Abstract: Under the background that Shanghai will strive to become a world shipping center, ship financing has been raised to an unprecedented height, and various businesses involved in the process of ship financing have attracted more and more attention. Among them, the repayment guarantee business has won the favor of many financial institutions because of its relatively long cycle, large amount involved and relatively high income-risk ratio. Although more and more banks are engaged in this business, the legal risks in repayment guarantee have not attracted enough attention, which has led to many disputes. Therefore, how do banks face these disputes and possible potential risks? The article holds that the investigation before the issuance of the letter of guarantee should be strengthened, the unreasonable claims of shipowners should be effectively handled, counter-guarantee measures should be implemented, the internal management of banks should be improved, and the professional level of bank shipping personnel should be improved. Seriously deal with the legal risks of repayment guarantee in ship financing, actively take preventive measures, reduce disputes over repayment guarantee, and do a good job in strengthening repayment guarantee business.
[Keywords:] ships; Repayment guarantee; Risk; Stay alert
In recent years, with the rapid development of China's shipping industry and the deepening of foreign exchanges, more and more financial institutions are optimistic about the attractive huge market of ship financing, and many banks have begun to vigorously develop ship financing business. Among them, the export ship repayment guarantee business has won the favor of many financial institutions because of its relatively long cycle, large amount involved and relatively high income-risk ratio. Although more and more banks begin to use repayment guarantee as a bank credit tool, commercial banks have not carried out this business smoothly because of their lack of understanding of its risks. Therefore, it is necessary to clarify the legal risks in the repayment guarantee and the related preventive methods, so as to provide some help for China to become bigger, stronger and better in the repayment guarantee business.
First of all, let's look at a classic case of repayment guarantee dispute: namely, the construction company v. Lloyd's Bank and Rafidain Bank. In this case, the plaintiff IE Construction Company signed a contract with an employer shipowner in Iraq. According to the contract, the agreed ships will be built in Kogbara, West Asia, Calda and Duhuk. The format of these letters of guarantee is based on Rafidain's own format, which is beneficial to Iraqi shipowners. Later, the Iraqi shipowner asked the shipyard to repay in advance for some reason. The shipowner's practice in the current situation is generally believed to be that the shipowner is unwilling to take over the ship because of the falling ship price. At the same time, the shipowner pushed his luck, claimed that the shipyard was in breach of contract under the pretext of some minor problems, and issued false certificates accusing the shipyard, that is, the plaintiff, of breach of contract, and then asked the bank to provide repayment guarantee. At this time, the bank is in a dilemma, whether to repay the shipowner. Let's put aside the possibility of employer fraud. We just want to emphasize that in this case, the bank issues an independent guarantee (usually the repayment guarantee is an independent guarantee). Generally speaking, the independent guarantee requires that the corresponding consideration should be paid as long as the relevant certification materials are seen, and it has to be paid. Therefore, if the bank does not prepare for the relevant risks in advance, then the bank will bear great risks when issuing independent guarantees, which is likely to lead to the bank taking great responsibility for future problems.
In fact, there are still many risk problems caused by repayment guarantee like this. Let's analyze the risks that repayment guarantee may face for banks and the countermeasures.
First, the risks faced by bank repayment guarantee
(A) shipyard reputation risk. To analyze the risk of repayment guarantee issued by the bank, we should investigate the reputation of the shipyard in detail. The reputation of the shipyard mainly refers to: whether the shipyard has committed any major breach of contract, whether it has a record of being punished for delayed delivery, whether it has been involved in arbitration or litigation at home and abroad due to unqualified or defective shipbuilding quality, whether it has a history of bad loan repayment and financial disputes, and whether there has been any major safety accident. If the above-mentioned risk events have never happened, it means that the shipyard has a good reputation, so the bank risk is low; Otherwise, banks may have relatively high risks when issuing repayment guarantees and need to be cautious.
(b) Shipyard experiences risks. To analyze the risk of repayment guarantee issued by banks, it is necessary to investigate whether the shipyard has experience in building similar ships. If there is similar experience in building this kind of ship, it will be guaranteed in terms of quality, safety and finance. If there is no experience in building similar ships, banks may increase the degree of risk guarantee or refuse to issue repayment guarantee when deciding to issue repayment guarantee. Of course, if some shipyards have no shipbuilding experience for high profits, it is necessary to deeply understand the relevant management experience and working background of the main management personnel and senior technicians of the shipyard, the level of technical consultants hired, the integrity of the shipyard quality control system and safety production system, etc. If the shipyard is still in infrastructure construction, then the bank should be very cautious and need to examine the strength of the shipyard in all aspects. If it is necessary to inspect the overall strength of shipyard investors, the availability of construction funds of investors and the management level of shipyard operators, etc. The results of these surveys will help banks to provide repayment guarantees.
