, environmental, and social, which are inherently intertwined, should be properly evaluated and balanced in terms of social benefits. In addition, the feasibility of each planning scheme can only be verified based on their local electrical conditions by employing multi-energy flow calculations. Thus, this paper develops a comprehensive methodology for the optimal planning of remote integrated energy systems taking into account the uncertainty of renewable energy, where a multi-criteria decision-making procedure is designed, including the candidate set construction, remote integrated energy systems modeling, multi-energy flow calculation of the candidates, index definition and selection, and the optimal scheme determination. The methodology is applied to a case study in Lankao County, China. The optimal scheme, selected by the proposed multi-criteria decision-making procedure from 432 candidates, shows the best comprehensive performance, which is verified by different ranking methods. The optimal scheme can rank in the top 13% of each aspect on average, with economic and environmental aspects ranking in the top 2%. The methodology can help decision-makers find reasonable solutions for energy system planning in remote areas.

Research on an Investment Decision Model of Waste Incineration Power under Demand Guarantee Policies

In order to encourage social capital to sustainably enter waste incineration power generation projects, policy-makers propose demand guarantee policies to ensure the fundamental interests of social capital. Nowadays, demand guarantee policies in China are artificially set based on industry experience and similar biomass power generation projects but lack theoretical support, thus bringing pitfalls to sustainable development. To address this issue, this paper constructs a decision model under the Real Option Approach to obtain investment triggers and guarantee level. Under lower, upper and bidirectional demand guarantee policies, this paper compares three Real Option models considering uncertain factors. The results show that demand guarantee policies usually have an excess guarantee phenomenon that affects long-term interests, and the lower demand guarantee policy can most effectively promote social capital to invest. Policy-makers can choose appropriate policies based on their demands or adjust existing guarantee policies to avoid the excessive guarantees phenomenon and attract social capital to invest in waste incineration.

Incentive contracts with demand guarantee in BOT toll road projects

Demand uncertainty is a significant issue faced by both the government and private firms in build-operate-transfer (BOT) toll road projects. To encourage private firms' participation, the government usually provides them with demand guarantee. This paper investigates and compares the optimal BOT contracts with the minimum demand guarantee (MDG) and the flexible demand guarantee (FDG), respectively, in environments of symmetric and asymmetric information. It is determined that under the MDG with asymmetric information, the private firm's optimal effort decreases with respect to the guarantee level, which indicates that the MDG provides the private firm with a disincentive to exert effort to increase traffic demand. Under the FDG with asymmetric information, the private firm's optimal effort decreases with respect to the guarantee level and threshold coefficient. Through a comparison of the environment with asymmetric information, the optimal toll price, optimal guarantee level and resulting social welfare are higher under the FDG for a small threshold coefficient. Therefore, it is concluded that the government may choose the FDG instead of the MDG for a small threshold coefficient, which means that the FDG is suitable for toll roads with relatively low demand. Conversely, the government prefers to choose the MDG instead of the FDG when the threshold coefficient is large enough, which means that the MDG is suitable for toll roads with relatively high demand. We further demonstrate that our model results still qualitatively hold when traffic congestion is considered.

The classification of a ‘maritime claim’ in South Africa under the Admiralty Jurisdiction Regulation Act

The definition of ‘maritime claim’ in s 1 of the Admiralty Jurisdiction Regulation Act 105 of 1983 is the gatekeeper to the exercise of admiralty jurisdiction. It is accordingly critical that the process of classifying a claim as a maritime claim is certain and predictable. However, the elasticity of the wording in the definition can create confusion for claimants in borderline cases. In Kuehne & Nagel (Pty) Ltd v Moncada Energy Group SRL 2016 JDR 0312 (GJ) the court formulated the ‘legally relevant connection’ test to assist it in classifying a claim to enforce a demand guarantee. The test was subsequently relied on in Twende Africa Group (Pty) Ltd v MFV Qavak 2018 JDR 0238 (ECP) in classifying a damages claim for unlawful contractual interference. This article examines the ‘legally relevant connection’ test in the context of both cases to assess whether it is consistent with the definition of ‘maritime claim’. We show that the reasoning followed in Kuehne & Nagel is flawed in several respects, revealing certain fundamental weaknesses of the test. However, the decision in Twende demonstrates that the test is capable of yielding results that align with the policy justification for the exercise of admiralty jurisdiction.

