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We have a delicate situation regarding payment under a counter guarantee issued subject to URDG758.
In 2016, at the request of a foreign bank, we issued our local guarantee subject to URDG758 in favour of a local beneficiary for US$ 9.7 million in respect of a railway contract being implemented by a foreign state-owned contractor. The counter guarantee and our local guarantee were extended by way of amendments and the current expiry date of the counter guarantee was 30 November 2019.
Having received a complying demand from the beneficiary we paid out under our local guarantee for the full amount of our guarantee – US$ 9.7 million – and made a presentation demand under the counter guarantee.
Our presentation was received by the counter guarantor bank on Tuesday 29 October 2019 and on the same day we received a notice of rejection from the counter guarantor in respect of one stated discrepancy: “supporting statement is for amount greater than amount of demand under counter guarantee”.
We managed to send a counter argument on the same day but while this was factually correct, in our opinion this was not a discrepancy and demanded immediate payment from the counter guarantor.
We did not receive any further communication from the counter guarantor bank but the counter guarantor made payment on Tuesday 5 November 2019.
We consider this situation unsatisfactory and we request your prompt response on two questions.
- Do you consider the claimed discrepancy “supporting statement is for amount greater than amount of demand under counter guarantee” as a valid discrepancy?
- When should the counter guarantor have made payment based on the factual information we have provided?
As the amount is substantial you can appreciate the importance of our questions.
We await your expert reply.