Bank Guarantees in Egypt

Although our country’s commercial law accommodates application of international rules and standards of practice for demand guarantees, we in Egypt should continue our efforts to ensure that the majority of demand guarantees are issued subject to the ICC’s Uniform Rules for Demand Guarantees (URDG758) and, as a consequence, in conjunction with ISDGP as well.

Article 355-2 of Egyptian commercial law number 17 (1999) states, in part, that:

‘in the absence of a relative provision, the international practice in demand guarantees shall apply … ‘

Among many other commercial laws, I think that the Egyptian commercial law is a very advanced one that takes into consideration international practice. It defines both demand guarantees and suretyship guarantees. Meanwhile the commercial laws of many other countries do not define demand guarantees, i.e. independent guarantees.

Despite the fact that the standby letter of credit instrument is not defined in Egyptian commercial law, it is not difficult to convince an Egyptian court that a standby LC is an independent undertaking with the same features of a demand guarantee.

These instruments are even consider to have the same definition of an independent undertaking:

“The Independent undertaking is an undertaking that is written, signed, and definite promise to honor a timely documentary presentation that complies on its face with the terms and conditions of the undertaking.”¹

Regarding URDG and Egyptian commercial law, we can say that it is not easy to find a contradiction between treatment of demand guarantees under Egyptian law and in URDG758. For instance, both Egyptian law and URDG recognize: