KUALA LUMPUR: The International Chamber of Commerce's (ICC) revised Uniform Rules for Demand Guarantees (URDG) will be launched in Paris on March 18, 2010 and come into force on July 1, 2010.

In a statement today, ICC Malaysia, the national chapter of the ICC here, said the revised rules, first in 18 years, were formally adopted by the ICC executive board in December 2009.

In international sales, whereas a documentary credit assures the exporter of being paid upon the presentation of complying documentation showing that shipment is made, a demand guarantee provides protection to the importer against non-performance, or late or defective performance, by the exporter.

It said the URDG rules, comprising 35 articles, set out the liabilities and responsibilities of the parties at each key stage of the lifecycle of the guarantee.

ICC Malaysia said the changes included innovative treatments of payment contingencies and more precise language for determining whether a presentation made under a guarantee or counter-guarantee, whether paper-based or electronic, is a complying presentation.

It said these changes were expected to curb the rate of rejection of demands and increase the certainty of the instrument.

ICC Malaysia said the URDG had gained increasing worldwide acceptance over the years, having been adopted by the International Federation of Consulting Engineers in their model guarantee forms and later incorporated by the World Bank in all of its unconditional guarantee forms.

It said the rules had also been endorsed by the United Nations Commission on International Trade Law, and national lawmakers had used them as a model for independent guarantee statutes.

"The revised URDG rules are the latest example of ICC's leadership in writing the rules that govern some US$14 trillion (RM46.5 trillion) of international trade," said ICC chairman Victor K Fung.

"Since its founding in 1919, ICC has been writing rules to facilitate cross-border trade and investment. ICC rules are globally accepted in the fields of banking, customs, marketing, advertising and trade finance."

ICC secretary-general Jean Rozwadowski said the collective effort produced rules that reflected a broad consensus among bankers, users, and all members of the guarantee community.

"It is the result of an ambitious project to create a new set of rules for the 21st century that is clearer, more precise, and more comprehensive, offering the fairest balance yet between the parties' competing interests and doing so in innovative ways."

ICC Malaysia said the revision of the URDG spanned two and a half years and was a cooperative effort by ICC's Banking Commission and its Commission on Commercial Law and Practice (CLP), which are made up of representatives from banks, companies and law firms worldwide.

The revised URDG was adopted by vote at the Banking Commission meeting on Nov 24, 2009 with 96% of voting rights received from some 50 countries, including Malaysia.

The revision was conducted under the stewardship of the ICC Task Force on Guarantees, a standing body of experts from 26 countries.

"The new rules are destined to become the international standard for demand guarantee practice," said George Affaki of BNP Paribas, who chaired the task force and the drafting group.

ICC Malaysia will be organising a one-day seminar here on April 28, 2010 on the changes and implication of the revised rules.