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Guarantee Facility Agreement for United Arab Emirates

Guarantee Facility Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that establishes the terms and conditions under which a financial institution provides guarantee facilities to a borrower, typically for commercial purposes. The document outlines the mechanism for issuing guarantees, the obligations of all parties involved, security arrangements, and enforcement rights in accordance with UAE Civil and Commercial Codes. It includes specific provisions required under UAE banking regulations and Central Bank guidelines, ensuring compliance with local legal requirements while facilitating commercial transactions through bank-issued guarantees.

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Guarantee Facility Agreement

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What is a Guarantee Facility Agreement?

The Guarantee Facility Agreement is a crucial financial instrument in the UAE business environment, particularly used when companies require ongoing bank guarantee support for their business operations. This document, governed by UAE law and regulated by the UAE Central Bank, establishes a framework under which a financial institution can issue multiple guarantees on behalf of a borrower up to an agreed facility limit. The agreement is essential for businesses engaged in government contracts, construction projects, or international trade where bank guarantees are required as security or performance bonds. It contains detailed provisions on facility limits, issuance procedures, fees, security requirements, and enforcement mechanisms, all structured to comply with UAE Civil Code requirements for guarantees and the UAE Commercial Code's banking provisions.

What sections should be included in a Guarantee Facility Agreement?

1. Parties: Identification of the facility provider (bank/financial institution), the borrower, and the guarantor(s)

2. Background: Context of the facility arrangement, relationship between parties, and purpose of the guarantee facility

3. Definitions and Interpretation: Detailed definitions of terms used in the agreement and rules of interpretation

4. The Facility: Details of the guarantee facility including nature, purpose, amount, and terms

5. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

6. Guarantee and Indemnity: Core provisions detailing the guarantee obligations, scope, and indemnification terms

7. Representations and Warranties: Statements of fact and assurances given by the guarantor

8. Covenants: Ongoing obligations of the guarantor throughout the facility period

9. Events of Default: Circumstances that constitute default and their consequences

10. Payments and Calculations: Terms regarding payment obligations, calculations, and currency provisions

11. Changes to Parties: Provisions regarding assignment, transfer, and succession

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction provisions

What sections are optional to include in a Guarantee Facility Agreement?

1. Security: Include when additional security is required beyond the guarantee

2. Islamic Finance Provisions: Required when the facility needs to be Shariah-compliant

3. Multiple Guarantors: Additional provisions when there are multiple guarantors

4. Counter-Indemnities: When counter-indemnities are required from other parties

5. Tax Provisions: Detailed tax provisions when cross-border elements exist

6. Foreign Currency Provisions: When the facility involves multiple currencies

7. Set-off Rights: Detailed set-off provisions when parties have multiple relationships

8. Anti-Money Laundering: Enhanced AML provisions for high-risk transactions

What schedules should be included in a Guarantee Facility Agreement?

1. Form of Request: Standard form for requesting guarantees under the facility

2. Form of Guarantee: Template guarantee format to be issued under the facility

3. Conditions Precedent Documents: List of required documents and conditions

4. Fee Schedule: Detailed breakdown of all applicable fees and charges

5. Authorized Signatories: List of authorized signatories and specimen signatures

6. Security Documents: Forms of any required security documents

7. Compliance Certificates: Template forms for periodic compliance certification

8. Financial Covenants: Detailed financial covenants and calculation methodologies

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions





























































Clauses


































Relevant Industries

Banking and Financial Services

Construction and Infrastructure

International Trade

Manufacturing

Real Estate and Property Development

Oil and Gas

Retail and Wholesale

Telecommunications

Healthcare

Hospitality and Tourism

Transportation and Logistics

Energy and Utilities

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Credit Administration

Operations

Commercial

Business Development

Company Secretariat

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Legal Counsel

Compliance Officer

Risk Manager

Corporate Banking Manager

Relationship Manager

Credit Manager

Company Secretary

Commercial Director

Operations Director

Contract Manager

Business Development Manager

Financial Controller

Industries







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