ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (74)393
Vol.1974/9002

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COMMISSION Brussels,2April1974
OPTHE
EUROPEAN COMMUNITIES
I-E-2
ftCOM(74)393/6Final
\
WORKINGPAPER
fromtheDepartments oftheCommission
relatingtotheapplication of
UniformPrinciples
in
ExportCreditInsurancePolicies

UNIFORM PRINCIPLES INEXPORT CREDIT
Explanatory noteINSURANCE POLICIES
Inthelight oftheir discussions with national experts ,the
services oftheCommission have thought ituseful toexplore
whether analternative approach can befound inthefield
ofexport credit insurance .They have accordingly drawn up
theattached working document (which takes theform ofapossibledraft Council directive ),toserve asthebasis formore
substantive discussion with experts ofthemember states ,and
with UNICE ,theChambers ofCommerce and theFederation 3ancaire .
Once 1these discussions have taken place ,theCommission maybe
asked toapprove adraft proposal ,onthebasis oftheattached
working document ,which would besubmitted totheCouncil .If
this course were followed ,andtheCouncil adopted thenewproposal
certain earlier proposals andexisting directives adopted' (butnot inforce )would bewithdrawn totheextent that these were
incompatible with theapproach nowenvisaged .
Theaim oftheattached working document istoharmonise the
principles underlying export credit insurance policies ofall
types -short ,extended terms ,medium orlong term andother
guarantees .
Inalmost allrespects these proposals simply reflect existing
practice oftheexport credit insurers oftheCommunity .However ,
itisworth mentioning certain particular points :
1)Legal basis .Thelegal basis would beArticle 113 .
•2)Competition inthefuture from theprivate sector .This
point has atheoretical validity and itisproposed that
theuniform principles should apply toallpolicies of
export credit insurance used tofinance transactions with
official support atapreferential rate ofinterest .This
definition .does not cover theprivate sector ,butapplies
virtually toallexport credit insurance 'atpresent done
within theCommunity . . ■
3)-Maximum percentages onunconditional guarantees .Itis
suggested that where such guarantees areprovided tobanks
themaximum percentage belimited to957o .
4)The short term field .For short andextended term tran­
sactions theguaranteed percentage suggested is90%for
insolvency anddefault risks and 957„forpolitical risks .
Control
Thepossible adoption bytheCouncil ofharmonised principleswhich would /thebasis ofpolicies takes account ofthedifferent
legal systems ofeach member state andraises aquestion ofcontrol
over theimplementation ofthese principles .Tothis end ,itis
provided that thetexts ofpolicies adopted ineach member country •
should bedeposited with theCommission andwith other credit
insurers inadvance .soastoensure therespect ofthese uniform
principles byeach credit insurer guaranteeing for theaccount or
with thesupport ofamember state .This will give .the .Commission 3
aswell asmember states ,theopportunity toexamine these document
inorder toensure that they areinaccordance with theuniform
principles . \

Harmonisation ofpremia
Thequestion ofpremia has sofarproved very intractable because
acomprehensive harmonised base hasbeen lacking .Moreover the
existing Commission proposal onpremia isnolonger asatisfactory •
basis ofdiscussion ,because itisbased exclusively onmedium
and long term transactions ,and takes noaccount oftheshort
andextended terms .However ,premia areinfact built upon
principles which apply toalltransactions andare sobalanced
astoproduce asatisfactory return overall .Farthsa ieas3ns ,theprocosmade bytheCommission ^1971 isin'factnolonger thebasis ofthe'
discussion ofpremia now proceeding intheTechnical Committee .
However ,itshould beemphasised that the adoption ofauniform system
ofpremia remains gnessential aimoftheCommunity inthis field ,andone
which themember "states ,aswell astheCommission ,wish topursue .
–When theCommission isasked toapprove thetext ofa
draft proposal totheCouncil onthe lines oftheattached document
asubmission will atthesame time bemade concerning anew
Commission approach tothequestion ofharmonisation ofpremia
and atimetable drawn uponthebasis ofwhich proposals onthis
subject will subsequently betransmitted totheCouncil .
Multinational supply contracts
Onthebasis ofexisting work andoftheproposed harmonised
principles ,itshould also bepossible toexamine other problems
inthefield ofexport credit insurance ,forexample the
participation byexport credit insurers inmultinational supply
contracts .

s
SUMMARY
1.Explanatory note
2.WorkingPaperrelatingtouniformprinciplesin
ExportCreditInsurancePoliciescovering,respectively :-
AnnexI -shorttermstransactions onawholeturnover
[
"basis
!
: I
AnnexII -extendedtermstransactions onawholeturnover
| basis
AnnexIIIPartI–specifictransactions
PartII-anendorsementrelatingtoperformance "bonds
AnnexIV -direct "bankguaranteesissuedinconnection
withshortterm,extendedtermsandspecific
transactions
AnnexV -financialguaranteetransactions
AnnexVI -interpretations
3.ProposalforDerogationtotheaboveWorkingPaper.

z-
THE COUNCIL OFTHE EUROPEAN COMMUNITIES ,
Having regard totheTreaty establishing theEuropean Economic Community ,
andinparticular Article 113thereof ;
Having regard totheproposal from theCommission ;
Whereas export credit isofprimary importance ininternational trade and
isanimportant instrument ofcommercial policy ;
Whereas thevarious systems ofexport credit insurance inforce inthe
Member States may give rise todistortions incompetition between Community
undertakings inmarkets inthird countries ;
Whereas harmonisation ofthevarious systems ofexport credit insurance
could also facilitate cooperation between undertakings inthevarious
Member States ;
Whereas harmonisation canbeachieved ,according tothedifferent types of
transaction ,bymeans ofcommon policies orbymeans ofuniform principles
relating totheessential matters governing theoperation ofthesystems of
export credit insurance ;
$
Whereas itisappropriate tomaintain theprinciples which underlie the
proposals previously submitted bytheCommission andtheDirectives already
adopted bythe Council ;
Whereas itseems appropriate atthe present time toconfine harmonisation
inthis sphere totheadoption ofuniform principles ;
Whereas itisimportant for theCommission toobtain theopinions ofthe
Representatives oftheMember States onanyproblem relating tothe
application ofthis Directive ,

-2-
HAS ADOPTED THIS DIRECTIVE :
Article 1
1.Member States shall adopt such measures "bylaw ,regulation oradministrative
action asmaybenecessary toputinto force asfrom 1October 1975 the
uniform principles set outintheannexes tothis Directive and toensure
therespect ofthese uniform principles byeach credit insurer guaranteeing
fortheaccount orwith thesupport ofaMember State ,inparticular bythe
deposit bysuch credit insurers onorbefore 1April 1975 with theCommission
andwith allother such credit insurers copies ofallpolicy documents tobe
used inpursuance ofthis Directive .Any change which itisproposed to
make insuch policy documents shall likewise becommunicated tothe
Commission and toother credit insurers atleast three months before itis
proposed tointroduce them .
2.Theannexes relate respectively to
Annex I -short term transactions onawhole
turnover basis ;
Annex II –extended terms transactions onawhole turnover
basis ;
Annex III
Part I-spécifie transactions ;
Part II-anendorsement relating toperformance bonds ;
Annex IV -direct bank guarantees issued inconnection
with short term ,extended terms andspecific
transactions ;
Annex V -financial guarantee transactions ;
Annex VI –interpretations .
Article 2
Each Member .State shall ensure that credit insurers guaranteeing for theaccount
.orwith the support oftheMember State concerned insure transactions that fall
within the scope oftheuniform principles inaccordance with theterms laid down
herein andanyspecific rules that maybeadopted bythe Council .Where policies
ofcredit insurance issued bysuch credit insurers areused tofinance
transactions with official support atapreferential rate ofinterest ,the
commercial risks shall becovered inaccordance with this Directive .