(c) Shipyard equipment risks. To analyze the risks of repayment guarantee issued by banks, it is necessary to check the import status of key supporting equipment. In China, the auxiliary products of ships mainly depend on imports, so banks should pay close attention to the market situation of auxiliary products and the cooperation between shipyards and major marine equipment suppliers. It is precisely because the key supporting equipment depends on imports, if the supply of related equipment is tight, it is likely that the shipping companies will not be able to deliver the ships on time, thus making the banks responsible for repayment. Therefore, this issue is also something that banks should consider when issuing repayment guarantee.
(4) Text risk of letter of guarantee contract. When signing a repayment guarantee contract, we should pay great attention to the words and descriptions of the guarantee contract. When the repayment guarantee contains some vague, contradictory, illogical and unreasonable terms, the guarantee bank that issued the repayment guarantee will face the risk of being unreasonably demanded to pay. Therefore, when writing a letter of guarantee contract, both parties must be clear in the expression of meaning and words, the structural framework must be rigorous, and there can be no contradiction between the provisions. In addition, when signing the letter of guarantee contract, we should also pay attention to the writing and specification of some special terms, so that these terms can play a role in ensuring that the risks under the advance payment guarantee are reasonable and controllable. The most commonly used special clauses in practice mainly include the following three types: dispute arbitration or litigation clauses; Payment transfer clause ①; Article (2) on the entry into force and increase or decrease of the letter of guarantee. The normative expression of these terms can play a certain role in effectively dispersing risks for banks.
(5) Ship type risk. Different types of ships have different degrees of risk. Relatively speaking, the technical requirements of complex ship types are higher, so the risk of ship financing is greater, while bulk carriers (such as Panama bulk carrier, Cape of Good Hope bulk carrier, handy bulk carrier and lake bulk carrier) are relatively mature, so the risk is less. According to the different types of ships, the guarantee of repayment guarantee issued by banks will be different. In addition, the bank also needs to review whether the overall design of the ship type under the letter of guarantee is mature, how the shipyard has made progress in building this type of ship in the past, whether this type of ship is a product familiar to the shipyard, whether the relevant management and main technical personnel have changed, and whether the main shipbuilding facilities such as portal cranes (or docks) are safe and reliable without major hidden dangers and defects.
(6) The strength and reputation risk of the shipowner. In addition to the strength of the shipyard, the strength and reputation of the shipowner is also an important guarantee for the repayment guarantee. If the shipowner is strong, reputable, engaged in shipping for a long time, has a large fleet and is in good operating condition, the bank can feel more at ease when issuing repayment guarantee, and can actively expand the repayment guarantee business if the relevant conditions are met. If the shipowner's strength is weak and reputation is poor, and the shipowner's own fleet is small, then the bank needs to comprehensively consider the financial situation of the beneficiary (shipowner) to decide whether to intervene in related business. Because in this case, the shipowner is likely to make unreasonable claims to the bank and demand high compensation, and the shipowner is more likely to cheat, which will harm the interests of the bank. We know that most repayment guarantees are independent guarantees. The so-called independent guarantee means that the bank can bear the responsibility when the beneficiary gives the required documents, regardless of the basic contract behind the guarantee. Therefore, in order to prevent shipowners from malicious fraud, banks need to evaluate the strength and reputation of shipowners. Therefore, the strength and reputation of the shipowner is also one of the risks of issuing a repayment guarantee.
(7) Banking supervision risk. The risk of bank supervision is mainly reflected in the use of funds for shipyard bank supervision. If the advance payment is remitted to the shipyard by the shipowner after the repayment guarantee is issued, the management and control of the advance payment by the bank, that is, whether the shipyard uses the advance payment for a specific ship as agreed, is also an important consideration for the bank to issue the repayment guarantee and the required guarantee. Shipyards should implement special account management for advance payment according to proper operation procedures, and review the use and destination of advance payment one by one according to the arrangement of ship construction, production and purchase and sale, so as to achieve earmarking and reduce bank risks. However, from the practical point of view, it is difficult for banks to supervise the advance payment, and many supervision measures for shipyards are only implemented on paper. How to effectively eliminate the hidden capital operation risk after the issuance of the letter of guarantee and effectively prevent the operation risk is a problem worthy of our consideration.
(8) Classification Society ③ Qualification and reputation risk. The qualification and reputation of classification society is also one of the risks that banks should consider when issuing repayment guarantee. The main function of the classification society is to organize regular inspections during and after the construction of ships, with the aim of formulating and maintaining the construction and maintenance standards of ships and their equipment. If the qualification is not good, the classification society with bad reputation may partner with malicious shipowners to defraud the shipyard and ask them to refund the advance payment. If the shipyard fails to perform, it will affect the interests of the bank and make it difficult to perform the repayment guarantee. Therefore, in order to ensure the safety of repayment guarantee, banks should investigate the qualification and reputation of classification societies through reputable institutions such as Deng Bai (1) to prevent possible fraud.