A Comparative Analysis of the Approach to the Conformity of a Supporting Statement Calling for Payment Under Demand Guarantees

The core requirement of a demand guarantee is to receive payment through the delivery of documents or a call for payment that meets the requirements of the demand guarantee. The call for payment may be accompanied by a declaration alleging a breach of the underlying agreement or a statement with full particulars of the breach. However, the extent to which the data in the supporting statement or statement of breach must comply with the guarantee requirements is not always entirely clear. Over the years, a strict standard of compliance of the statement with the terms of the guarantee has been employed. This has threatened the commercial use of demand guarantees due to demands for payment being rejected. This article draws upon the approach in resolving the problems related to the conformity of a statement accompanying the call for payment through an analysis of international instruments applicable to demand guarantees (the Uniform Rules for Demand Guarantees (URDG758); the International Standby Practices (ISP98); the United Nations Convention on Independent Guarantees and Standby Letters of Credit (UNCITRAL Convention); the Supreme Court of the People's Republic of China Letter of Credit Rules (Chinese LC Rules); the Provisions of the Supreme People's Court of the People's Republic of China on Several Issues Concerning the Trial of Disputes Over Independent Guarantees (Chinese IGP), the recently issued International Standard Demand Guarantees Practice (ISDGP) and international case law in an attempt to find the most feasible approach for South African law. A supporting statement accompanying a call for payment is conforming if it indicates the event triggering the guarantor's obligation to pay as specified in the demand guarantee. Furthermore, in ascertaining whether a supporting statement is compliant, a technical interpretation of the terms of the guarantee should be avoided in favour of one that advances the common intention and purpose of the guarantee.

Adversarial learning‐based multi‐timescale network resource management in multi‐mode green IoT network for smart building

Multi-mode green internet of things (IoT) network that integrates multiple communication media can well meet data transmission and processing demands of low-carbon smart building. However, network resource management optimisation including joint optimisation of gateway and channel selection still faces technical challenges such as differentiated quality of service (QoS) demand guarantee, coupling between optimisation problems with different timescales, and adversary caused by multi-device competition. To address these challenges, an adversarial learning-based multi-timescale network resource management algorithm for multi-mode green IoT is proposed. Specifically, the minimisation problem of weighted difference between energy consumption and throughput under the long-term queuing delay constraints is formulated to achieve differentiated QoS guarantee. Large-timescale gateway selection is decoupled from small-timescale channel selection by establishing matching preferences based on empirical performance, and optimised by using bilateral matching with quota. Finally, an exponential-weight algorithm for exploration and exploitation (EXP3)-based small-timescale channel selection algorithm is proposed to achieve adversary awareness. Simulation results demonstrate that compared with asynchronous greedy matching algorithm and auction-based many-to-many matching algorithm, the proposed algorithm performs superior in terms of energy consumption and throughput.

The Legal Perspective on Strengthening the Practice of Bank Guarantees in Indonesia: Revisiting the Provisions Related to Payment

This Article provides the legal perspective of the transaction of bank guarantees in the banking practice in Indonesia. It examines the provisions related to payment for bank guarantees by comparing the provisions related to payment for the bank garansi and that of the standby letter of credit or demand guarantee. The work shows that the bank garansi is dependent guaranty, whereas the standby letter of credit or demand guarantee is independent guaranty. The payment for the bank garansi is based on the actual default, whereas the payment for the standby letter of credit or demand guarantee is based on the statement of default. The primary obligation to pay for the bank garansi is that of the issuing bank or guaranteed party, while the primary obligation to pay for the standby letter of credit or demand guarantee is that of the issuing bank. And, as to the international counter guarantee, the conflicting provisions arise when it is asking the bank garansi as the domestic bank guarantee. The banks, companies and government agencies involved in the transaction of bank guarantees are encouraged to understand the implication of these findings and further prepare the appropriate solution.

