The adoption of the URDG by the Federation of International Consulting Engineers (FIDIC) in their guarantee templates, and later by the World Bank, also had a significant impact in increasing the number of URDG guarantees and counter-guarantees.
In many countries, national lawmakers took the URDG as a model for independent guarantee statutes.
Referral or application of URDG as trade usage by some courts, even though the disputed guarantees were not even issued subject to URDG, lent credence and credibility to the rules and gained further acceptance for them by banks, principals and beneficiaries.
In my country, Bahrain, a three-day training program on the URDG has become almost a regular feature at the Bahrain Institute of Banking and Finance (BINF).
Indeed, URDG can be applied to guarantees issued by Islamic banks, since most Islamic bank guarantees are akin to those of the conventional ones insofar as they are both non-funded and fee-based transactions (i.
It discourages "unfair calls" on guarantees, a principle no different from that embodied in article 20 of URDG 458, calling for a beneficiary from making an unfair call.
guarantee) from the "contract," a principle articulated in sub-article 2(b) of URDG 458 and article 4 of UCP 600, whereby guarantees or credits are separate transactions from the contracts on which these might be based.
In this regard, the laws are no different than the relevant provisions of URDG.
The revision of the URDG spanned two-and-a-half years and was a co-operative effort by the ICC Commission on Banking Technique and Practice and Commission on Commercial Law and Practice, which are made up of representatives from banks, companies and law firms worldwide.
The URDG can adequately provide an operational framework for harmonising international practices by setting out the liabilities and responsibilities of trading partners," said ICC Bahrain chairman Ebrahim Zainal.
The universal acceptance of URDG 758 stems from the fact that they successfully manage to strike a balance between the conflicting interests of various parties to a demand guarantee namely, applicant, beneficiary, guarantor and a counter-guarantor," said Pradeep Taneja, chairman of the ICC Bahrain Trade Finance Forum who was a member of the URDG 758 drafting group.