(9) Counter-guarantee risk. Usually, before issuing a letter of guarantee, the bank will ask the applicant to provide a counter-guarantee letter issued by a third party to ensure the bank's own interests. However, if the content of counter-guarantee is not sufficient and the funds are not strong enough, then the bank issuing the repayment guarantee will face the possibility that if the shipyard cannot refund, the bank will suffer heavy losses, that is, the money paid by the bank cannot be compensated.
(10) Industry market risk. Shipbuilding has its periodicity, 2004. In 2007, the situation of the ship market was very good, with continuous orders and flourishing ship-related business. Now, due to the impact of the financial crisis, the entire shipping market is depressed, ship prices are falling, orders are decreasing, and the proportion of advance payment is decreasing. To some extent, market risk is force majeure, and we can't predict when the market risk will come or its size. In today's depressed market, the advance payment is less, the possibility of shipowners picking faults and abandoning ships is increased, and the risk of shipyards is suddenly increased. At this time, the shipowner is likely to find fault in the construction process and delay the progress. The shipowner's practice will greatly reduce orders, which may make the shipyard unable to make ends meet, causing huge losses and eventually closing down because it can't support it. At this time, the risk of the bank increases sharply, and the prepayment guarantee issued by the bank must bear the repayment responsibility because it cannot perform the contract, and the risk level increases. This kind of ship abandonment by shipowners brings great risks to shipyards and banks. This kind of risk is largely caused by market risk, and it is difficult to estimate the occurrence of this kind of risk in the coming moment. What we can do now is to minimize this risk as much as possible. It is difficult to estimate the risks in the industry market, but we should try our best to make up for them.
Two. Relevant measures for banks to deal with the risks of repayment guarantee business.
(a) to strengthen the investigation before the issuance of the letter of guarantee. Since most repayment guarantees are independent guarantee contracts, once issued, the shipowner can ask the bank for advance payment as long as he gives the documents required by the guarantee. Therefore, before issuing, the relevant units must be carefully investigated. The bank's investigation before issuing the L/C is mainly aimed at the following parties or units: first, investigate the credit status of the shipyard, then investigate the strength and reputation of the shipowner, secondly investigate the status of the classification society, and finally carefully review the counter-guarantee to ensure that the counter-guarantee is true and sufficient. After careful investigation of these aspects, the repayment guarantee will be issued according to the risk of the guarantee itself, the term of the guarantee, the country where the shipowner is located and the specific situation of ship construction. It should be noted that when counter-guarantee is needed, the validity period of counter-guarantee should be slightly longer than the validity period of repayment guarantee, or the counter-guarantor can be required to give the guarantee bank a certain time to claim compensation after the counter-guarantee expires, so as to prevent the guarantee bank from having time to recover from the counter-guarantor because the shipowner claims before the expiration of the validity period stipulated in repayment guarantee. It is very important to investigate the external guarantee beforehand. Banks should be clear about the credit status of all parties, so as to provide repayment protection with more peace of mind.
(2) Effectively handling unreasonable claims of shipowners. Repayment guarantee is mainly an independent guarantee, which is payable at sight. Whether the payment under the independent guarantee occurs does not depend on the performance of the basic contract, but only depends on whether it meets the provisions of the repayment guarantee. The shipowner can claim the advance payment from the bank as long as he submits the documents required by the repayment guarantee. As for whether the reasons for the claim are sufficient and reasonable, and whether the reasons for the claim have actually occurred, the guarantee bank does not ask except fraud. So, this independent guarantee? Documentary? The characteristics make the shipowner's claim unreasonable, which brings risks to the guarantee bank and shipyard. Therefore, it is necessary to take the following measures to prevent and reduce the unreasonable claims of shipowners: (1) Try to adopt the form of direct guarantee. The so-called direct guarantee, in the repayment guarantee, refers to the guarantee issued by the guarantee bank to the shipowner at the application of the shipyard, and the bank directly assumes the payment guarantee responsibility to the shipowner with this repayment guarantee. The corresponding sailing guarantee means that under the sailing guarantee, as long as the sailing bank declares to the instructing bank that it has received the shipowner's claim, the instructing bank must pay. In addition to the definition of double-guarantee, the shipowner's claim is very fast and convenient. Because the validity period of the counter-guarantee letter of the issuing bank is inconsistent with that of the guarantee issued by the double-guarantee bank, the possibility of the shipowner's overdue claim is increased. The direct issuing bank's guarantee can check whether the shipowner's claim meets the requirements of the guarantee and whether the claim is overdue without the help of others. (2) consciously set some documentary clauses in the repayment guarantee clauses, which can be used to limit the unreasonable claims of shipowners. Once it