Research On Fraud Exception Of Independent Guarantees Based On The Chinese Practice

The draft of Provisions concerning several issues on the trial of Independent Guarantees disputes released by the Supreme Court on November 23,2013 has solved the problem of legal gaps appeared in hearing cases about Independent Guarantees disputes for years. This draft has made detailed provisions relating to independent guarantee issues such as its identification and application. However, because the judicial interpretation is just in the comment period, we need to combine with our real problems to have a depth review of the draft, and propose some valuable and practical recommendations for perfection before its finalization. Wherein the provisions on fraud of independent guarantee, an exception of independence of guarantee, have become an important research point.According to the characteristic of independence, once the independent guarantee is produced, it’s separate from underlying contract which generates it. Some parties use the characteristic of it and forge a series of documents which leads to fraudulent of independent guarantee. Many countries confirm the independence of guarantee in law as much as possible. At the same time, they also try taking legal countermeasures against the beneficiary’s fraudulent demanding for payment. Law experts from many countries also strengthen the research on fraud exception of independent guarantee. Fraud exception of independent guarantee is a principal under the premise of affirming the independence of independent guarantee. It allows the bank refuse to pay money under the guarantee in the case of fraud. The court may also issue a ban. In order to better maintain commercial exchanges among nations and regulate the application of independent guarantee, it’s essential for the states to set the application of exception system on the legislative level.The full text is based on empirical research, which makes inductive analysis and integration of nature identification, applicable law, ways of fraud identification and other issues in the cases of independent guarantee fraud. Although courts in China identifies independent guarantee fraud as infringement cases, they have different concepts and practices during the application of law. Each court only used the way of properly examining fulfillment of the underlying contracts to identify fraudulent behaviors. There is no uniform requirement on subjective elements and limits of underlying contract review. It relies more on discretion of judges. Faced with the limitations in the practices, Article 5,18 and 19 in the draft only solve parts of the problems. Facing these limitations, the author set out from the purpose of solving empirical problems and improving the judicial interpretation, make a comparative analysis on the basis of the practice of China and learning from the system of abroad. I believe that the draft should add the applicable provision of disputes of counter-guarantee in entity, improve the subjective and objective standard of fraud identification and protect the interests of bona fide third parties. In addition, it should make requests on the standard of proof of the evidences that submitted by the parties and make a reasonable allocation of burden of proof between the parties in procedural. The text makes a deep analysis of independent guarantee fraud from the angle of empirical and legislation, hoping to serve as a trigger effect and put forward feasible suggestions for improvement of the draft.