Article 3
There shall beappointed ,totheCommission anAdvisory Committee forExport
Credit Insurance ,hereinafter called "theCommittee ",which shall consist
ofRepresentatives oftheMember States ,with aRepresentative ofthe
Commission asChairman .
I
The Committee shall establish itsownrules ofprocedure .
Article 4
The Committee shall meet when convened byits Chairman ,either onthe
initiative ofthe latter orattherequest oftheRepresentative ofa
Member State .
Article 5
The Committee may beconsulted bytheCommission orbyaRepresentative
ofaMember State onanyproblem relating totheapplication ofthis
Directive .
Article 6
TheCommission shall ,within three years oftheentry into force ofthe
uniform principles covered byAnnex I,within five years ,oftheentry
into force oftheuniform principles covered byAnnex II,andwithin six
years ofthose covered byAnnexes III ,IVandV,andafter consultation
with the Committee ,present areport ontheexperience acquired inthe
application ofthe principles contained inthe said Annexes .The Commission
maymake proposals forsuch amendments totheprinciples asappears appropriate .
Areport may ,however ,bepresented atanytime ifaMember State sorequests ;
itshall besubmitted asamatter ofurgency totheCouncil .

Article7
Ontheadoption "bytheCouncilofthisDirective,CouncilDirectiveNo.
70/509/EECof27October1970,CouncilDirectiveNo.70/510/EECof27
October1970andCouncilDirectiveNo.71/86/EECof1February1971shall
berevoked.
Article8
ThisDirectiveisaddressedtotheMemberStates.

ANMEX I
Short Term Transactions onaWhole Turnover Basis
Scope ofthe Guarantee
4
(1)TheGuarantee shall apply tocontracts relating tothesale ofgoods
orservices rendered "byanInsured inaMember State toabuyer outside
thecountry oftheCredit Insurer under which -
(a)theperiod ofcredit granted tothebuyer does notexceed 2years ;
or
(b)where theManufacturing Risk applies ,theperiod oftheManufacturing
Risk does notexceed 1year from theDate ofContract andthe
cumulative period oftheManufacturing Risk and Credit Risk does not
exc.eed 2years from theDate ofContract
andwhich aremade with particular buyers approved bytheCredit
Insurer orwith buyers incountries approved bytheCredit Insurer .
(2)Theterms oftheGuarantee maybevaried oramended soastoallow such
other contracts tobecovered astho Credit Insurer inhis discretion
shall agree ,Provided That theprovisions ofheads (a)and (b)above
apply .
Risks covered
(1)TheManufacturing Risk shall mean thecover provided' under theGuarantee
against loss sustained bytheInsured inconnection with anycontract
(a)before thedespatch ofgoods orinrespect ofservices notyet
completed under that contract ;and
(b)towhich theCredit Risk also applies orpayment under which is
tobemade infull before thedespatch ofthegoods oragainst
documents under anirrevocable letter ofcredit confirmed before
thedespatch ofthe goods .
(2)TheCredit Risk shall mean thecover provided under theGuarantee against
loss sustained bytheInsured inrelation togoods despatched ,delivered
oraccepted ,orservices rendered under anycontract onorafter the
Commencement Date . . •

-2- I
3.Guaranteed percental
The Credit Insurer shall pay totheInsured notmore than -
–$0%oftheamount ofloss when loss isduetotheoccurrence of
any ofcauses A,BorC;
–90i°of "theamount ofloss where loss isduetotheoccurrence of
•anyofcauses DtoKinclusive before despatch ofgoods or
rendering ofservices ;
–95f°oftheamount ofloss where loss isduetotheoccurrence of
•anyofcauses DtoKinclusive after despatch ofgoods or
rendering ofservices .
The amount ofloss shall becalculated inaccordance with Article 13of
this .Annex .
4.Maximum liability
The Credit Insurer shall stipulate themaximum amount ofhisliability
under theGuarantee andsuch liability maybesubject tosuch special
conditions ashemayinhisabsolute discretion impose .
5.Obligations oftheInsured
Without prejudice toanyrule oflaw ,theGuarantee isgiven oncondition
that -O
(a)theInsured hasattheCommencement Date oftheGuarantee disclosed
andwill atalltimes during theoperation oftheGuarantee promptly
disclose allfacts inanywayaffecting therisks guaranteed ; .and
(b)theInsured shall useallreasonable andusual care ,skill and
forethought andtake ailpracticable measures ,including anymeasures
which mayberequired bytheCredit Insurer (including ifsorequired
theinstitution oflegal proceedings ),toprevent orminimise loss ;
and
(c)theInsured shall notify theCredit Insurer inwriting oftheoccurrence
ofanyevent likely tocause aloss promptly onbecoming aware ofany
such occurrence ;and
(d)theInsured shall upon request provide allsuch other information as
theCredit Insurer mayrequire .
*
«/.

-3- I
6.Conditions precedent toCredit Insurer 'sliability
(1)Dueperformance andobservance bytheInsured ofeach andevery
stipulation contained intheGuarantee andinanydocument related
thereto and ,inparticular ,butwithout prejudice tothegenerality
oftheforegoing ,oftheobligation oftheInsured topaysuch
premium asisreferred toinArticle 9ofAnnex I,shall bea
condition precedent totheliability oftheCredit Insurer .'Ifthe
jInsured isinbreach ofanyofhisobligations under theGuarantee
|theCredit Insurer maydisclaim liability .
(2)Nofailure bytheInsured tocomply with anyoftheconditions of
theGuarantee shall bedeemed tohave been excused oraccepted by
the Credit Insurer unless the same isexpressly soexcused oraccepted
bytheCredit Insurer inwriting .
7.Extent oftheGuarantee
The Guarantee «hall come into effect onthe Commencement Date orthe
Date ofContract ,whichever isthe later .
8.Causes ofloss
Forthepurposes oftheGuarantee thefollowing shall constitute causes of
loss –
ATheInsolvency ofthebuyer ;
BThefailure ofthebuyer topaytotheInsured within 6months -after
theduedate ofpayment theamount owing inconnection with gpods
despatched ,delivered toandandaccepted bythebuyer orservices
rendered tothebuyer ;
CThefailure orrefusal ofthebuyer toaccept goods despatched ,where
such failure orrefusal does notarise from anybreach ofcontract on
t
thepart oftheinsured ;
DAgeneral moratorium decreed bythegovernment ofthebuyer 'scountry
orbythat ofathird country through which payment must beeffected ;
EAnyother measure ordecision ofthegovernment ofaforeign country
which inwhole orinpart prevents performance ofthecontract ;

