Law of Export Credit Insurance and Guarantees

Cover
Half Title
Title Page
Copyright Page
Table of Contents
Preface
Acknowledgements
Author biography
List of Abbreviations
Table of Cases
Table of statutes and statutory instruments
Chapter 1 Introduction
References
Chapter 2 How are ECI and ECGs used in the industry?
General distinctions between insurance and guarantees
Confusion in English ECI and ECG cases
The similarities and differences between general contracts of insurance and guarantee
The elements to distinguish a general contract of insurance from guarantees
The different types of ECI and ECG products
An overview of ECI and ECG products around the world
The main ECI products in the UK
What is insured under ECI: political risks and commercial risks
Basic ECI cover
Supplier credit insurance
Buyer credit insurance
The main ECG products in the UK
Supplier credit guarantees
Buyer credit guarantees
The formation process of ECI
How to obtain an ECI cover from the ECA?
The application process
Situations where a single transaction should be insured by more than one ECA
The ECA’s liability for “bad advice”?
How to obtain an ECI cover from private credit insurers?
The early attempt to introduce ECI business at Lloyd’s
Today’s ECI business at Lloyd’s
The leading underwriters’ role under ECI
The relationship between leading and following underwriters under ECI
ECI business in the company market
The broker’s role under ECI
Market protocols
Legal principles
Broking political and credit risks in the marine cargo market?
The causal connection between the broker’s breach and the assured’s losses
The quantum issue regarding the broker’s liability
The broker’s duty of care to the intended assignee of ECI
The role of sub-brokers under ECI
Summary: is the formation process of ECI similar to that of general insurance contracts?
The formation process of ECGs
How to conclude an ECG contract with the ECA?
Is the formation process of ECGs similar to that of general guarantee contracts?
Are there any potential problems within the formation of ECI and ECGs?
The potential issue within the formation of supplier credit insurance
Is the formation process of ECGs as problematic as that of ECI?
References
Chapter 3 Terms and conditions of ECI and ECGs
The peculiar terms of ECI
The insuring and indemnity clause
The UKEF’s insuring and indemnity clause
Lloyd’s definition of “Credit Risk” and “Contract Frustration”
Treating protracted payment default and insolvency of the buyer as separate risks insured
Inserting a credit risk clause into a marine cargo policy?
The wording of the “transaction premium clause”
The construction of the TPC: textualism, contextualism, factual matrix and commercial consequences
Rectification and an estoppel by convention?
Identifying the subject matter insured and drafting an appropriate insuring clause
The measure of indemnity under ECI
The maximum liability clause
The credit limit clause
Distinguishing an insuring clause from a measure of indemnity clause
The exclusion clause
Exclusion clause: general
Exclusion of documentation risk
Specific exclusions under Lloyd’s ECI policies
Conditions and warranties under ECI before and after the IA 2015
ECI conditions before the IA 2015: the effects of the breach of conditions precedent to liability
ECI conditions after the IA 2015: risk-defining or risk-mitigating?
Clause 6 of the “Export Insurance Policy”: is it a condition precedent to liability?
How to determine whether a term is risk-defining or risk-mitigating?
Is Clause 6 subject to s 11 of the IA 2015?
ECI warranties after the IA 2015
Clause 11 of the “Export Insurance Policy”
Does Clause 11 conflict with ss 10 and 11 of the IA 2015?
Did the UKEF intend to contract out of ss 10 and 11 of the IA 2015?
An example of an anonymous Berne Union member’s policy that is compliant with the IA 2015
Alteration of the ECI policy
Summary: the legal nature of ECI reflected by its terms and conditions
Terms and conditions of ECGs
The ECG Contract
The guarantee clause: general
The guarantee clause must mirror the terms of the underlying contract of sale
The guarantee clause covers genuine underlying transactions only
The exclusion on the documentation risk?
The bank’s rights and obligations under ECGs
The ECA-exporter contract
Core clauses on the exporter’s obligations
The UKEF’s remedies for the exporter’s breach
Summary: the legal nature of ECGs reflected by its terms and conditions
Conclusion
References
Chapter 4 The duty of fair presentation under ECI and ECGs?
The duty of fair presentation under ECI
The materiality test
Material facts: general
Facts that make the risk attractive to the insurer
A “new raft” of disclosure where ECI is provided as an add-on cover?
The inducement test
Non-disclosure of the existence and purpose of specific policy clauses?
The non-disclosure of the Transaction Premium Clause and the Non-avoidance Clause
The “comprehensive” effect of the NAC
The non-disclosure of the TPC and NAC in light of the IA 2015?
Misrepresentation as the foundation for an estoppel to circumvent the application of the NAC?
Waiver
Waiver of the assured’s duty to disclosure: the “frame of reference” formulation
Waiver of the right to avoid the contract: the “legal advice” presumption
The UKEF’s questionnaire in the ECI cover proposal form
Contractual clauses in relation to the duty of fair presentation
Stipulating the duty of fair presentation as a condition precedent to liability?
Non-avoidance clause
Is the creditor under ECG subject to the duty of fair presentation?