A Study on Chinese Court Cases Regarding an Injunction Against a Counter-Guarantee

Purpose Focusing on recent Chinese court cases, this study aims to review the perspective of Chinese courts on fraud exceptions under a demand guarantee, and derive precaution points for a guarantor in demanding payment under a counter-guarantee. Design/Methodology/Approach A literature study is conducted in relation to recent Chinese court cases with reference to International Standard Demand Guarantee Practice and ICC official opinion related to guarantees or counter guarantees. Findings First, Chinese courts have restricted application of fraud exception since the provisions of China’s Supreme People’s Court on independent guarantees were enacted in 2016. Second, Chinese courts judged that it was a manifest fraud that a guarantor falsely made a demand despite discrepancies in the beneficiary’s demand under a guarantee. Third, counter guarantors must decide whether to pay within five business days following the day of presentation, but often times they delay payment thus being informed from the local court that the applicant has filed for an injunction. Research Implications Chinese courts’ frequent allowance for fraud exception in the past aroused worldwide complaints. However, since enactment of independent guarantee provisions, Chinese courts have rarely issued injunctions. Thus, guarantees and counter-guarantees issued by Chinese banks these days have accordingly been considered trustworthy.

Improving Indicators of Hydrological Alteration in Regulated and Complex Water Resources Systems: A Case Study in the Duero River Basin

Assessing the health of hydrological systems is vital for the conservation of river ecosystems. The indicators of hydrologic alteration are among the most widely used parameters. They have been traditionally assessed at the scale of river reaches. However, the use of such indicators at the basin scale is relevant for water resource management since there is an urgent need to meet environmental objectives to mitigate the effects of present and future climatic conditions. This work proposes a methodology to estimate the indicators of hydrological alteration at the basin scale in regulated systems based on simulations with a water allocation model. The methodology is illustrated through a case study in the Iberian Peninsula (the Duero River basin), where different minimum flow scenarios were defined, assessing their effects on both the hydrological alteration and the demand guarantees. The results indicate that it is possible to improve the hydrological status of some subsystems of the basin without affecting the water demand supplies. Thus, the methodology presented in this work will help decision makers to optimize water management while improving the hydrological status of the river basins.

STRICT CONFORMITY OF DOCUMENTS UNDER A PERFORMANCE GUARANTEE. DOES A SIGNED COPY OF A DOCUMENT QUALIFY AS AN ORIGINAL? Stefanutti & Bressan (Pty) Ltd v Nedbank Ltd (unreported judgment delivered on 30 July 2008) (case no 5311/2008) (D&CLD)

Unlike in many overseas jurisdictions, there is a paucity of South African reported case law dealing with certain instruments of payment and guarantees for payment such as documentary letters of credit and performance guarantees, to mention but two examples of instruments prevalent in the field of payment and financing. For this reason any new case law dealing with either letters of credit or performance guarantees is to be welcomed as it would hopefully not only contribute to our understanding of this area of the law, but also provide an opportunity for comment and reflection. This holds especially true since the International Chamber of Commerce has recently (in July 2007) accepted and introduced a new version of the Uniform Customs and Practices for Documentary Credits (hereinafter “the UCP”): UCP 600. In passing: Apart from the main distinction between direct (three-party) and indirect (four-party) demand guarantees, they (ie, demand guarantees) may also be classified by reference to the phase or part of performance theyare designed to secure, hence the following classification of the different types of demand guarantees: tender guarantee (tender bond); performance guarantee (performance bond); advance payment guarantee (repayment guarantee); retention guarantee; and maintenance guarantee (warranty guarantee). In what follows below the author will use the concept of “guarantee”, being a genericterm, when referring to demand and/or performance guarantees in general. The recent decision in Stefanutti & Bressan (Pty) Ltd v Nedbank Ltd (unreported judgment delivered on 30 July 2008 (case no 5311/2008) by the Durban & Coast Local Division of the High Court (now: KwaZulu-Natal High Court, Durban) is a rare and welcome addition to the rather modest collection of South African decisions dealing with performance guarantees.

