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Dubai: Representatives of UAE Banks Federation-UBF (the sole unified voice and representative of UAE banks), and International Chamber of Commerce (ICC)’s Banking Commission, recently held a meeting on , facilitated by Dubai Chamber of Commerce, to review a major study completed jointly by banks on guarantee practices within the UAE. The study, involving engagement with more than 95% of the banks which are active in the issuance of bank guarantees in the United Arab Emirates, concluded on 30 October 2021.
Jamal Saleh, Director General of UAE Banks Federation, stated: “The findings of this study, undertaken by UBF and ICC, reveal that excellent benefits can be brought to the economy with the inclusion of URDG758 (Uniform Rules for Demand Guarantees) international rules of the ICC in bank guarantees, standardising concise formats, and employing the application of smart technology”.
Under UAE Law, a bank guarantees is considered to be a commercial activity governed by the UAE Commercial Transactions Law (Federal Law No. 18 1993 - “CTL”). It is international standard guarantee practice that demands guarantees issued by banks are conditional undertakings payable upon presentation of a complying demand by a beneficiary.
Vincent O’Brien, Director of ICC-UAE, further elaborated saying: “At this time, when the economy is once again moving forward post Covid-19, every dirham of banks’ capital must be used wisely especially to support businesses in the UAE, in particular SMEs in non-oil sectors”.
With advancements in guarantee practice, transforming technology and the evolution of international rules such as the Uniform Rules for Demand Guarantees “URDG758” of the International Chamber of Commerce, bank guarantors and beneficiaries of demand guarantees can now enjoy the same high level of risk coverage and protection.
According to O’Brien, “This study and the findings are timely in having three primary recommendations. Firstly, the implementation of URDG758 rules. Secondly, forming a joint UBF and ICC team to develop up-to-date standardised concise guarantee formats. And thirdly, to evaluate how advanced technology can enhance the efficiency of UAE guarantee process”.
The primary purpose of international rules, such as URDG758 of International Chamber of Commerce, is to supplement local laws by providing uniform international rules of practice. The meeting participants shared a successful example of this supplementary nature of international rules of practice and local law working in harmony. This can be found within UAE Commercial Transactions Law (Federal Law No. 18 1993 - “CTL Chapter 4, Article 428 to Article 439), which governs the operation of documentary credits. Vincent O’Brien explained: “In practice, almost 100% of documentary credits issued within the UAE, for domestic or international businesses, are also issued subject to the rules of UCP600 {The Uniform Customs and Practice for Documentary Credits}. This harmonious cohabitation of UAE commercial law and international rules of practice provides certainty and operational efficiency for all parties involved.
“The application of internationally accepted business and trade rules working in harmony with local law is also a significant consideration for parties considering foreign direct investment into any jurisdiction” according to O’Brien of ICC.
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About International Chamber of Commerce, United Arab Emirates (ICC UAE):
The International Chamber of Commerce, United Arab Emirates (ICC UAE) was established in 2004 under the Federation of UAE Chambers of Commerce and Industry.
ICC UAE represents commercial, industrial and business enterprises in the UAE at the global level while promoting the UAE business community around the world.
The ICC UAE also hosts international events and business meetings for exchange of experiences and knowledge. It regularly organises briefing sessions, training workshops and seminars on banking, arbitration, customs and trade facilitation for business owners, managers and representatives from the export, logistics, legal and arbitration sectors.
For more information: www.iccuae.com
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© Press Release 2021
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