Bank guarantees often raise difficult procedural questions. A party that fears that its contractual partner will call the bank guarantee based on unjustified grounds must act quickly and must decide whether it will act against the bank or against its contractual partner. If it acts against the bank and requests an order that the bank be prohibited from issuing payments under the guarantee, it cannot rely on an arbitration clause contained in the main contract with its contractual partner from a Swiss perspective,. Rather, it has to file a request before the competent state courts at the bank’s domicile. This is the path that parties would normally choose in Switzerland. However, there is also the option to file a claim against the contractual partner and request that it be ordered not to call the guarantee, as it was done in the case cited above. In that case, the claiming party is bound to the arbitration clause of the main contract, if such clause exists. As one can see from the decision of the Swiss Federal Supreme Court, a party can pursue both ways in parallel in order to avoid payment of the bank guarantee. We would be interested in hearing from our colleagues what, in their views, the most effective way would be, to prevent payment.
Georg von Segesser / Andrea Meier