happens, what are the factual conditions for the shipowner to claim compensation? In the letter of guarantee, the words should be specific and clear to protect the legitimate rights and interests of the shipyard from infringement and meet the reasonable requirements of foreign shipowners. (3) If the shipowner cheats, the shipyard can apply to the court for an injunction ① to prevent the beneficiary (the shipowner under the shipbuilding contract) from abusing his rights. The only legal way is to apply to the court for an injunction immediately. The injunction, also known as the stop payment order and the pre-injunction order, is a legal remedy in the balance law. The injunction can be directed at the bank and the beneficiary who made the restraining order guarantee. The former prohibits banks from making direct payments, while the latter prohibits beneficiaries from making payment demands. However, countries have different attitudes towards the ban. Obviously, British law takes a non-interference attitude and will not issue bans at will. The reason is that for the sake of commercial certainty, the beneficiary of repayment guarantee (often the shipowner) knows that he can get the full guarantee; However, Singapore's attitude towards issuing injunctions is more relaxed than that of Britain, because Singapore's laws seem to be the most secure for the party or bank that makes the restraining order guarantee, so they are relatively unfavorable to the beneficiaries of repayment guarantee. Although the practices of different countries are somewhat different, and there is no uniform standard for judging fraud or abuse of rights in theory, there are still some problems in international academic theories, precedents and related conventions, such as the Uniform Rules for Demand Guarantees formulated by the International Chamber of Commerce, the International Standby Letter of Credit Practices and the United Nations Convention on Independent Guarantees and Standby Letters of Credit formulated by the United Nations Commission on International Trade Law. Through analysis and research, we can also draw some characteristics, that is, the court will not easily issue an injunction. The stability of trade has its important position. Secondly, it is possible that the courts in most countries are considering it in a balanced and convenient way, if the injunction is not issued easily. For example, although Britain requires a ban when it reaches the level of fraud, Singapore can approve a ban when it is too unreasonable. Singapore's courts seem to be more lenient in issuing injunctions, but this is only relative to Britain. Generally speaking, in order to protect the good development of trade, countries will not easily issue bans.
(3) Implement counter-guarantee measures. In order to further reduce their own risks, banks often require shipyards to provide counter-guarantee measures for repayment guarantees, mainly including collecting deposits, credit counter-guarantee and property mortgage. Generally speaking, if all deposits are provided, the risk of banks is relatively small; If the bank only pays part of the deposit, the risk is even greater. At this time, the bank will increase the guarantee and reduce the risk through other methods. If the bank wants to further guarantee its rights and interests, it can notarize the counter-guarantee contract. In short, strengthening the counter-guarantee under the repayment guarantee can enable the bank to reasonably obtain all or a considerable part of compensation from the counter-guarantor in the event of a claim. Therefore, in any case, improving the implementation of counter-guarantee plays an extremely important role for banks to control all kinds of risks arising from repayment guarantee.
(IV) Improving the internal management of banks O In addition to taking effective risk prevention measures for shipowners, shipyards and other stakeholders, improving the internal management of banks is also an important aspect of coping with risks. For banks, we should first establish and improve the business operation system to ensure possible operational risks, and then set up a special group for ship prepayment guarantee business, which is responsible for matters related to ship prepayment guarantee business, so as to make the whole project operate clearly, smoothly and efficiently, strengthen communication among relevant stakeholders, ensure the interests of banks and reduce risks. Secondly, it is necessary to send business personnel with strong professional quality and strong sense of responsibility to the shipyard to understand the relevant ship construction process, including strengthening the supervision of advance payment, implementing the supervision of the special account for advance payment of ships, earmarking funds and the production and operation of third-party guarantors, so as to minimize the risks brought by advance payment guarantee to banks. Finally, the bank should supervise and file all kinds of funds and letters under the repayment guarantee to ensure that the bank's debts are clear. In the process of supervision, if any adverse events are found to banks, we should take timely measures to resolve possible risks. No matter how big or small the capital risk is, banks should pay considerable attention to ensuring the interests of banks.
(five) to improve the professional level of bank shipping business personnel. The salesman who handles the ship advance payment guarantee in the bank should strengthen the study on the guarantee business, foreign exchange management, and related laws of guarantee mortgage. , in order to avoid mistakes caused by unfamiliar business and ignoring a link. We should have a clear understanding of the framework and content of the letter of guarantee, grasp the internal meaning of relevant clauses and their practical significance for preventing risks, so as to correctly and skillfully use these clauses in issuing advance payment letters of guarantee.