Bhalchandra R (DYM) 08 October 2013

Bank guaratee clauses

Dear Sir,

We have to give bank guarantee to our customer for one of the job. Our Mumbai bank is not ready to include following clause in BG. I would like to know what will be the problem to bank to include this clause?

This Guarantee shall be governed by, and construed in accordance with, the laws of India. The Guarantor irrevocably agrees that any legal action, suit or proceeding arising out of or relating to this Guarantee shall be adjudicated in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and the seat of arbitration shall be at Hyderabad.

Please advice.

Reply Follow

1 Replies

VIRAJ KADAM (Advocate Supreme Court of India) 08 October 2013

Dear Friend

The possible objection is the Arbitration clause. The Bank would not agree to Arbitration clause. Plus your banker is from Mumbai, whereas, your place of arbitration is Hydrabad. That's the problem.

Regards

VIRAJ KADAM

Advocate, Supreme Court of India