Defended rights of a beneficiary of bank guaranty under URDG 758

Our Dispute Resolution team has successfully represented a Belarussian water supply and sewerage maintenance company in a dispute initiated by a Lithuanian entity. The client requested payment under a guarantee, whereas the claimant (Lithuanian entity) submitted a preventive claim to the Vilnius District Court and requested to adapt interim measures – to prevent the bank from performing the payment to the client.

The claimant demanded the court to evaluate the application of ICC uniform rules for demand guarantees (URDG 758) and if the guarantee remains valid when the beneficiary is acquired through a merger by another company (universal acquisition of rights).

With its decision, Vilnius District Court confirmed our client’s right to claim payments under the guarantee. The court additionally explained that the claimant, in a case where demand for payment is disputable, should submit a claim against the beneficiary, not the bank (Solve et repete). In this case, the Lithuanian courts would have no jurisdiction to adjudicate as to the beneficiary and Lithuanian entity are bound by a valid arbitration agreement.

As a result, the claim was rejected. The decision of the Vilnius District Court can be appealed to Vilnius Regional Court in 30 days.