• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.46
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• pp.133-158
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• 2010

Independent guarantee is a creation of the need from the both sides, i.e. the applicant (principal debtor) and the beneficiary (creditor). The former used to have to deposit cash in favor of the beneficiary in case of his default, which laid a burden on his liquidity while the latter still wanted to have the equivalent to cash. Independent guarantee satisfied the both parties by freeing the applicant of a deposit and maintaining the beneficiary's right at the same time. The fact that independent guarantee has three payment mechanisms is not widely known to the public. They are (i) payment on first demand, (ii) payment upon submission of third-party documents, (iii) payment upon submission of an arbitral or court decision. From the applicant's point of view, the order in his favor is (iii), followed by (ii) and (i). As there shouldn't be a case where one party is at a disadvantage against the other, useful insight is being sought for the benefit of the applicant. First, the applicant can offer his intention to provide a payment mechanism (ii) or (iii) rather than (i) if he must deliver it. Second, if the beneficiary still wants to have (i) and the applicant is in a position not to reject it, the latter should thoroughly check any provisions that may work against him later. Third, the applicant could use counterbalancing provisions in underlying contract to cope with protective clauses in the guarantees. Forth, the applicant should review the beneficiary's sincerity to prevent unfair calling risks. The applicant may use an ECA(Export Credit Agency) in his country to which he can transfer not only unfair calling risks, but also political risks. On the other hand, a bank needs to keep the following advice in mind. The foremost important thing for the bank not to forget is that it provides a guarantee as a service provider, not as a responsible party for the feasibility of the project, etc. Credit risk of the applicant should require the greatest attention when issuing a guarantee: the bank should look into the possibility that it can procure immediate reimbursement from its customers after payment to the beneficiary. Second, the applicant's ability to complete the project should be reviewed by checking its track records, techniques and reputation, etc. Third, the bank may also use an ECA to cover the beneficiary's unfair calling risks as well as political risks. In the case of Korea, as Korea Export Insurance Corporation(KEIC) can cover all the risks mentioned above, the bank could use its service called 'Export Bond Insurance.' What's better for the bank is that ECA cover can enhance the bank's asset quality by putting it zero on its risk weighted asset.

• Proceedings of the Korean Institute Of Construction Engineering and Management
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• 2007.11a
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• pp.289-294
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• 2007

It has been 10 years Since December 1996 when CM method was institutionalized by Construction Industry Fundamental law. Even though construction market has been in stagnant of business activities till now, CM in Korea started to be activated by the introduction of CM method i.n public construction. In the end of 2005, the number of CM order's contract is 6.7 times , an amount of CM order's money is 9.2 times more than operation plan of CM system announced in 2001. Therefore, CM market has been dramatically growing. However, it is judged that the shortage of faith in CM project and necessity of CM method are not recognized and study on a owner who affects successful settlement of CM has not been performed. When considering those points, in introduction and practical use of CM, CM is suggested to the field which is necessary for a client through the task performance level research and analysis of a owner who act a important role to activate Construction Management. As result of studying pre-existing papers to i.nvestigate of owner's capability level, the task function of a client is classified into 10 types and a public opinion poll was performed based on the 10 types of function.