PPolitical events oreconomic difficulties arising outside /thecountry
oftheInsured //orlegislative oradministrative measures taken outside
,/thecountry oftheInsured_7 >being events ,difficulties ormeasures
which prevent ordelay thetransfer ofpayments ordeposits made in
respect ofthe contract ;
GTheoperation ofalaw (including anorder ,decree orregulation having
theforce oflaw)inthebuyer' scountry which hastheeffect ofgiving
the "buyer avalid discharge ofthedebt forpayments made notwithstanding
that ,asaresult offluctuations inexchange rates ,such payments ,when
converted into thecurrency ofthecontract ,areless than theamount of
thedebt atthedate oftransfer ;
H,Theoccurrence outside ./thecountry oftheCredit Insurer__7 °fwar
(including civil war ,hostilities ,rebellion andinsurrection ),revolution
orriot ,cyclone ,flood ,earthquake ,volcanic eruption ortidal wave which
inwhole orinpart prevents performance ofthe contract ;
J (1)The"cancellation ornon-renewal ofanexport licence ;or ■
(2)theoperation ,after theDate ofContract ,ofanylawin/thecountry
oftheCredit Insurer_7 which prohibits orrestricts theexport ofthe
goods tothebuyer' scountry ,other than therefusal togrant an
export licences inrelation togoods which onthesaid Date ofContract
were subject tolicence ;
or
KWhere thebuyer under anycontract isaPublic Buyer JOTaguarantee of
payment andindemnity forbreach ofthecontract hasbeen provided bya
natioiaal government authority ^ "thefailure orrefusal onthepartofthe
buyer tofulfil anyoftheterms ofthecontract . '
Thecauses ofloss maybeamended bytheCredit Insurer provided such
amendment does notinvolve anextension ofthecover beyond that afforded
under the above-mentioned clauses .
t
Premium
(1)Thecover provided under theGuarantee issubject totheobligation of
theInsured topaypremium .Premium shall beassessed onthemaximum
amount atrisk .

(2)Where thepayment ofpremium oranypart thereof ispostponed after the
commencement oftherisks theCredit Insurer shall "beentitled tocharge
interest ontheunpaid amount ofsuch premium .
Exclusion ofliability
The Credit Insurer shall not "be'liable foranyloss sustained inrespect of
anycontract -
! I
(a)byreason ofthefailure oftheInsured orofanyperson acting onhis
behalf tofulfil anyoftheterms and conditions ofthe contract orto
comply with theprovisions ofanylaw (ororder ,decree orregulation
having theforce oflaw)insofarasthat lawaffects performance of
the contract ;
(b)byreason ofthefailure toobtain anyimport licence oranyother
authorisation necessary fortheperformance ofthecontract under any
law (including anyorder ,decree orregulation having theforce oflaw)
inforce atthedate onwhich theCredit Insurer 1sliability inrespect
ofthe contract commences under the Guarantee unless the Credit Insurer
agrees otherwise ;
(c)which provides that payment istobemade inacurrency other than
./currency oftheCredit Insurer 'scountry _7ifonthedate onwhich the
Credit Insurer 'sliability inrespect ofthat contract commences under
theGuarantee ,theuseofsuch currency would contravene anyExchange
Control Regulations inforce atthat date in_/theCredit Insurer 's
country__7 >thebuyer' scountry ,thecountry inwhose currency payment
istobemade ,oranycountry through which under theterms ofthe
contract payment istobemade ; •
(d)ifatthetime ofmaking aclaim theInsured has ,without theconsent
ofthe Credit Insurer orwithout complying with such conditions asthe
Credit Insurer mayhave prescribed ongiving such consent ,assigned or
charged anypart oftheamount owing under thecontract oranysecurity
received bytheInsured inrespect ofthecontract .

I
11.Tininnurfìrì percent a^e
TheInsured shall retain uninsured andexclusively forhisownaccount
responsibility forthat portion ofanyloss sustained "byreason ofany
ofthecauses ofloss specified intheGuarantee which isnotcovered by
the Credit Insurer .
I
4
I
12.Allocation ofmonies received
I
Allpayments ofprincipal payable under anycontract andallpayments
ofinterest accruing uptotheduedate ofpayment ofsuch principal shall be
allocated bytheInsured ortheCredit Insurer pari passu toguaranteed and
unguaranteed debts .
13-Calculation ofloss
(l)Under theManufacturing Risk theamount ofloss shall notexceed the
lesser of-
(a)theamount ofthecosts incurred bytheInsured inrespect of
goods notdespatched orservices not completed less the
aggregate of-
(i)anyamount which canbecredited or"appropriated tothe
contract ,including anysumfound tobepayable bythe
Insured tothebuyer inaccordance with anysuch
proceedings against thebuyer asarereferred toin
Article 15ofAnnex I;and
(ii)anyamount which theInsured hasrecovered from any
source ,including theproceeds from therealisation of
anysecurity ortheresale ofanygoods ormaterials
relating tothe contract ;
0R
(b)theamount which would have been dueunder thecontract less the
»
aggregate of-
(i)anyamount which cambecredited orappropriated tothe
contract ,including anysuafound tobepayable bythe
Insured tothebuyer inaccordance with anysuch proceedings
against thebuyer asarereferred toinArticle 15ofAnnex
I;and
(ii)anyamount which theInsured hasrecovered from anysource ,.

-7- I
including theproceeds from therealisation ofanysecurity
ortheresale ofanygoods ormaterials relating tothe
contract ;and
(iii)anyexpenses saved bytheInsured .
(2)Under theCredit Risk theamount ofloss shall notexceed theamount
owing totheInsured inaccordance with the contract inrespect of
goods despatched ,delivered oraccepted ortheamount which would
Ihavebeenowing ifthegoods hadbeenaccepted ,orservices rendered
|less theaggregate of-
(a)anyamount which canbecredited orappropriated tothecontract j
including anysumfound tobepayable bytheInsured tothe
buyer inaccordance with anysuch proceedings against thebuyer
asarereferred toinArticle 15ofAnnex I;and
(b)anyexpenses saved bytheInsured .
Theamount owing shall belimited toprincipal andinterest uptothe
due date ofsuch principal .
14.Date for payment ofclaim
Aclaim shall bepaid - .
(a)where thecause ofloss iscause A,immediately after theoccurrence
oftheInsolvency ;
(b)where thecause ofloss iscause B,6months after theduedate of
payment ;
(c)where thecause ofloss iscause C,onemonth after thegoods have ,
with the Credit Insurer 'sapproval ,been resold orotherwise disposed
of; .
(d)where thecause ofloss iscause Porcause G,4months after thedue
date ofpayment or4months from completion oftheformalities necessary
toobtain transfer tothecountry oftheCredit Insurer ofthepayments
ordeposits made ,whichever isthelater JOTsuch longer period asmay
beprovided inanyspecial condition forthetime being applicable to
anyparticular country_7 »
(e)inallother cases ,4months after theoccurrence ofthecause ofloss ,
orimmediately after thedate onwhich theInsured suffered loss asa
result ofthat occurrence ,whichever isthelater .

-8-
15.Disputes
The Credit Insurer maypostpone payment ofaclaim until anydispute "between
thebuyer and theInsured concerning the loss has "been settled .The Credit
Insurer mayrequire theInsured tohave thedispute settled bylegal
proceedings against thebuyer inthebuyer 'scountry orinsuch other manner
asthe Credit Insurer shall decide .
«
|
16.Action after payment ofclaim
I-.R.I IN,IM 1.1.I .I..I I III
TheInsured (andwhere national lav;permits ,anyagent acting onhisbehalf ,
co-contractor andsub-contractor )shall beunder obligation totake allsteps
which theCredit Insurer mayrequire toeffect recoveries .Such steps may
include theinstitution oflegal proceedings inanycountry .
17.Legal costs
The costs of "anylegal proceedings undertaken with theapproval orin
piirsuance ofarequirement oftheCredit Insurer shall beborne bythe
Insured andtheCredit Insurer intheproportions inwhich loss isborne by
them respectively . '
18.Recoveries
(i)Allsums which fall tobeallocated toacontract inrespect ofwhich
•theCredit Insurer haspaid aclaim under theGuarantee andanyinterest
received bytheInsured relating toaperiod after thedate ofpayment
ofa'claim ;and
(ii)allother sums recovered from anysource ,including suras resulting from
therealisation ofanysecurity orfrom theresale ofany goods or
materials relating tosuch contract
shall beshared between the Credit Insurer and theInsured intheproportion
inwhich loss isborne bythem respectively .
19.Conversion rates forforeign currencies
Allamounts which require tobeconverted into thecurrency ofthecountry
ofthe Credit Insurer shall besoconverted atarate and atadate tobe
Ν
determined bytheCredit Insurer .

