Namely, the current matter is that English law and jurisprudence on guarantees is contradictory, complex and often very difficult to understand from a commercial perspective.
Concequently, small changes made by negotiators can have wide reaching commercial consequences.
The aim of the BIMCO refund guarantee is to provide an instrument which removes uncertainties as to what is guaranteed and when the guarantee can be called on, as far as practicable.
....said Ian Gaunt, Chairman of the refund guarantee subcommittee and Arbitrator and Past President of The London Maritime Arbitrators Association.
For the records, refund guarantees play a major role for shipbuilding initiatives by securing the large advance payments made by the buyer during the construction of the ship.
In light of the above, the refund guarantee will be a primary security instrument where the bank pays on demand of the buyer but with appropriate provisions for disputes to be decided by arbitration before payment is made, BIMCO noted.
In fact, it further goals to provide the industry with a balanced instrument intended to protect the interests of all parties involved in the project, the builder, the buyer and the bank.
The focus of our work is to draft a guarantee which will be accepted by the issuing banks, builders and buyers and thus be used as a standard for the industry. To achieve this goal, the subcommittee consists of senior representatives of banks, builders and buyers from ICBC, Hyundai Heavy Industries (HHI) and shipowner Norden.
In order to help users, the guarantee will be published with explanatory notes which will be comparable to a users’ manual for the form.
Professor Min Han, Ewha Womans University, South Korea, Richard Lord, QC Brick Court, Chris Kidd, Ince & Co and Sean Gibbons, Stephenson Harwood joined their forces and their expertise for the project.
Concluding, the refund guarantee is expected to be available in 2021.