The creditor is under no duty of disclosure: Credit Lyonnais
General rules on misrepresentation and non-disclosure in the law of guarantee
The rationale for the creditor’s limited duty of disclosure: does it apply to ECGs?
A tendency that the ECA is importing the duty of fair presentation into ECG business?
Express contractual provisions on the duty of full disclosure?
Detailed questionnaires for the exporter and the bank to complete
Proposal: a unification of English law on the duty of fair presentation in ECI and ECGs
What is the current law?
Insurance law and ECI contracts: before and after the IA 2015
Law of guarantees and ECG contracts
What should the law be?
What steps can the UKEF take?
Miscellaneous
The assured’s post-contractual duty of disclosure under ECI: the “common interest” test and the legal professional privilege
The insurer’s duty of utmost good faith under ECI
The ECA’s vicarious liability for its employee’s fraud?
The bank’s duty to investigate the genuineness of the underlying transaction?
References
Chapter 5 The claim handling process under ECI and ECGs
The peculiar preconditions which could prolong the claim handling process under ECI
The waiting period clause
Time of loss under ECI policies?
The rationale behind the waiting period clause
Claiming the interest that accrues during the waiting period?
The proposal for a fairer waiting period clause for the assured
The “arbitration award/judgment” clause
The controversies of the “arbitration award/judgment” clause
The rationale behind the “arbitration award/judgment” clause: a prerequisite of indemnification and subrogation
Should the ECA make indemnification straight away after the assured has obtained an arbitration award or a judgment?
Mitigating the harsh consequences of the “arbitration award/judgment” clause
The claim provisions in ECI that are common in other types of insurance policies
The general claim handling clause
The acceleration clause
ECI as “back-to-back indemnity” with the underlying loan agreement
The acceleration clause in the underlying loan agreement
The acceleration provision in the ECI policy
The notification and mitigation clause
The UKEF’s sample clause
The duty to provide a “duly completed” notification of loss?
The fraudulent claim clause
Summary: the claim handling process of ECI and its legal nature
The claim provisions in ECGs
Do ECGs include a waiting period clause and an “arbitration award/judgment” clause?
Do ECGs contain a waiting period clause?
Do ECGs contain an “arbitration award/judgment” clause?
The claim handling process in ECGs is not likely to be prolonged
The general claim handling clause
The refund of payment clause
The notification and mitigation clause
Summary: the claim provisions in ECGs and the legal nature of ECGs
A common framework for ECA-supported buyer credit transactions: LMA’s Export Finance Buyer Credit Agreement
Background to the LMA project
Assumptions
Terms of payment
Down payment
ECA premium
Repayment date
Calculation of interest
Interest rate
Default interest
Events of default
Political and commercial events
The acceleration clause
The Isabella clause
The interrelationship between the Loan Agreement and the ECI/ECG contract
Conclusion
References
Chapter 6 Subrogation and recoveries under ECI and ECGs
Subrogation and recoveries under ECI
The juridical basis of the subrogation right in the context of ECI
The ECA’s pre-indemnity right and the control of proceedings under ECI
Established principles in English insurance law
The ECA’s right to control the assured’s proceedings prior to indemnification?
Stipulating a clear and precise control of proceedings clause in the ECI policy
The collection of recoveries under ECI
The subrogation protection clause: general
The subrogation protection clause in contractor–subcontractor transactions
The intergovernmental debt rescheduling clause
The subrogation protection clause in the underlying export contract/loan agreement
The allocation of recoveries under ECI
Established principles in English insurance law
Circumstances where the assured effects the recoveries
Circumstances where the ECA effects the recoveries
The allocation of recoveries clause in ECI policies
The allocation of recoveries clause and the waiting period clause
Assignment under ECI as the alternative to subrogation
The potential advantages of assignment over subrogation
Contractual assignment and equitable assignment
Assignment and set-off
Assignment and the jurisdiction clause of the underlying transaction
Summary
Subrogation and recoveries under ECGs
The legal basis of the subrogation right in the context of guarantees
The subrogation provisions under ECGs
The subrogation protection clause
The collection of recoveries clause
The allocation of recoveries clause
What should the law be regarding subrogation and recoveries issues in ECG contracts?
Conclusion
References
Chapter 7 Why ECAs provide ECGs in addition to ECI
The legal nature of ECI and ECGs as revealed in Chapters 2–6
Why do ECGs remain a less popular product?
ECI works well in most circumstances
The costs for ECGs are higher than ECI
The processing time for underwriting an ECG cover is longer than ECI
The division of the global market by ECAs and private credit insurers
Why are ECGs still significant?
In supplier credit transactions: how is an ECG used as a “top-up” facility together with ECI?
In buyer credit transactions: how is an ECG used as a standalone and tailored product to support transactions of a larger amount and a longer credit period?
Concluding thoughts
References
Appendix 1: Special acknowledgements
Appendix 2: How are ECI and ECGs used by the Berne Union members? – full list
Appendix 3: The Berne Union members’ standard ECI and ECG contracts available online
Appendix 4: Questionnaires in the proposal forms for ECI and ECGs
Index