II
AMEX II
Extended Terms Transactions onaWhole Turnover Basis
1.Scope ofthe Guarantee
AnExtended Terms Guarantee may "beissued inrespect ofcontracts relating
tothe sale ofgoods ortherendering ofservices byanInsured inaMember
State toabuyer outside thecountry ofthe Credit Insurer ,being contracts -
(a)under which theperiod ofcredit granted tothebuyer does notexceed
5years ;and
(b)which dohotfall within theprovisions ofArticle 1(b)ofAnnex I;
andwhich aremade with particular buyers approved bythe Credit Insurer or
with buyers incountries approved bytheCredit Insurer .
2.Theprovisions setoutinArticles 2-19 inclusive of
Annex Ishall apply ,subject tothefollowing amendments
A.Article 9ofAnnex Ishall beread asifattheendofsub-paragraph (1)
there were added the words
"and ,iftheCredit Insurer sorequires ,ontheperiod ofthat
risk ."
B.Article 13 .ofAnnex Ishall bedeleted andreplaced bythefollowing :-
"•13.Calculation ofloss *
(1)Under theManufacturing Risk theamount ofloss shall not
exceed the lesser of-
(a)theamount ofthecosts incurred bytheInsured in
respect ofgoods notdespatched orservices not
completed less ,insofarassuch amount has not
been taken into account incalculating theamount
ofanyother loss under theguarantee ,the
aggregate of-

-2- II
(i)anyamount which canbecredited orappropriated
tothecontract ,including anysumfound tobe
payable bytheInsured tothebuyer inaccordance
with anysuch proceedings against thebuyer as
arereferred toinArticle 15ofAnnex I;and
(ii)anyamount which theInsured hasrecovered from
any sovurce ,including theproceeds from the
realisation ofanysecurity ortheresale of
any goods ormaterials relating tothecontract :
0R
(b)theamount which would have been dueunder thecontract
less theaggregate of-
(i)anyamount which canbecredited orappropriated
tothecontract }including anysumfound tobe
payable bytheInsured tothebuyer inaccordance
with any such proceedings against thebuyer as
arereferred toinArticle 15ofAnnex I;and
(ii)anyamount which theInsured hasrecovered from
any sourcei including theproceeds from therealisation
ofanysecurity ortheresale ofanygoods or
materials relating tothe contract ;and
(iii)anyexpenses saved bytheInsured .
(2)Under theCredit Risk theamount ofloss shall notexceed
theamount owing totheInsured inaccordance with the
contract inrespect ofgoods despatched ,delivered or
accepted ortheamount which would have been owing ifthe
goods hadbeen accepted ,orservices rendered less ,inso
far assuch amount has not been taken into account in
calculating theamount ofanyother loss under the
guarantee ,theaggregate of-
(a)anyamount which canbecredited orappropriated to
thecontract including any surafound tobepayable
bytheInsured tothebuyer inaccordance with any
such proceedings against thebuyer asarereferred
toinArticle 15ofAnnex I:and <>

(b)anyexpenses saved ,"bytheInsured .
Theamount owing shall "belimited toprincipal and interes
uptotheduedate ofsuch principal andanyfreight ,
insurance orother charges paid bytheInsured onthe
buyer 'sbehalf .
(3)Where loss hasbeen ascertained inaccordance with
sub-paragraph (2)ofthis Article ,theCredit Insurer
may elect topay loss calculated onthetotal contract
price less theaggregate of-
(i)anyamount which maybecredited orappropriated
tothe contract ;and
(ii)anyexpenses saved bytheInsured ;and
(iii)theamount ofanyinstalment orpart ofthetotal
contract price inrespect ofwhich the Credit
Insurer hasalready implemented theGuarantee
andpayment inrespect oftheamount ofloss soascertaine
shall beafull andcomplete discharge ofthe Credit
Insurer 'sliability under theGuarantee ."

III (I)
AITNEX III
PART I- "Scecific Transactions
1..Scope ^oftheGuarantee
(1)ASpecific Guarantee mayboissued inrespect ofcontracts relating to
the sale ofgoods ortherendering ofservices byanInsured ina
Member State toabuyer outside thecountry oftheCredit Insurer ,
being contracts which donot fall within theprovisions of-
(a)heads (a)and (b)ofArticle 1ofAnnex I;and
(b)heads (a)and (b)ofArticle 1ofAnnex II.
(2)Theterras oftheGuarantee maybevaried oramended soastoallow
contracts for hire and such other contacts tobecovered asthe Credit
Insurer inhisdiscretion shall agree ,Provided That theprovisions of
heads (a)and (b)above apply .
(3)TheGuarantee shs.ll apply toforeign goods andservices approved bythe
Credit Insurer Provided That theInsured need not seek theapproval of
the Credit Insurer ifthevalue oftheforeign goods and services does
not exceed 10/»ofthe contract amount .
2.Risks covered
(1)TheManufacturing Risk shall mean thecover provided under theGuarantee
against loss sustained bytheInsured inconnection with anycontract -
(a)before thedespatch ofgoods or,inthecase ofservices ,before
thebuyer 'sobligation topayforsuch services inaccordance
with the terms ofthe contract has arisen ,and
(b)towhich theCredit Risk also applies .
(2)TheCredit Risk shall mean thecover provided under thoGuarantee against
loss sustained bytheInsured inrelation togoods despatched ,delivered
oraccepted orservices rendered under anycontract onorafter the
Commencement Date where thebuyer 'sobligation tomake payment inrespect
ofthose goods orservices inaccordance with thecontract hasarisen .

-2- III(I)
3-Guaranteepercentage
TheCreditInsurershallpaytotheInsurednotmorethan90/Joftheasount
oflossascertainedinaccordancewiththeprovisionsoftheGuarantee.
4-Maximumliability
TheCreditInsurershallstipulatethemaxxnmaamountcfhisliabilityunder
theGuaranteeandsuchliabilitymaybesubjecttosuchspecialconditions
I
ashemaymhisabsolutediscretionimpose.
i
5-Obligations oftheInsured
Withoutprejudicetoanyruleoflav/,theGuaranteeisgivenoncondition
that-
(a)theInsuredhasattheComaenceEent DateoftheGuaranteedisclosedand
willatalltiraesduringtheoperationoftheGuaranteepromptlydisclose
allfactsinanywayaffectingtherisksguaranteed;and
(b)theInsuredshalluseallreasonableandusualcare,skillandforethought
andtakeallpracticable measures,includinganymeasureswhichmaybe
requiredbytheCreditInsurer(includingifsorequiredtheinstitution
oflegalproceedings),topreventorminimiseloss;and
(c)theInsuredshallnotifytheCreditInsurerinwritingoftheoccurrence
ofanyeventlikelytocausealosspromptlyonbecomingawareofany
suchoccurrence ;and
(d)theInsuredshalluponrequestprovideallsuchotherinformationasthe
CreditInsurermayrequire.
6.ConditionsprecedenttoCreditInsurer'sliability \.
(1)DueperformanceandobservancebytheInsuredofeachandevery
stipulationcontainedintheGuaranteeandinanydocumentrelatedthereto
and,^.nparticular,butwithoutprejudicetothegeneralityofthe
foregoingoftheobligationoftheInsuredtopaysuchpremiumasis
referredtoinArticle9ofAnnexIII,PartI,shallbeacondition
precedenttotheliabilityoftheCreditInsurer.IftheInsuredis
inbreachofanyofhisobligationsundertheGuaranteetheCredit
Insurermaydisclaimliability.

