Guarantee Contract and Principal Contract: Conflicts in Jurisdiction

This article analyses Article 129 of an Interpretation published by the PRC Supreme People's Court ("SPC"), and considers different results which may arise under PRC and non-PRC law, where the Principal Contract specifies a dispute resolution mechanism, while the Guarantee Contract does not specify a (or specifies a different) dispute resolution mechanism.

 

Given that in addition to a Construction Contract (which can be seen as the Principal Contract) between the Employer and the Contractor, either party may be required to obtain a Guarantee Contract (eg by way of a Parent Company Guarantee, Personal Guarantee by a Director, or a Bank Guarantee), care should be taken to avoid unexpected results. 


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