국제건설계약상 청구보증에 관한 영국법계 판례의 발전 - 비양심성 법리를 포함하여 -

청구보증은 국제 건설 계약과 선박 건조 계약에서 널리 사용된다. 그러나 청구보증이 악용될 경우 채무자의 유동성과 신용을 해치고 수익자의 청구보증권을 박탈하면 수익자의 유동성도 해치게 된다. 건설계약 준수 및 청구보증에 관한 법률이 영국법이나 영국법계 국가로 제정된 사례가 많아 이를 재검토하고 법리 개발을 도모할 필요가 있다. 우리는 국제 건설에서 청구보증의 활용 사례를 검토하고 청구보증의 요건, 청구보증의 독립적 추상성 및 예외, 청구보증의 지급 금지 당사자에 대한 영국 및 영국법계 국가, 특히 싱가포르의 개발을 검토하였다. 보증을 요구하기 위한 지불금지의 요건을 완화한다. 청구보증의 의뢰인인 건설회사나 조선회사의 입장에서 주로 법을 준수할 수 있는 권리의 의무를 충분히 이해하고 대처할 필요가 있으며, 수익자나 보증은행은 수익자에 대해 지급금지 또는 가처분하도록 할 필요가 있다.<BR> 비양심적인 행위는 청구보증 하에 수익자의 청구를 억제하기 위한 근거로 싱가포르 및 호주에서 잘 알려져 있다. 청구보증은 신청자가 수익자에게 지불해야 할 의무를 이행할 것을 보증하기 위해 보증인이 제공한다. 싱가포르 항소법원은 비양심성 법리의 배제조항을 청구보증 청구의 제한에서 인정하는 경향이 있으므로, 계약자는 비양심성 법리는 청구보증의 수익자에 대해 가능한 한 제한적으로 허용해야 한다.

Emergence of Illegality in the Underlying Contract as an Exception to the Independence Principle of Demand Guarantees

It is questionable whether illegality in the underlying contract of a demand guarantee can or should constitute a valid exception to this instrument’s independence (autonomy) principle. From earlier English case law and scholarly discussions it appears that the acceptance of such an exception is contentious and, even if it is recognised, its extent remains uncertain. The English courts have previously indicated that they are open to accepting illegality in the underlying contract as an exception to the principle of independence of demand guarantees, but have not developed the exact parameters of such an exception. In the past, there were no South African court cases where illegality in the underlying contract was accepted, or even considered, as a possible exception to the independence principle of a demand guarantee. In a recent South African case, Mattress House (Proprietary) Ltd v Investec Property Fund Ltd, we find the first evidence of a South African High Court’s willingness to accept the possibility of illegality in the underlying contract as constituting a valid exception. In this article we discuss this South African case, which provides general guidance on the possibility of accepting such an exception under the South African law. South Africa is always persuasively influenced by English law in relation to demand guarantees. Therefore, we also discuss the English law.

Bank Guarantee: Significance and Regulation Issues of the solvet et repete Principle

Bank Guarantee: Significance and Regulation Issues of the solvet et repete Principle

Research on Hydraulic Safety Assessment of Water Distribution Systems

There are two key issues in the safety assessment of the water distribution system (WDS). One is how to evaluate the safety levels of water supply for customers, while the other is how to describe the importance of a pipe for the global or local WDS. The water demand guarantee rate (DGR) and the water demand failure rate (DFR) are proposed. The mathematical expectations of the DGR and DFR describe the average customer’s water safety levels for the first issue. Moreover, the unit influence of pipe failure (UIPF) is put forward for the second issue. It describes the importance of the pipe for the global or local system. Several cases show how to calculate the above values with the pressure-driven model. It is also shown how to find key pipelines in the WDS. The results show that the method can provide an effective reference for real-life WDS management.

Financing in International Trade; a Reference of Legal Measures

Letters of credit and bank guarantee are important instruments of international trade financing. These instruments are the documentary credits. Letter of credit and bank guarantee have two fundamental principles; one is the doctrine of strict compliance and another is the autonomy of the credit. A first principle follows enforceability of terms and conditions of letters of credit and demand guarantee strictly and second principle respects the letter of credit and demand guarantee as a separate contract. Although same contractual principles are applicable for demand guarantee, it is paid to beneficiary by the bank if the buyer of the guarantee makes default. These are much essential instruments of contemporary transnational trading system. Despite it, cash in advance, documentary collection, bank transfer, barter or counter-trade systems are used in the payment of international trade finance.

Research on the Realization of Risk Sharing of Changing Market Demands in PPP Projects of Sewage Treatment

Through literature analysis, the minimum demand guarantee is identified as the main way to realize the risk sharing of market demand changes in PPP projects of sewage treatment including two price structures, namely the total cost and the two-part charging structure. Firstly, three representative cases are selected from the project database; Secondly, the composition of the service fee settlement price of the three water quantity intervals is comparatively analyzed, that is, the actual treated water quantity is less than or equal to the basic water quantity, between the basic water quantity and the designed water quantity, and is larger than the designed water quantity. Finally, on this basis, three management implications are proposed for the PPP-related practice departments.