-3- III(I)
(2)Nofailure "bytheInsuredtocomplywithanyoftheconditionsofthe
Guaranteeshallbedeemedtohave"beenexcusedoracceptedbythe
CreditInsurerunlessthesameisexpresslysoexcusedoracceptedby
theCreditInsurerinwriting.
ExtentoftheGuarantee
TheCuaranteeshallcoraeintoeffectontheCommencement DateortheDate
ofContract,whicheveristhelater,ProvidedThatnoliabilityshallarise
undertheGuaranteeuntilallconditionsprecedentwhetherrelatingtothek
initialpaymentorobtainingoflicencesorotherwise,stipulatedinthe
contracthavebeensatisfiedandthecontracthasenteredintoforce.
Causesofloss
ForthepurposesoftheGuaranteethefollowingshallconsitutecausesof
loss-
ATheInsolvencyofthebuyer;
BThefailureofthebuyertopaytotheInsuredwithin6monthsafterthe
duedateofpaymenttheamountowinginconnectionwithgoodsdelivered,
despatchedtoandacceptedbythebuyerorservicesrenderedtothebuyer.
CThefailureorrefusalofthebuyertoacceptgoodsdespatched,where
suchfailureorrefusaldoesnotarisefromanybreachofcontracton
thepartoftheInsured;
DAgeneralmoratoriumdecreedbythegovernmentofthebuyer'scountryor
bythatofathirdcountrythroughwhichpaymentmustbeeffected;
EAnyothermeasureordecisionofthegovernmentofaforeigncountry
whichinwholeorinpartpreventsperformanceofthecontract;
PPoliticaleventsoreconomicdifficultiesarisingoutside_/thecountry
oftheInsuredJ7orlegislativeoradministrative measurestakenoutside
JjthecountryoftheInsured_7»beingevents,difficultiesormeasures
whichpreventordelaythetransferofpaymentsordepositsmadein
respectofthecontract;

-4- III (I)
GTheoperation ofalaw (including anorder ,decree orregulation having
theforce oflaw)inthe "buyer 'scountry which hastheeffect ofgiving
the "buyer avalid discharge ofthedebt forpayments made notwithstanding
that ,asaresult offluctuations inexchange rates ,such payments ,when
converted into thecurrency ofthe contract ,are less than theamount of
thedebt atthedate oftransfer ;
HTheoccurrence outside _/thecountry oftheCredit Insurer _7ofwar
(including civil war ,hostilities ,rebellion andinsurrection ),
revolution orriot ,cyclone ,flood ,earthquake ,volcanic eruption or
tidal wave which inwhole orinpart prevents performance ofthecontract ;
J (l)Thecancellation ornon-renewal ofanexport licence ;or
(2)theoperation ,after theDate ofContract ,ofanylawinJthecountry
oftheCredit Insurer _7which prohibits orrestricts theexport of
thegoods tothebuyer 'scountry ,other than therefusal togrant an
export licence inrelation togoods which onthe'said Date ofContract
were subject tolicence ; •
0R
KWhere thebuyer under anycontract isaPublic Buyer JOTaguarantee of
payment andindemnity forbreach ofthecontract hasbeen provided bya
national government authority_7 "thefailure or»refusal onthepart ofthe
buyer tofulfil anyofthe terras ofthecontract .
Thecauses ofloss maybeamended bytheCredit Insurer provided such amendment
does notinvolve anextension ofthecover beyond that afforded under the
above-mentioned clauses .
Premium
(1)Thecover provided under theGuarantee issubject totheobligation of
theInsured topaypremium .Premium shall beassessed onthemaximum
amount atrisk and ,iftheCredit Insurer sorequires ,ontheperiod of
that risk .
(2)Where thepayment ofpremium oranypart thereof ispostponed after the
commencement oftherisks theCredit Insurer "shall beentitled tocharge
interest ontheunpaid amount ofsuch premium .

-5- III (I)
(3)TheCredit Insurer shall been-titled ,where appropriate ,tomake a
partial refund ofpremium .Where aclaim hasbeen paid under the
Manufacturing Risk thecalculation ofthepremium forthe Credit Risk
may berevised and the Credit Insurer shall beentitled tomake a
partial refund ofpremium (subject toa10fodeduction ofthepremium to
administrative expenses oftheCredit Insurer ).
4
Exclusion ofliability
TheCredit Insurer shall notbeliable forany loss sustained inrespect
ofany contract –
(a)byreason ofthefailure oftheInsured orofanyperson acting onhis
behalf tofulfil any oftheterms and conditions ofthe contract orto
comply with theprovisions ofanylaw (ororder ,decree orregulation
having theforce oflaw)insofarasthat lawaffects performance of
the contract ;
(b)byreason ofthefailure toobtain anyimport licence oranyother
authorisation necessary fortheperformance ofthecontract under any
law (including anyorder ,decree orregulation having theforce oflav;)
inforce atthedate onwhich the Credit Insurer 'sliability inrespect
ofthe contrs.ct commences under the Guarantee --unless the Credit Insxirer
agrees otherwise ;
(c)which provides that payment istobemade inacurrency other than
/currency oftheCredit Insurer 'scountry _7ifon "thedate onwhich the
Credit Insurer 'sliability inrespect ofthat contract commences under
theGuarantee ,theuseofsuch currency would contravene anyExchange
Control Regulations inforce atthat date in./theCredit Insurer 's
country_7 »"thebuyer 'scountry ,thecountry inwhoso currency payment
istobemade ,oranycountry through which under theterms ofthe
contract payment istobemade ;
(d)arising from acause which occurs before theInsured hasreceived in
/thecountry oftheCredit Insurer _7 "theamount oftheinitial
instalment specified inthe contract nor shall the Credit Insurer be
liable forloss inrespect oftheinitial instalment ;
(e)byreason ofthefact that theCredit Insurer mayhave seen andexamined
thecontract ;

-6- III (I)
(f)if,without theCredit Insurer 'sconsent ,theInsured ,agrees toany
variation intheterns ofthecontract oragrees tooracquiesces in
anydeparture from such terns ;
(g)ifatthetime ofmaking aclaim theInsured has ,without theconsent
oftheCredit Insurer orwithout complying with such conditions asthe
Credit Insurer mayhave prescribed ongiving such consent ,assigned or
charged anypart oftheamount owing under thecontract oranysecurity
received bytheInsured inrespect ofthecontract ,
11.Uninsured percentage
TheInsured shall retain uninsured andexclusively forhisownaccount
responsibility forthat portion ofanyloss sustained byreason ofanyof
the causes ofloss specified intheGuarantee which isnot covered bythe
Credit Insurer ,
12.Allocation ofmonies received
Allpayments ofprincipal payable voider any contract and allpayments of
interest accruing uptothedue date ofpayment ofsuch principal shall be
allocated bytheInsured orthe Credit Insurer pari passu toguaranteed and
unguaranteed debts .
13.Calculation oflos3
(1)Under' theManufacturing Risk theamount ofloss shall notexceed the
lesser of-
(a)theamount ofthecosts incurred bytheInsured inrespect of
goods notdespatched orservices notcompleted less ,insofaras
such amount ,hasnotbeen taken into account incalculating the
amount ofanyother loss under theGuarantee ,theaggregate of-
(i)anyanount which canbecredited orappropriated tothe
contract ,including anysumfound tobepayable bythe
Insured tothebuyer inaccordance with anysuch
proceedings against thebuyer asarereferred toin
Article 15ofAnnex IIIPart I;and
../■

-7- III (I)
(ii)anyamount which theInsured hasrecovered from anysource ,
including "theproceeds from therealisation ofanysecurity
ortheresale ofany goods ormaterials relating tothe
contract ;
0R
(t>)theamount which would have "been dueunder thecontract less the
aggregate of-
(i)anyamount which can "becredited orappropriated tothe
contract ,including anysumfound tobepayable bythe
Insured tothebuyer inaccordance with anysuch
proceedings against thebuyer asarereferred toin
Article 15ofAnnex IIIPart I;and
(ii)anyamount which theInsured hasrecovered from anysource ,
including theproceeds from therealisation ofanysecurity
ortheresale ofanygoods ormaterials relating tothe
contract ;and
(iii)anyexpenses saved bytheInsured .
Under the Credit Risk the amount ofloss shall not exceed the amount
owing tothe Insured inaccordance with thecontract inrespect of
goods despatched ,delivered oraccepted ortheamount which would
have been owing ifthegoods hadbeen accepted ,orservices rendered
less ,insofarassuch amount hasnot been taken into account in
calculating theamount ofanyother loss under theGuarantee ,the
aggregate of- -
(a)anyamount which canbecredited orappropriated tothecontract >
including anysumfound tobepayable bytheinsured tothe
buyer inaccordance with anysuch proceedings against thebuyer
asarereferred toinArticle 15ofAnnex IIIPart I;and
(b)anyexpenses saved bytheInsured .
Theamount owing shall include principal andinterest uptothedue
date ofpayment ofsuch principal andanyfreight ,insurance orother
charges paid bytheInsured onthebuyer 'sbehalf .(ii)
(iii)
(2)Under the

-8- III (I)
(3)Where loss hasbeen ascertained ,inaccordance with sub-paragraph (2)
ofthis Article theCredit Insurer mayelect topayloss calculated
onthetotal contract price less theaggregate of–
(i)anyamount which may "becredited orappropriated tothe
contract ;and
(ii)anyexpenses caved bytheInsured ;and
(iii)theamount ofanyinstalment orpart ofthetotal contract price
inrespect ofwhich the Credit Insurer hasalready implemented
the Guarantee »
andpayment inrespect oftheamount ofloss soascertained shall be
afull andcomplete discharge ofthe Credit Insurer 'sliability under
the Guarantee .
(4)Anyamounts paid bytheInsured under abond guaranteeing performance
ofthecontract shall beexcluded from any calculations oftheamount
ofloss .
Date for payment ofclaim
Aclaim shall bepaid –
(a)where thecause ofloss iscause A,immediately after theoccurrence
oftheInsolvency ; ,
(b)where thecause ofloss iscause B,6months after theduedate of
payment ;
(c)where thecause ofloss iscause C,onemonth after thegoods have ,
with -the Credit Insurer 'sapproval ,been resold orotherwise disposed of
(d)where thecause ofloss iscause Forcause G,4months after thedue
date ofpayment or4months from completion oftheformalities necessary
toobtain transfer tothecountry ofthe Credit Insurer ofthepayments
ordeposits made ,whichever isthelater _/orsuch longer period asmay
beprovided inanyspecial condition forthetime being applicable to
anyparticular country_7 »
.(e)inallother cases ,4months after theoccurrence ofthecause ofloss ,
orimmediately after thedate onwhich theInsured suffered loss asa
result ofthat occurrence ,whichever isthelater .

-9- III (I)
15-Disputes
The Credit Insurer maypostpone payment ofaclaim -until anydispute
between the "buyer andtheInsured concerning theloss hasbeen settled .
TheCredit Insurer mayrequire theInsured tohave thedispute
settled bylegal proceedings against thebuyer inthebuyer 'scountry
orinsuch other manner asthe Credit Insurer shall ,decide .
16.Action after payment ofclaim
TheInsured (andwhere national lawpermits ,anyagent acting onhis
behalf ,co-contractor andsub-contractor )shall beunder obligation to
take allsteps which theCredit Insurer may require toeffect recoveries .
Such steps mayinclude theinstitution oflegal proceedings inany
country .
17.Leral costs
The costs ofanylegal proceedings undertaken with theapproval orin
pursuance ofarequirement ofthe Credit Insurer shall beborne bythe
Insured and the Credit Insurer intheproportion inwhich loss isborne
bythem respectively . .
18.Recoveries
(i)Allsums which fall tobeallocated toacontract inrespect ofwhich
the Credit Insurer has paid aclaim' under theGuarantee andany
interest received bytheInsured relating toaperiod after thedate
ofpayment ofaclaim ;and
(ii)all other sums recovered from anysource ,including sums resulting
from therealisation ofanysecurity orfrom theresale ofany goods
ormaterials relating tosuch contract
shall beshared between the Credit Insurer and the Insxired inthe
proportions inwhich loss isborne bythem respectively .
19*Conversion rates for foreign currencies
Allamounts which require tobeconverted into thecurrency ofthecountry
ofthe Credit Insurer shall besoconverted atarate and atadate tobe
determined bytheCredit Insurer .

-10- III I)
Appointment ofExpert
(1)TheCredit Insurer mayathisdiscretion appoint anexpert such as
anaccountant for thepurpose ofverifying theamount ofloss
claimed "bytheInsured .
(2)Thefeeoftheexpert soappointed shall bepaid either -
(a)bytheInsured andtheCredit Insurer intheproportions in
which loss isborne bythem respectively }
or
(b)iftheexcess ofthedebit balance oftheInsured' sstatement
ofloss over the loss ascalculated bytheexpert is–
(i)10foorless ,theCredit Insurer shall paythefee
of -theexpert ;
(ii)more than 10$butless than 20$ ,theCredit Insurer
and the Insured shall share the fee ofthe expert
equally ;
(iii)20joormore ,theInsured shall paythefeeofthe
expert .

III (II)
ACT -:EXIII
PART II-Endorsement for extension ofthe Guarantee
(Bond guaranteeing satisfactory performance ofthecontract )
1.Scope ofthe Bond Endorsement
TheGuarantee shall extend tolosses consequent upon thecalling ofthe
bond -
(a)where aclaim hasbeen made under theManufacturing Risk ;
| (b)where ,without such claim ,thebond iscalled asadirect result of
apolitical measure ordecision ofgeneral application taken bythe
govei-nraent ofaforeign country ;
(c)where thebond iscalled asaresult ofadispute concerning the
satisfactory performance ofthecontract ,insofarasthe Insured
isunable toobtain from thebsneficiary ofthebond compliance with
ajudgment orarbitration award ordering thebeneficiary toreturn
the sums which hehas withheld .
Obligations ofthe Insured
(1)TheInsured maynotwithout theexpress authority oftheCredit
Insurer inwriting agree toanyamendment oftheterms ,the amount
^ ortheduration oftheperformance bond ortheconditions forthe
exercise orrelease ofrights under it.
(2)TheInsured shall within 30days following theevent inquestion
notify the Credit Insurer -
(a)oftherefusal ofthebeneficiary ofthetond torelease his
rights under the bond onthedate provided ;
(b)oftheexercise bythebeneficiary ofhisrights under thebond
orofhisrefusal tocomply ,inthetime allowed ,with a
judgment orarbitration award ordering himtoreturn thesums
which hehaswithheld ;
(c)ofhisbecoming aware oftherelease ofrights under the ond .
./•