Demand Guarantees in the People’s Republic of China and the Republic of South Africa

Guarantees play an important role in large commercial contracts internationally. Guarantees can be either independent (demand) guarantees or accessory guarantees. The legal consequences of the two differ significantly and, therefore, it is important to differentiate clearly between the two. In the case of independent (demand) guarantees – the focus of this contribution – the guarantor’s liability is independent of the underlying performance it is guaranteeing, and is accordingly to be determined, in principle, with reference only to the terms of the guarantee. However, this is not an absolute principle. Jurisdictions throughout the world recognize exceptions to this principle, the most important and prevalent being fraud on the part of the beneficiary. A Judicial Interpretation by the Supreme People’s Court of the People’s Republic of China relating to independent guarantees came into operation in December 2016. Its rules depart in some important respects from the law of guarantees in South Africa, both in relation to the determination of the nature of the guarantee (as independent or accessory) and in relation to the exceptions to the principle of independence. This article explores these issues against the background of the law of contract of both countries.

Court Involvement in Construction Demand Guarantees in Ethiopia: The Law and Practice

Nowadays, construction industry is becoming one of the fastest growing economic sub sectors in Ethiopia. Minimizing the expected contractual risk is the right strategy to develop the industry. To this end, in construction contracts presenting bank demand guarantee by the contractor is a common trend in our country and in other countries of the world. This demand guarantee/Unconditional bond is chosen due to its being payable by the bank immediately and unconditionally where the beneficiary demands the payment in an alleged nonperformance of the contract by the side of the contractor. Thus, due to its being fast source of money where this problem happens, demand guarantee is said to be “as good as cash in hand.” Accordingly, the nature and purpose of this instrument is supplemented by the “principle of autonomy” which states that, the rights and obligations created by the guarantee are independent from the main construction contract. As a result, the idea of the stated principle presupposes that the operation of demand guarantee will not be interfered with by courts in injunction order to stop its payment to the beneficiary on grounds immaterial with the guarantee. On the other hand, there are exceptional circumstances acknowledged by different jurisdictions which opens a room to court involvement, the two most of these are; where there is “Fraud”, and “Illegality”, in the demand guarantee, and/or on underlying contract. So, the aim of this research is to examine for the practice of Ethiopian Federal Courts regarding court involvement in the operation of demand guarantee instrument, and the existence of a legal basis. To this end, court cases and the available legislations are analyzed in comparing other countries practice in case laws and legislations. In course of this, the findings reveal that in Ethiopia, there is no an adequate legal framework which covers all aspects of demand guarantees issue, and court involvement is unlimited and even unreasonable. And also there is legal interpretation gap in differentiating the nature and purpose of unconditional and conditional bonds in court cases. Finally, the research findings show that court interference in demand guarantee payment cases is unlimited that, the study recommends the promulgation of new specific law governing this area, the inclusion of the fraud and illegality exception in the new law and training to relevant stakeholders as possible solutions for the problem.

Review on the Decision of the China Court on Fraud Exception in a Demand Guarantee (Powers Links International v. Far East Cable Co. Ltd, 2016)

The Guarantor shall pay a complying demand even if the applicant has fulfilled the obligation of the underlying contract. However, since this does not encourage a beneficiary’s fraudulent demand, if the fraud of the beneficiary is certain, the court may issue an injunction to the guarantor. Since guarantee disputes are settled outside the court, the content is not well known outside. However, judicial cases provide an opportunity to know the contents of the dispute. Here, the Chinese court case, Powers Links International v. Far East Cable Co. Ltd (2016), is analyzed to know the criteria of the injunction. In this case, the contract was not written with the actual signature date, but the signature date of the draft was kept as it was, giving the beneficiary a cause for dispute through fraudulent demand. This case reveals that trivial things may cause significant harm to a party if sufficient care is not observed in international transactions. In this case, the beneficiary demanded the guarantor, claiming that the applicant did not provide the bid bond mistakenly requested in the draft contract. The court concluded that the beneficiary clearly knew that the applicant was not in default, but made the demand under the guarantee. So the court issued an injunction.