-2- III(II)
Maximumliability
TheCreditInsurer'sreaxiniumliabilityinrespectofthebondshall "be
90%oftheguaranteedamountofthebond.
Dateforpaymentofclaim
AclaimshallbepaidundertheEndorsement-
(a)inthecasereferredtoinhead(a)ofArticle1,inPartIIof
AnnexIII,atthesametimeastheclaitaispaidunderthe
Manufacturing Rick;
(b)inthecasereferredtoinhead(b)ofArticle1,inPartIIof
AnnexIII,6monthsafterthebondiscalled;
(c)inthecasereferredtoinhead(c)ofArticle1,inPartIIof
AnnexIII,6monthsafterthejudgmentorarbitration awardordering •
thebeneficiary ofthebondtoreturnthesumswhichhehaswithheld }
ProvidedThatifafterappealafinaljudgmentisiradeinfavourof
thebeneficiary ofthebond,anymoniespaidbytheCreditInsurer
totheInsuredinaccordance withthetermsoftheEndorsement must
beimmediatelyrepaidtotheCreditInsurer.
GeneralConditions
TheInsuredshallpaypremiummrespectoftheissueoftheEndorsement
andtheprovisionsofAnnexIIIPartIrelatingtorecoveries,legal
costsandconversionofcurrencyshallalsoapplytotheEndorsement .

IV
AIWEX IV
Direct Bank Guarantees related toacredit insurance policy
VJhere abank ismaking finance available atapreferential rate ofinterest
tooronbehalf ofanexporter inconnection with anyoftheexporter 's
export contracts and theexporter istheholder of-
(1)ashort terra guarantee ; ' .
(2)anextended terras guarantee ;or
(3)aspecific guarantee
theCredit Insurer may issue aguarantee tothat bank inaccordance with the
following provisions :
Scope' oftheDirect Bank Guarantee
(1)TheDirect Bank Guarantee shall beunconditional andmayextend to-
(a)the ..amount ofthefinance made available bythebank totheexporter
inrespect ofprincipal and/orinterest ;or
(b)theamount ofcredit inrespect ofprincipal andinterest uptothe
duedate ofthat principal granted bytheexporter tothebuyer under
therelevant export contract .
PROVIDED ALV.'AYS THAT theexporter shall retain uninsured and forhis own
account responsibility forthat portion ofanyloss which theexporter
.bears under therelevant short term ,extended terms orspecific guarantee .
(2)Subject totheprovisions relating torecourse setoutbelow -
(a)theCredit Insurer shall paytothebank notmore than 95/®ofany
amount ofsuch principal and/orinterest which remains unpaid three
months after itsdue date ;or
(b)theCredit Insurer shall paytothebank 100^ofanyamount ofsuch
principal and/orinterest which remains unpaid three months after its
duedate PROVIDED THAT such payment Ehall notrelate tothe SUTSS
first falling dueamounting to5°fthefinance made available by
thebonk bywayofcredit .

Risk covered .
TheBank Guarantee shall cover thefailure tomake payment onduedate
(i)bytheexporter ;or
(ii)where thefinance orcredit hasbeen secured bypromissory
notes orother instruments ofsecurity ,bythebuyer orany
third party ,asthe case may be.
Maximum liability
The Credit Insurer shall stipulate themaximum amount ofhisliability
under the Bank Guarantee .
Recourse
(1)Theissue bytheCredit Insurer ofaDirect Bank Guarantee related
toashort terra ,extended terms orspecific guarantee shall not put
theexporter ,intheevent oftheoccurrence ofacause ofloss ,in
abetter financial position than hewould have been ifhehadonly
his short terra ,extended terms orspecific guarantee issued bythe
Credit Insurer and there had been nofinance orcredit made
available tohimbythebank .
Accordingly ,theCredit Insurer shall take recourse totheexporter
forthat portion ofanyamount paid bythe Credit Insurer tinder the
Direct Bank Guarantee which exceeds the amount ofloss which would
have been payable totheexporter under the terras oftherelevant
short term ,extended terms orspecific guarantee .
(2)Theexporter Ehall berequired torepay that sumtotheCredit
Insurer ondemand with interest from thedate ofpayment bythe
Credit Insurer tothe bank .
Recoveries
Anysums recovered bythebank ortheCredit Insurer inconnection with
anyguaranteed instrument inrespect ofwhich theCredit Insurer has
wade payment under theDirect Bank Guarantee shall beshared between the
bank and theCredit Insurer intheproportions inwhich loss isborne by
them respectively . .

-3- IV
6.Premium • . •
The Credit Insurer shall require theexporter topaypremium inreGpect
ofthe issue ofthe Direct Bank Guarantee .
Premium shall baassessed onthemaximum amount atrisk and ,ifthe
Credit Insurer sorequires ,ontheperiod ofthat risk .
Ο

ANNEX V
Financial Guarantees not related toany credit insurance policy
Where abank inthecountry ofthe Credit Insurer ismaking finance available
inconnection with any export contract byway ofadirect loan orcredit
facility granted ,tothebuyer orborrower the Credit Insurer may issue a
financial guarantee tothat bank inaccordance with thefollowing provisions :
Scope oftheFinancial Guarantee
Thefinancial guarantee shall beunconditional and ,subject totheprovisions
relating torecourse setoutbelow –-
(a)theCredit Insurer shall paytothebank notmore than 957 '»ofthe
amount ofprincipal andinterest which thebuyer orborrower has
undertaken topay tothebank inaccordance with theprovisions of
theLoan Agreement andwhich remains unpaid three months after its
due date ;or "
(b)theCredit Insurer shall paytothebank 100$ of-theamount of
•principal and .interest which thebuyer orborrower hasundertaken
topaytothebank inaccordance with theprovisions oftheLoan
Agreement andwhich remains unpaid three months after itsduedate
PROVIDED THAT such payment shall notrelate tothe sums first falling
dueamounting to5$ofthefinance made available bythebank byway
ofcredit .
Maximum liability
The Credit Insurer shall stipulate themaximum amount ofhis liability under
thefinancial guarantee .

Commencement ofthe Financial Guarantee
The Guarantee shall come into effect when there isinexistence
(i)avalid export contract between theexporter andthebuyer ;and
(ii)avalid Loan Agreement between thebank andthebuyer orborrower
iunder which allconditions precedent have been satisfied
:andithe buyer orborrower makes adrawing from tholoan orcredit
ifacility .
Recourse "
(a)TheCredit Insurer shall take recourse totheexporter forthe
amount paid bythe Credit Insurer tothebank under thefinancial
guarantee incircumstances where
(i)thebuyer orborrower isindefa\ilt under theLoan Agreement
atatime when theexport contract hasbeen terminated by
thebuyer inaccordance with itsterms ovting tothedefault
ofthe exporter ;or
(ii)thebuyer orborrower isindefault under theLoan Agreement'
atatime when adefault bytheexporter under theterms of
theexport contract hasoccurred andremains unremedied .
(b)Theexporter shall berequired to -paythat sumtotheCredit Insurer
ondemand with interest from the date onwhich the Credit Insurer
haspaid thebank under thefinancial guarantee .
Obligations ofthebank
Thefinancial guarantee isgiven oncondition that thebank -
(a)shall useallreasonable andusual care ,skill andforethought and
take allpractical measures ,including anymeasures which maybe
required bytheCredit Insurer (including ifsorequired the
institution oflegal proceedings )toprevent orminimise loss ;
(b)shall donothing toprejudice oradversely affect therights or
interest oftheCredit Insurer under thefinancial guarantee ;

-3- V
(c)promptly upon becoming aware ofthesame notify theCredit Insurer
oftheoccurrence ofanyevent ofdefault specified intheLoan
Agreement ;
(d)shall notamend ordepart from theterms oftheLoan Agreement or
exercise orrefrain from exercising any rights orpowers conferred
onthebank bytheLoan Agreement except inaccordance with the
requirements ofthe Credit Insurer ;
(e)shall upon request provide such information astheCredit Insurer
mayrequire .
*
6.Action after payment ofclaim
Theban ]:shall beunder obligation totake allsteps \tfhich the Credit
Insurer mayrequire toeffect recoveries .Such steps mayinclude the
transfer orassignment totheCredit Insurer ofanyinstruments of
security inrespect ofwhich payment hasbsen made andtheinstitution
oflegal proceedings inany country .
7.Recoveries
Anysums recovered bythebank inconnection with anyguaranteed
instrument inrespect ofwhich theCredit Insurer hasmade payment
under thefinancial guarantee shall beshared between
thebank and the Credit Insurer intheproportions inwhich loss is
borne bythem respectively . *
8.Lepal costs
Thecosts ofanylegal proceedings undertaken with theapproval orin
pxirsuance ofarequirement oftheCredit Insurer shall beborne bythe
Credit Insurer .
9.General Conditions
A.Inorder tosafeguard theposition oftheCredit Insurer ,theCredit
Insurer maytake such steps ashedeems necessary toensure compliance
with thefollowing matters -

-4- V
(1)Provisions which maybeincluded intheexport contracts
(a)theright oftheexporter tosuspend work ortoterminate
the contract inthe event of-
(i)the "buyer 'sorborrower 'sfailure topayunder the
i Loan Agreement ;
j (ii) buyer 'sbreach ofthecontract ;
! (iii)force majeure ;
(b)amethod forcalculating payment duetoeither party on
termination ;
(c)aright toproceed toarbitration under acceptable
international rules forarbitration ;
(d)anyamounts duetotheexporter ontermination orunder
anarbitration award tobepaid under theLoan Agreement ;
(e)allloan drawings tobecertified byoronbehalf ofthe
buyer orbyanindependent .third party asbeing due to
the exporter .
(2)Itshall beacondition oftheLoan Agreement that
(a)theb\iyer 'sorborrower 'sobligation tomake payment to
thebank -under theLoan Agreement isnot conditional upon
performance oftheexport contract bytheexporter ;
(b)theLoan Agreement shall begoverned byandconstrued in
accordance with thelawoftheCredit Insurer 'scountry .
B. Inorder toenable the Credit Insurer toexercise control over the
management ofanyexport contract inconnection with which theCredit
Insurer hasagreed toissue tothebank afinancial
guarantee ,theCredit Insurer mayrequire theexporter
(i)nottoamend orvary anyoftheterms oftheexport contract
ortoexercise anyrights thereunder orsuspend performance
oforterminate theexport contract other than inaccordance
with therequirements ofthe Credit Insurer ;
(ii)tonotify theCredit Insurer promptly upon becoming aware of
theoccurrence ofanyevent which might delay thefulfilment
oftheexporter 'sobligations under theexport contract ;
(iii)toinform theCredit Insurer promptly upon becoming aware of
theoccurrence ofanyevent likely tocause loss under the
export contract .

-5- V
C.The Credit Insurer shall require theexporter topaypremium in
respect oftheissue ofthefinancial guarantee .
Premium shall "beassessed onthemaximum amount atrisk and ,if
the Credit Insurer sorequires ,ontheperiod ofthat risk .

ÂKWEXVI
Interpretations
Forthe1purposesofthisDirectivethefollowinginterpretations shallapply
! I
I
(a)"Commencement Date"shallmeanthedateofsignatureoftheGuarantee;
I
(b)"DateofContract"shallinrelationtoanycontracttowhichthe
iGuaranteeapplies,meanthedateonwhichthatcontractismade:
.. *
(c;"Insolvency"shall "bedeemedtooccurwhen-
(1)the"buyerisdeclaredbankrupt;or
(2)ifthebuyerisacompany,anorderforwinding-uphasbeenmade
onthegroundsthatthecompanyisinsolvent ;or
(3)anorderforadministration ofthebuyer'saffairshasbeenmade
byacourtforthebenefitofhiscreditors;or
(4)inthecourseofexecutionofajudgment,thelevyofexecution
hasnotsatisfiedthedebteitherinfullorinpart;or
(5)thebuyerhasmadeavalidassignment,compositionorother
arrangement .forthebenefitofhiscreditorsgenerally;or
(6)theinsuredshows,tothesatisfactionoftheinsurer,•thatthe
financialstateofthebuyerissuchthatevenpartialpayment
isunlikelyandthattoenforcejudgmentortorequestthatthe
buyerbedeclaredbankruptorwoundupwouldhavenoother
foreseeableresultthanoneoutofproportiontothecostsof
theproceedings ;or
(?)suchconditionsexistasarebyanyothersystemoflaweubstantiall
equivalentineffecttoanyoftheforegoingconditions;
(d)"PublicBuyer"shallmean-
(1)anational,regional,provincialorlocalgovernmentauthority;
(2)organisationofcentralgovernment;
(3)statetradingcorporations ,publiccorporations andorganisations
inthepublicsectorfinancedinwholeorinpartbythestateor
anylocalauthority;
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*tobewordedinaccordancewiththenationallawoftheCreditInsurer.

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(4)privatecompanieswhichareseparatelegalentitiesinwhichthe
statehasaninterest,and.whichitwould,notpermitto"bemade
insolvent
andinrespectofwhichtheCreditInsurerhasconfirmedthatcauseof
lossKshallapply;
(e)"Guarantee"shallmeanthepolicyofinsuranceissuedbytheCredit
IInsurersettingouttheterrasofthecontractofinsurancebetweenthe
,CreditInsurerandtheInsured.

THE COUNCIL OPTILE EUROPEAN COKIOIHITIES
Having regard totheTreaty establishing theEuropean Community ,andin
particular Article 113thereof ;
Having regard totheproposal from theCommission ;
Whereas for thepurpose offurthering harmonization inthe field ofexport
credit insurance aset ofuniform principles applicable tothemain forms
ofexport credit insurance aspractised intheMember States has been
drawn up;
Whereas harmonization ofthese principles does not preclude the
continuance ofcertain practices bycredit insurers operating for the
account or-with thesupport oftheState insofarassuch practices do
not give rise todistortions incompetition ;
Whereas itistherefore appropriate toprovide forderogation ,inspecific
cases andinaccordance with agreed procedure ,from theuniform principles
"s6t out inthe annexes ofCouncil Directive .....
HAS ADOPTED THIS DIRECTIVE
Article 1
Notwithstanding theprovisions ofArticle 2oftheCouncil Directive of..
1974 ontheadoption ofuniform principles inthefield ofexport credit
guarantees ,anyofthecauses ofloss specified intheAnnexes tothesaid
Council Directive mayinpolicies issued inaMember State beexpressed in
negative form .
Article 2
Ontheadoption bytheCouncil ofthis Directive ,Council Directives of
27October 1970 authorising derogations totheprovisions oftheCouncil

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Directivesof27October1970(70/509/EECand70/510/iI2C)and.Council
Directiveof1February1971authorisingderogationstoCouncilDirective
of1February1971(7l/06/£EC)shallberevoked.
Article3
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ThisDirectiveisaddressedtotheMemberStates.